# JAIIB Exam – Most Important Formulas of AFB

Important formulas provided in this article for Accounting & Finance for Bankers (AFB) JAIIB Exam.

## Most Important Formulas of AFB for JAIIB Exam

JAIIB Exam Formulas : JAIIB exam conducted by IIBF twice in a year. JAIIB or DBF 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  Accounting & Finance for Bankers (AFB) subjects.

### Calculation Of Interest and Annuities

• PV = Future Value
• C = Cash flow per period
• I = interest rate
• N = Number of payments

• EMI = Equated Monthly Installment
• P = Principal (Amount of loan)
• R = rate of interest per installment
• N = No. of Installments in year

### Capital Budgeting

• IRR = Internal rate of return
• LR = Lower rate
• NPVL = Net present value at lower rate
• PVL = present value at lower rate
• PVH =present value at higher rate
• HR = Higher rate
• LR = lower rate

### Depreciation And Its Accounting

1. SLM = 𝐶𝑃−𝑆𝑉/ 𝐸𝑠𝑡𝑖𝑚𝑎𝑡𝑒𝑑 𝐿𝑖𝑓𝑒 𝑜𝑓 𝐴𝑠𝑠𝑒𝑡 (𝑖𝑛 𝑦𝑒𝑎𝑟𝑠)
• SLM = straight line method
• CP= cost Price
• SV= scrap value
1. WDV = previous year’s value of asset × percentage rate

WDV = written down value method of depreciation

1. Double Declining Method of Depreciation
•  Calculate depreciation rate under SLM
• RATE × 2
• This rate is applied on written down value of asset
• In which year WDV is less than depreciation under SLM. Double declining rate of depreciation is not applied. Whole written down value of asset is charged as depreciation for that  year.

### Balance Sheet Equation

• Assets = Liabilities + Capital
• Income = Revenue – Expenses
• Sales = cost of sales + Gross profit
• Sales = Stock in the beginning + Purchases +Direct Expenses – Stock at       the end + Gross profit
• Gross profit = Sales – cost of sales

## Ratios

### Profitability Ratios

Return on investment: It measures how much the organization is earning on its capital employed.

Earnings Per Share (EPS)

• The ratio denotes per share profit of a
• It can be used to compare 2 different companies’ )
• To calculate the ration only the no. of equity share is taken (and not of preference shares).

### Price Earnings Ratio (PER)

• The ratio indicates the current market price vis-à-vis the earning per

#### Return on equity

• This ratio provides information about the earnings, which the funds put in by the promoters/shareholders. The ratio can be worked out as under:

#### Gross Profit Ratio

• The gross profit is considered to be the surplus of sales over the cost of goods sold and the ratio can be worked out as under:

#### Net Profit Ratio

• The net profit is the surplus of gross profit after meeting other The ratio can be worked out as under:

(The net profit could be before or after tax)

#### Operating Profit ratio

• The ratio denotes the margin of profit on the main operations revealing the operational efficiency of the unit.

(Profit minus net other income or profit from un-related activity)