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

**Advance Bank Management**

*Advance Bank Management* that is ABM is one of the important subject in the Banking Exam Certification of CAIIB and most of the candidates sought **ADVANCE BANK MANAGEMENT** to be one of the toughest exam of the CAIIB. Thought this is not true by * avoiding these 10 mistakes in CAIIB Exam* we can get through the ABM exam too.

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

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 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 assetâ†’**

â–¼ Inventory

â–¼ Preliminary Expenses/prepaid expenses

â–¼ Cash and banj balance

â–¼ Sundry debtors/Bill reicivables

â–¼ Investment in qouted securities such as Govt sec , FDR

â™§ Heads that come under liabilities

â–¼ Sundry creditors/Bills payable

â–¼ Installment of term loan payable in a year

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

â–¼ prefrential capital

â–¼ Provisions to paid in a year

â–¼ 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.Â GDP** = C+I+G+(X-M)

Â¤ 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 Ã— 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)Ã— 100 / (current market price of

coupon)

**27. Rate of return =** (coupon+ price change)/investment

**28. YTM =** [ C+ ( A-P)/n ] Ã— 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+ { (rÃ—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 Ã— 365/ n Ã— 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 ) Ã· 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 Ã— [( 1+r)^n – 1]

**34. Present Value of an annuity ( End of period )=** A/r Ã—[ ( 1+r)^n-1] /(1+r)^n

**35. FV ( at the beginning )=** A/rÃ—(1+r)[( 1+r)^n -1]

**36. Â¤ Value of Bond =** PV( Coupon)+ PV( Face value )

Â¤ PV( A,r,n)+ PV(Face value)

**37. Standard error of the mean**= ï¿½ x = ï¿½ / 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)/â–²xâ–²y}

**42. Return on capital empolyed (ROCE)=**( Net profit after tax Ã— 100)/ total capital

empolyed

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