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ABM | Advance Bank Management Important Formulae | CAIIB

Important formulae Advance Bank Management CAIIB

Advance Bank Management that is ABM, is one of the important subject 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 2022. Though this will not come true if you avoid committing these 10 mistakes in CAIIB 2022 Exam we can get through the ABM exam too.

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

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Let’s Start

 

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/Share holders 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 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 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 )
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

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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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