FM Formula Sheet CA Inter: Complete Financial Management Formulas for Exam Revision

The sheet is arranged by chapter, which makes it easy to scan. The ratio analysis page lists 27 formulas across liquidity (current, quick, net working capital ratio), capital structure (debt equity, capital gearing, proprietary ratio), returns (ROI, ROCE, return on equity, return on assets), profitability (gross, net and operating profit ratios, operating ratio, PV ratio, P/E ratio), coverage (debt service, interest service, preference dividend coverage) and turnover ratios with debtor and creditor periods. A key equations block shows how COGS, gross profit ratio, operating expenses ratio, cost of production, average daily cash expenditure, net worth and capital employed connect. The investment decisions part gives payback period for even cash flows, ARR, profitability index, IRR by interpolation (with R1 as the lower rate) and annualised net benefit. Leverages, a full proforma P&L and dividend decision formulas, including growth g = b x r, Ke and Walter's model, complete the visible pages.

Several reminders in the sheet are easy to get wrong under time pressure. Capital employed can be worked out two ways: net worth plus long-term debt less non-trade investments, or fixed assets plus net working capital less non-trade investments. COGS ratio and gross profit ratio together equal 100, and gross profit ratio less operating expenses ratio gives the operating profit ratio, which helps in balance sheet reconstruction questions. In IRR interpolation, R1 must be the lower discount rate. Debtor and creditor periods use average daily or monthly credit sales or purchases, not total sales. Combined leverage is simply operating leverage multiplied by financial leverage. In the proforma P&L, non-operating items such as profit on sale of fixed assets and preliminary expenses written off sit below operating profit, and preference dividend is deducted before arriving at earnings for equity shareholders. Keep these relationships in mind when a question gives only ratios and asks for absolute figures.

Use this sheet as a recall tool, not a first-time study source. Learn each chapter from the ICAI study material first, then come back to the relevant page of the sheet and try writing every formula from memory before checking. For ratio analysis, pick an RTP or MTP question where the balance sheet must be prepared from given ratios and practise using the key equations block step by step. For investment decisions and leverages, solve past paper questions and note which formula each sub-part needed. The proforma P&L is a handy template to copy out while attempting ratio and leverage problems, since EBIT, EBT and EAT figures feed directly into financial leverage, interest coverage and EPS-based ratios. In the final week, read the whole sheet once a day and mark formulas you keep forgetting. On the day before the exam, a single quick pass should be enough to refresh the full set.

The sheet is meant for CA Inter students preparing the Financial Management and Strategic Management (FM and SM) paper, specifically the FM half. It is most useful for students who have finished their first reading and practice and now need a compact list for revision, mock tests and the final days before the exam. Because it covers ratio analysis, capital budgeting basics, leverages and dividend decisions together, it also helps when solving mixed questions that combine ratios with leverage or cost of equity. Students searching for an ACCA FM formula sheet may find the ratio and leverage formulas familiar, but the sheet is arranged for the CA Inter FM chapters and terminology, so ACCA candidates should match it against their own exam formula sheet. It is not a replacement for concept notes, as it gives formulas without worked examples, so pair it with your main notes and practice questions.

• Ratio analysis formulas
• Liquidity and turnover ratios
• Debt service coverage ratio
• Return on capital employed
• Key equations for COGS and capital employed
• Payback period and ARR
• Profitability index and IRR
• Operating financial and combined leverage
• Operating break-even point
• Proforma profit and loss statement
• Dividend yield and payout ratio
• Walter's model and cost of equity

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