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Bank Financial Management Important Formula for CAIIB Exam
CAIIB Exam Formulas : CAIIB exam conducted by IIBF twice in a year. CAIIB exam is a certification exam for those who want to grow in Banking sector in India. here in this article we are providing the Most important formula of Bank Financial Management (BFM) subjects.
Go through all the formulas carefully provided in this article which will help you to boost your score for CAIIB BFM exam.
Liquidity coverage ratio:
1.Raw material Turnover Ratio = Cost of RM used ÷ Average stock of R M
2.SIP Turnover = Cost of Goods manufactured ÷ Average stock of SIP
3.Debt Collection period = No. days or months or Weeks in a year ÷ Debt Turnover Ratio.
4.Average Payment Period = No. days or months or Weeks in a year ÷ Creditors Turnover Ratio.
5.Inventory Turnover Ratio = Cost of Goods Sold ÷ Average Inventory.
6.Debtors Turnover Ratio = Net Credit Sales ÷ Average Debtors.
7.Creditors Turnover Ratio = Net Credit Purchases ÷ Average Credits.
8.Defensive Interval Ratio = Liquid Assets ÷ Projected Daily Cash Requirement
9.Projected daily cash requirement = Projected operating cash expenses ÷ 365
10.Debt Equity Ratio = Long Term Debt ÷ Equity or Debt Equity Ratio = Total outside Liability ÷ Tangible Net Worth.
11.Debt to Total Capital Ratio = Total Debts or Total Assets ÷ (Permanent Capital + Current Liabilities)
12.Interest Coverage Ratio = EBIT ÷ Interest.
13.Dividend Coverage Ratio = Net Profit after Interest & Tax ÷ Preferential dividend
Components of Assets and Liabilities in the bank balance sheet:
14.Return on Assets = Net Profit After Tax ÷ Total Assets.
15.Total Assets = Net Fixed Assets + Net Working Capital.
16.Net Fixed Assets = Total Fixed Assets – Accumulated Depreciation.
17.Net Working Capital = (CA – CL) – (Intangible Assets + Fictitious Assets + Idle Stock + Bad Debts)
Tier I and Tier II capital
18.Return on Capital Employed = Net Profit Before Interest and Tax ÷ Average Capital Employed.
19.Average Capital employed = Equity Capital + Long Term Funds ÷ (Owners & Creditors at the beginning & at the end of the accounting period ÷ 2).
20.Return on Ordinary Share Holders Equity = (Net Profit After Tax – Preferential Dividends) ÷ Average Ordinary Share Holders Equity or Net Worth.
21.Earnings Per Share = Net Profit After Taxes and Preferential dividends ÷ Number of Equity Share.
22.Dividend per Share (DPS) = Net Profit After Taxes and distributable dividend ÷ Number of Equity Shares.
23.Dividend Pay Out Ratio = Dividend per Equity Share ÷ Earnings per Equity Share or Dividend Pay Out Ratio = Dividend paid to Equity Share-holders ÷ Net Profit available for Equity Share Holders.
24.Price Earnings Ratio (P/E) = Market Price per equity Share ÷ Earning per Share.
Asset classification
25.Total Asset Turnover = Cost of Goods Sold ÷ Average Total Assets.
26.Fixed Asset Turnover = Cost of Goods Sold ÷ Average Fixed Assets.
27.Capital Turnover = Cost of Goods Sold ÷ Average Capital employed
28.Current Asset Turnover = Cost of Goods Sold ÷ Average Current Assets.
29.Working Capital Turnover = Cost of Goods Sold ÷ Net Working Capital.
30.Return on Net Worth = (Net Profit ÷ Net Worth) * 100
Import export
31.Factory Cost = Prime cost + Production Overheads.
32.Cost of Goods Sold (COGS)= Factory Cost + Selling, distribution & administrative overheads
33.Contribution = Sales – Marginal Costs.
34.Percentage of contribution to sales = (Contribution ÷ Sales) * 100
35.Break Even Analysis (BEP) = F ÷ (1 – VC ÷ S) , Where F = Fixed costs, VC = Total variable operating costs & S = Total sales revenue
37.Break Even Margin or Margin of Safety = Sales – Break Even Point ÷ Sales.
38.Cash Break Even = F – N ÷ P – R or F – N ÷ 1 – (VC ÷ S)
39.BEP (Break Even Point) = Fixed Costs ÷ Contribution per unit.
40.Sales volume requires = Fixed cost + Required profit ÷ Contribution per unit.
41.BEP in Sales = (Fixed Costs ÷ Contribution per unit) * Price per unit.
Interest rate risk
42.Gross Profit Margin = Gross Profit ÷ Net Sales * 100
43.Net Profit Margin = Net Profit ÷ Net Sales * 100
44.Cost of Goods Sold Ratio = Cost of Goods Sold ÷ Net Sales * 100.
45.Operating Profit Ratio = Earnings Before Interest Tax ÷ Net Sales * 100
46.Expenses Ratio or Operating Ratio = Expenses ÷ Net Sales * 100
47.Net Profit Ratio = Net Profit After interest and Tax ÷ Net Sales * 100
48.Operating Expenses Ratio = (Administrative + Selling expenses) ÷ Net Sales * 100
49.Administrative Expenses Ratio = (Administrative Expenses ÷ Net Sales) * 100
50.Selling Expenses Ratio = (Selling Expenses ÷ Net Sales) * 100
51.Financial Expenses Ratio = (Financial Expenses ÷ Net Sales) * 100
52.DSCR = Profit after Tax & Depreciation + Interest on Term Loans & Differed Credit + Lease Rentals, if any, ÷ Repayment of Interest & Installments on Term Loans & deferred Credits + Lease Rentals, if any.
53.Contribution Sales Ratio = (Contribution per unit ÷ Sale price per unit) * 100
54.Level of sales to result in target profit after Tax = (Target Profit) ÷ (1 – Tax rate ÷ Contribution per unit)
55.Level of sales to result in target profit = (Fixed Cost + Target profit) * sales price per unit Contribution per unit.
Time value of money:
56.Net Present Value = – Co + C1 ÷ (1 + r)
57.Future expected value of a present cash flow = Cash Flow (1 + r) ^ t
58.Present value (simple future cash flow) = Cash Flow ÷ (1 + r) ^ t
59.Discount Factor = 1 ÷ (1 + r) ^ t
60.Notation used internationally for PV of an annuity is PV (A, r, n)
61.Notation used internationally for FV of an annuity is FV (A, r, n)
62.Effective Annual Rate = (1 + r) ^ t – 1 or (1 + (r ÷ N)) – 1) (N = Number of times compounding is done in a year)
63.PV of end of period Annuity = A {(1- (1 ÷ (1+r) ^ n) ÷ r}
64.Present Value (PV) = P ÷ R * [(1+R) ^ T – 1] ÷ (1+R) ^ T
65.Present Value = P ÷ (1+R) ^ T
66.Future Value (FV) = P * (1 + R) ^ T or FV = P * (1-R) ^ T or FV = P ÷ R * [(1+R) ^ T – 1] or FV = P ÷ R * [(1+R) ^ T – 1] * (1+R)
67.Equated Monthly Installments (EMIs)= P * R * [(1+R) ^ T ÷ (1+R) ^ T-1)]
68.Future Value of annuity = A ÷ r ×{(1+r) ^ n-1}
69.Bond Price = (1 ÷ (1+R) ^ t) ((coupon*((1+R) ^ t-1) ÷ R) + Face Value)
Basel III framework on Liquidity standard
70.Current Ratio = CA : CL
71.Net Worth = CA – CL
72.Debt Equity Ratio = TL ÷ TNW or debt ÷ equity or TL ÷ equity
73.Price Elasticity of Supply = (% change in quantity supplied ÷ (% change in price)
CAIIB BFM Important Formula PDF by Ambitious baba
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