Important formulae/ Advance Bank Management CAIIB

Important formulae/ Advance Bank Management CAIIB

1. Net worth =
A) Excess of assets over liabilities( for individual)
B) Capitals + Reserve (for company)
2. Networking Capital =
A) Total of current asset-Total of current liability
B) Difference b/w long term source and long term use
3. Debt Equity ratio (DER) =
A) Term loan/Tangible networth
B) Long term debt/Share holders equity
C) Total liability/Share holders equity
4. DSCR =
A) Total cash flow before interest/Total repayment obligation
B) ( Net profit + Depriciation + Interest on long term liability )/ (Instalment + interest on
long term liability)
5. Return on asset = Operating profit/(Total asset-intangible asset)
6. ICR(Interest coverage ratio )= EBIT / Interest on long term borrowings
Where EBIT = Earning before interest and taxes
7.Total outside liabilities= current liability + long term liability
8. Total tangible asset = CA+ Fixed asset+ other non currrent asset
9. Tangible networth = Networth - intangible asset
10. Current Ratio = CA:CL
11. Quick Ratio = ( CA - Inventories )/ CL
12. Quick asset = CA - Inventory
13. ♧ Heads come under current asset→
▼ Inventory
▼ Preliminary Expenses/prepaid expenses
▼ Cash and banj balance
▼ Sundry debtors/Bill reicivables
▼ Investment in qouted securities such as Govt sec , FDR
♧ Heads that come under liabilities
▼ Sundry creditors/Bills payable
▼ Installment of term loan payable in a year
▼ prefrential capital
▼ Provisions to paid in a year
▼ WCTL( Working capital term loan )
14. Narrow Money ( M1)= Currency with public + Demand deposits with banking system
+ ' other deposits with RBI
15. M2=M1+ Savings deposits of post office savings banks
16. M3= M1+ Time deposits with banking system
17. M4= M3+ All deposits with post office savings banks( Excluding National savings
certificate )
18. Inflation = ( Price index in current year- Price index in base year)*100
19. ¤ GDP = C+I+G+(X-M)
¤ GNP = GDP+ NR( net income from assets abroad( net income receipts ))
20. GDP at factor cost = GDP at market price -( Indirect taxes- Subsidies )
21. Total revenue receipts = Net tax revenue + Total Non-Tax revenue
22. Present value(PV)= Discount factor × Cn
23. Cash flow for n period = Cn= PV(1+r)^n where r = interest rate
24. Discount factor = 1/(1+r)^n
Where r = int rate , n = period in year
25. Effective int rate (EIR)= (1+r/n)^n -1
26.Current yield on coupon = (coupon or nominal yield)× 100 / (current market price of
coupon)
27. Rate of return = (coupon+ price change)/investment
28. YTM = [ C+ ( A-P)/n ] × 100 / ( A + P)/2
Where C- Coupon
A- Face value/ Maturity value of bond
P- Price paid for bond
n - term to maturity
29.Yield on discounted instuments :- The issue price of a discounted instrument can be
calculated by using formula
D = F / 1+ { (r×n)/36500 }
Where D = Discounted value of the instrument
F = Maturity Value
r = Effective rate of return per annum
n = Tenure of the investment in days.
30.conversely to find out the yield from a discounted instrument, the following formula
can be derived from the above one
r = ( F- D ) / D × 365/ n × 100
Where D = Discounted value of the instrument
F = Maturity value
r = Effective rate of interest per annum
n = Tenure of the instrument ( in days )
31. When you invest in a bond , you receive a regular coupon payment. As bond prices
change , you may also make a capital gain or loss.
The Rate of Return can be calculated using
ROR = ( Coupon income + Price change ) ÷ Investment
32. Zero coupan bond is a long term bond that pays no interest. This bond is sold at
discount. This can be calculated by using formula
ZC = FV / ( 1+r )^n
Where FV = Face value of bond
r = return required
n = Maturity period
33. Future Value of an annuity(End of period) = A/r × [( 1+r)^n - 1]
34. Present Value of an annuity ( End of period )= A/r ×[ ( 1+r)^n-1] /(1+r)^n
35. FV ( at the beginning )= A/r×(1+r)[( 1+r)^n -1]
36. ¤ Value of Bond = PV( Coupon)+ PV( Face value )
¤ PV( A,r,n)+ PV(Face value)
37. Standard error of the mean= � x = � / sqrt ( n)
38.PV of perpertuity = A/r
Where A = Annuity
r = int rate
39. If S is the sample space & E is the even of occurance
Then Probablity of occurance of even E for n time = P(E) = n(E)/n(S)
40. Equation of estamating of straight line
Y^ = a+bx
Where Y^ = estimating value of dependent variable
x = is an independent variable
a = y intercept when x=0
b = the slop of trend line
41. If x and Y are the two variables then corrleation of cofficient 'r'
r = cov{(x,y)/▲x▲y}
42. Return on capital empolyed (ROCE)=( Net profit after tax × 100)/ total capital
empolyed