## Important formulae **Advance Bank Management** CAIIB

**Advance Bank Management**

*Advance Bank Management* which is full form of ABM, is one of the important subjects in the Banking Exam Certification of CAIIB and most of the candidates find **ADVANCE BANK MANAGEMENT** to be one of the toughest exam of the CAIIB 2023. Though this will not come true if you ** avoid committing these 10 mistakes in CAIIB 2023 Exam** we can get through the ABM exam too.

In this article, we will talk about the CAIIB ABM formulas that are from the applicable syllabus of ABM CAIIB for the JUNE Exams 2023. The underwritten formulas will help you clear the CAIIB’s 2nd paper i.e. Advanced Bank Management.

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**Here are some formulae of CAIIB which will make ABM numerical a bit easier for the CAIIB candidates.**

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**READ ALSO -> CAIIB LATEST SYLLABUS JUNE 2023**

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**ADVANCE BANK MANAGEMENT FORMULAE TO CLEAR ABM PAPER THIS JUNE ATTEMPT 2023**

When revising the ABM syllabus for December Exams, you must take a look & memorise the below given formulas to perform better & pass the ABM Exam 2023.

**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 net worth

B) Long-term debt/Shareholders equity

C) Total liability/Share holders equity

**4. DSCR =**

A) Total cash flow before interest/Total repayment obligation

B) ( Net profit + Depreciation + 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 net worth =** Net worth – 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 bank balance

▼ Sundry debtors/Bill receivables

▼ Investment in Quoted securities such as Govt securities , FDR

♧ Heads that come under liabilities

▼ Sundry creditors/Bills payable

▼ Installment of term loan payable in a year

ALSO See: Avoid these 10 Mistakes in CAIIB Exam for SURE SUCCESS

▼ preferential capital

▼ Provisions to paid in a year

▼ WCTL( Working capital term loan )

**IMPORTANT NOTE:**

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**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 × C n

**23. Cash flow for n period =** Cn= PV(1+r)^n where r = interest rate

**24. Discount factor =** 1/(1+r)^n

Where r = interest rate , n = period in year

**25. Effective interest 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 instruments** :- 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 coupon 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 perpetuity =** A/r

Where A = Annuity

r = interest rate

**39. If S is the sample space & E is the even of ****occurrence**

**Then Probability of occurrence of even E for n time** = P(E) = n(E)/n(S)

**40. Equation of estimating 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 correlation of coefficient ‘r**‘

r = cov{(x,y)/▲x▲y}

**42. Return on capital employed (ROCE)=**( Net profit after tax × 100)/ total capital

employed

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