Most important formula of Advanced Bank Management (ABM)

Unit 13 – Sampling method

35.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)

Unit 14 – Co-efficient of co-relation:

36.If x and Y are the two variables then correlation of coefficient ‘r‘
r = cov{(x,y)/▲x▲y}

37.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

47.Standard error of the mean= � x = � / sqrt ( n)

48.PV of perpetuity = A/r
Where A = Annuity
r = interest rate
49.FV of annuity = A/r ×{(1+r)^n-1}
50.Bond Price = (1/(1+R)^t)((coupon*((1+R)^t-1)/R)+Face Value)

Unit -18 – Linear Programming

51.Break Even Analysis = F / ( 1 – VC / S )
F = Fixed costs, VC = Total variable operating costs & S = Total sales revenue
52.Break Even Margin or Margin of Safety = Sales – Break Even Point / Sales.
53.Cash Break Even = F – N / P – R or F – N / 1 – ( VC / S )
54.BEP = Fixed Costs / Contribution per unit.

Unit 27 – Ratio Analysis – Analysis of Financial Statements

55.Raw material Turnover Ratio = Cost of RM used / Average stock of R
56.SIP Turnover = Cost of Goods manufactured / Average stock of SIP
57.Debt Collection period = No. days or months or Weeks in a year/Debt Turnover Ratio.
58.Average Payment Period = No. days or months or Weeks in a year/Creditors Turnover Ratio.
59.Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory.
60.Debtors Turnover Ratio = Net Credit Sales / Average Debtors.
61.Creditors Turnover Ratio = Net Credit Purchases / Average Credits.
62.Defensive Interval Ratio = Liquid Assets / Projected Daily Cash Requirement
63.Projected daily cash requirement = Projected operating cash expenses / 365.
64.Debt Equity Ratio = Long Term Debt / Equity.
65.Debt Equity Ratio = Total outside Liability / Tangible Net Worth.
66.Debt to Total Capital Ratio = Total Debts or Total Assets/(Permanent Capital + Current Liabilities)
67.Interest Coverage Ratio = EBIT / Interest.
68.Dividend Coverage Ratio = N. P. after Interest & Tax / Preferential dividend
69.Gross Profit Margin = Gross Profit / Net Sales * 100
70.Net Profit Margin = Net Profit / Net Sales * 100
71.Cost of Goods Sold Ratio = Cost of Goods Sold / Net Sales * 100.
72.Operating Profit Ratio = Earnings Before Interest Tax / Net Sales * 100
73.Expenses Ratio or Operating Ratio = Expenses / Net Sales * 100
74.Net Profit Ratio = Net Profit After interest and Tax / Net Sales * 100
75.Operating Expenses Ratio = (Administrative + Selling expenses) / Net Sales * 100
76.Administrative Expenses Ratio =(Administrative Expenses / Net Sales ) * 100
77.Selling Expenses Ratio =(Selling Expenses / Net Sales ) * 100
78.Financial Expenses Ratio = ( Financial Expenses / Net Sales ) * 100
79.Dividend Pay Out Ratio = Dividend per Equity Share / Earnings per Equity Share.
80.Dividend Pay Out Ratio = Dividend paid to Equity Shareholders / Net Profit available for
Equity Share Holders.
81.Price Earning Ratio = Market Price per equity Share / Earning per Share.

Unit 31 – Credit control and monitoring

82.Net worth = A) Excess of assets over liabilities(for individual)
83.B) Capitals + Reserve (for company)
84.Networking Capital = A) Total of current asset-Total of current liability
85.B) Difference b/w long term source and long term use
86.Debt Equity ratio (DER) = A) Term loan/Tangible net worth
87.B) Long term debt/Share holders equity
88.C) Total liability/Share holders equity
89.DSCR = A) Total cash flow before interest/Total repayment obligation
90.B) ( Net profit + Depreciation + Interest on long term liability )/ (Instalment + interest on long term liability)
91.Return on asset =Operating profit/(Total asset-intangible asset)
92.ICR(Interest coverage ratio )=EBIT / Interest on long term borrowings, Where EBIT = Earning before interest and taxes
Unit – 28 Working Capital Finance
88. Total outside liabilities= current liability + long term liability
89.Total tangible asset =CA + Fixed asset+ other non currrent asset
90.Tangible net worth =Net worth – intangible asset
91.Current Ratio =CA:CL
92.Quick Ratio =( CA – Inventories )/ CL
93.Quick asset =CA – Inventory

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

 preferential capital

 Provisions to paid in a year

 WCTL( Working capital term loan )

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

Unit 31 – Credit Control and Monitoring

96.Return on Assets = Net Profit After Tax / Total Assets.
97.Total Assets = Net Fixed Assets + Net Working Capital.
98.Net Fixed Assets = Total Fixed Assets – Accumulated Depreciation.
99.Net Working Capital = ( CA –CL ) – ( Intangible Assets + Fictitious Assets + Idle Stock
+ Bad Debts )
100. Return on Capital Employed = Net Profit Before Interest and Tax / Average Capital Employed.
101. Average Capital employed = Equity Capital + Long Term Funds provided by Owners &
Creditors at the beginning & at the end of the accounting period divided by two.
102. Return on Ordinary Share Holders Equity = (NPAT – Preferential Dividends) / Average Ordinary Share Holders Equity or Net Worth.
103. Earnings Per Share = Net Profit After Taxes and Preferential dividends / Number of Equity Share.
104. Dividend per Share = Net Profit After Taxes and distributable dividend / Number of Equity Shares.
105. Total Asset Turnover = Cost of Goods Sold / Average Total Assets.
106. Fixed Asset Turnover = Cost of Goods Sold / Average Fixed Assets.
107. Capital Turnover = Cost of Goods Sold / Average Capital employed.
108. Current Asset Turnover = Cost of Goods Sold / Average Current Assets.
109. Working Capital Turnover = Cost of Goods Sold / Net Working Capital.
110. Return on Net Worth = ( Net Profit / Net Worth ) * 100
111. DSCR = Profit after Tax & Depreciation + Int. on T L & Differed Credit + Lease Rentals if any divided by Repayment of Interest &
Installments on T L & Differed Credits + Lease Rentals if any.
112. Factory Cost = Prime cost + Production Overheads.
113. Cost of Goods Sold = Factory Cost + Selling, distribution & administrative overheads
114. Contribution = Sales – Marginal Costs.
115. Percentage of contribution to sales = ( Contribution / Sales ) * 100
116. Sales volume requires = Fixed cost + Required profit / Contribution per unit.
117. BEP in Sales = ( Fixed Costs / Contribution per unit ) * Price per unit.
118. Contribution Sales Ratio = ( Contribution per unit / Sale price per unit ) * 100
119. Level of sales to result in target profit after Tax = (Target Profit) / (1 – Tax rate / Contribution per unit)
120. Level of sales to result in target profit = (Fixed Cost + Target profit) * sales price per unit Contribution per unit.