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CAIIB-ABM-IMPORTANT FORMULA


Important Formula
------------------------

Some of these Formula may not be applicable for ABM, but I request all of you to go through all of them to understand the concepts clear for both ABM and BFM.

1. Raw material Turnover Ratio = Cost of RM used / Average stock of R M

2. SIP Turnover = Cost of Goods manufactured / Average stock of SIP

3. Debt Collection period  = No. days or months or Weeks in a year/Debt Turnover Ratio.

4. Average Payment Period   = No. days or months or Weeks in a year/Creditors Turnover Ratio.

5. Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory.

6. Debtors Turnover Ratio = Net Credit Sales / Average Debtors.

7. Creditors Turnover Ratio = Net Credit Purchases / Average Credits.

8. Defensive Interval Ratio = Liquid Assets / Projected Daily Cash Requirement

9. Projected daily cash requirement = Projected operating cash expenses / 365.

10. Debt Equity Ratio = Long Term Debt / Equity.

11. Debt Equity Ratio = Total outside Liability / Tangible Net Worth.

12. Debt to Total Capital Ratio = Total Debts or Total Assets/(Permanent Capital + Current Liabilities)

13. Interest Coverage Ratio = EBIT / Interest.

14. Dividend Coverage Ratio = N. P. after Interest & Tax / Preferential dividend

15. Gross Profit Margin = Gross Profit / Net Sales * 100

16. Net Profit Margin = Net Profit / Net Sales * 100

17. Cost of Goods Sold  Ratio = Cost of Goods Sold / Net Sales * 100.

18. Operating Profit Ratio = Earnings Before Interest Tax / Net Sales * 100

19. Expenses Ratio or Operating Ratio = Expenses / Net Sales * 100

20. Net Profit Ratio = Net Profit After interest and Tax  / Net Sales * 100

21. Operating Expenses Ratio = (Administrative + Selling expenses) / Net Sales   * 100

22. Administrative Expenses Ratio =(Administrative Expenses / Net Sales ) * 100

23. Selling Expenses Ratio =(Selling Expenses / Net Sales ) * 100

24. Financial Expenses Ratio =  ( Financial Expenses / Net Sales ) * 100

25. Return on Assets = Net Profit After Tax / Total Assets.

26. Total Assets = Net Fixed Assets + Net Working Capital.

27. Net Fixed Assets = Total Fixed Assets – Accumulated Depreciation.

28. Net Working Capital = ( CA –CL ) – ( Intangible Assets + Fictitious Assets + Idle Stock + Bad Debts )

29. Return on Capital Employed = Net Profit Before Interest and Tax / Average Capital Employed.

30. 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.

31. Return on Ordinary Share Holders Equity = (NPAT –  Preferential Dividends) / Average Ordinary Share Holders Equity or Net Worth.

32. Earnings Per Share = Net Profit After Taxes and Preferential dividends / Number of Equity Share.

33. Dividend per Share = Net Profit After Taxes and distributable dividend / Number of Equity Shares.

34. Dividend Pay Out Ratio =  Dividend per Equity Share / Earnings per Equity Share.

35. Dividend Pay Out Ratio = Dividend paid to  Equity Share holders / Net Profit available for Equity Share Holders.

36. Price Earning Ratio = Market Price per equity Share / Earning per Share.

37. Total Asset Turnover = Cost of Goods Sold  / Average Total Assets.

38. Fixed Asset Turnover = Cost of Goods Sold  / Average Fixed Assets.

39. Capital Turnover = Cost of Goods Sold  / Average Capital employed.

40. Current Asset Turnover = Cost of Goods Sold  / Average Current  Assets.

41. Working Capital Turnover = Cost of Goods Sold  / Net Working Capital.

42. Return on Net Worth = ( Net Profit / Net Worth ) * 100

43. 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.

44. Factory Cost = Prime cost + Production Overheads.

45. Cost of Goods Sold = Factory Cost + Selling, distribution & administrative overheads

46. Contribution = Sales – Marginal Costs.

47. Percentage of contribution to sales = ( Contribution / Sales ) * 100

48. Break Even Analysis = F / ( 1 – VC / S ) 
       F = Fixed costs, VC = Total variable operating costs & S = Total sales revenue

49. Break Even Margin or Margin of Safety  = Sales – Break Even Point / Sales.

50. Cash Break Even = F – N / P – R or F –  N / 1 – ( VC / S )

51. BEP = Fixed Costs / Contribution per unit.

52. Sales volume requires = Fixed cost + Required profit / Contribution per unit.

53. BEP in Sales = ( Fixed Costs / Contribution per unit ) * Price per unit.

54. Contribution Sales Ratio  = ( Contribution per unit / Sale price per unit ) * 100

55. Level of sales to result in target profit after Tax = (Target Profit) / (1 – Tax rate / Contribution per unit)

56. Level of sales to result in target profit = (Fixed Cost + Target profit) * sales price per unit Contribution per unit.

57. Net Present Value =  - Co + C1 / (1 + r)

58. Future expected value of a present cash flow = Cash Flow ( 1 + r ) ^ t

59. Present value of a simple future cash flow = Cash Flow / (1 + r) ^ t

60. The Discount Factor  = 1 / (1 + r) ^ t

61. Notation used internationally for PV of an annuity is PV ( A, r, n )

62. Notation used internationally for FV of an annuity is FV ( A, r, n )

63. The effective annual rate = ( 1 + r ) ^ t – 1 or  (1 +  (r / N) ) – 1 ) 
       N = Number of times compounding in a year

64. PV of end of period Annuity = A { (1- (1 / (1+r) ^ n) / r

65. CR = CA : CL

66. Net Worth = CA - CL

67. DER = TL/TNW or debt/equity or TL/equity

68. Price Elasticity of Supply = (% change in quantity supplied/(% change in price)

69. PV = P / R * [(1+R)^T - 1]/(1+R)^T

70. PV = P / (1+R)^T

71. FV = P * (1 + R)^T

72. FV = P*(1-R)^T

73. FV = P / R * [(1+R)^T - 1]

74. FV = P / R * [(1+R)^T - 1] * (1+R)

75. EMI = P * R * [(1+R)^T/(1+R)^T-1)]

76. FV of annuity = A/r ×{(1+r)^n-1}

77. Bond Price = (1/(1+R)^t)((coupon*((1+R)^t-1)/R)+Face Value)

 

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