Dear candidates, obtaining the JAIIB certification is essential for bankers and banking aspirants aiming for quick promotions. To get the JAIIB certification, applicants must clear four distinct papers (IE & IFS, PPB, AFM, and RBWM). Among these, AFM (Accounting and Finance Management of Bankers) is a vital section to master. It contains numerous formulas that require preparation. Candidates might find themselves uncertain about what these formulas entail. This page provides a list of important formulas for the JAIIB AFM along with simple explanations. Candidates can download the PDF of this article from the link below. The JAIIB exam cycle for November has not yet commenced. To register for this examination, candidates must submit their applications by August 7, 2025, without incurring any extra charges. Following that date, from August 8 to August 21, 2025, additional fees will apply in conjunction with the standard exam fees. JAIIB stands for Junior Associate of the Indian Institute of Bankers, and it is a certification program organised by the Indian Institute of Banking & Finance (IIBF). This examination is conducted biannually. The May cycle for this year has already been completed. Candidates will receive their results right after finishing this exam. For any inquiries, please visit the FAQs outlined below.

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JAIIB AFM

The JAIIB AFM (Advanced Financial Management) exam encompasses a range of finance topics, such as ratio analysis, cost accounting, and financial mathematics. Important formulas include calculations for the Current Ratio (CA/CL), Debt-Equity Ratio (TL/TNW), Simple Interest, Compound Interest, Present Value (PV), Future Value (FV), and Equated Monthly Instalment (EMI).

JAIIB AFM Important Formulas

Before getting into the important formulas for JAIIB AFM, candidates need to know the JAIIB AFM syllabus modules. The JAIIB AFM Syllabus is divided into four modules:

1. Module A: Accounting Principles and Processes

2. Module B: Financial Statement and Core Banking Systems

3. Module C: Financial Management

4. Module D: Taxation and Fundamentals of Costing

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The AFM examination consists of 100 questions, with each question worth one mark, and must be finished in two hours. Familiarity with the syllabus module will aid in recalling the formulas more easily. Below is the list of JAIIB AFM important formulas for the upcoming JAIIB exam preparation.

1. Current Ratio

The formula for Current Ratio is,

Current Ratio = Current Assets / Current Liabilities

• Current Assets: Assets expected to be converted into cash or used within one year (e.g., cash, accounts receivable, inventory).

• Current Liabilities: Obligations due within one year (e.g., short-term loans, accounts payable).

• Example:

If a company has Rs. 5,00,000 in current assets and Rs. 2,50,000 in current liabilities:

Current Ratio = 5,00,000 / 2,50,000 = 2.0

This means the company has Rs. 2 in current assets for every Rs. 1 in current liabilities.

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2. Debt-Equity Ratio

The formula for Debt-Equity Ratio is,

Debt-Equity Ratio = Total Debt / Shareholders' Equity

• Total Debt: Money borrowed by the company (loans, debentures).

• Shareholders’ Equity: It is the company’s capital, including share capital and reserves.

• Example:

If Total Debt = Rs. 8,00,000 and Shareholders’ Equity = Rs. 4,00,000:

Debt-Equity Ratio= 8,00,000 / 4,00,00 = 2.0

The company has Rs. 2 of debt for every Rs. 1 of equity.

3. Simple Interest

The formula for Simple Interest is,

Simple Interest (SI) = P×R×T​ / 100

• Here, P is Principal (initial amount), R = Rate of interest per year, and T = Time in years.

• It tells you how much interest is earned or paid on a fixed amount over time.

• Example:

If Rs. 5,000 is invested at 10% for 2 years:

SI = 5000×10×2​ / 100 = 1,000.

4. Compound Interest (Annually)

The formula for Compound Interest (Annually) is,

CI = P × (1 + R / 100)^T - P

• Here, P = Principal, R = Annual interest rate, and T = Time in years.

• Compound interest means interest is added to the principal each year, and new interest is calculated on the increased amount.

• Example:

If Rs. 2,000 is invested at 10% for 2 years:

CI = 2000 × (1+ 10/100)²- 2000

= 2000 × 1.21 − 2000 = Rs. 420

5. Future Value (FV) of an Annuity

The standard formula for Future Value (FV) of an Annuity is,

FV = A × (1+r)^n−1 / r

Here,

• FV = Future Value of the annuity (total amount after all payments + interest)

• A = Fixed payment made in each period (annuity)

• r = Interest rate per period (expressed as a decimal, e.g., 10% = 0.10)

• n = Number of periods

• This formula adds up all the recurring payments, along with interest earned on them over time.

• Example: 

What will be the future value if Rs. 2,000 is invested annually for 4 years at 8% interest?

A = Rs. 2,000 (annuity/payment per year)

r = 8% = 0.08 (interest rate)

n = 4 years

FV=2000×(1+0.08)^4 -1 / 0.08

= 2000×4.5061 = Rs. 9,012.20

6. Present Value (PV) of an Annuity

The present value (PV) of an annuity formula is,

PV=A × 1−(1+r)^−n / r

Here,

• A = Annuity (equal payment per period)

• r = Interest rate per period (in decimal)

• n = Number of periods

• It tells the current worth of a series of equal payments (annuity) to be received in the future, discounted at a given interest rate.

Example:

What is the present value of Rs. 3,000 received annually for 5 years at 10% interest?

PV= 3000× 1−(1.10)^−5 / 0.10

= 3000 × 3.7908 = Rs. 11,372.40

• The formula for the present value of a single future amount is,

PV = P / (1+R)^T

7. EMI (Equated Monthly Instalment)

The standard formula for EMI (Equated Monthly Instalment) is,

EMI=P× r(1+r)^n / (1+r)^n - 1

Here,

• P = Loan amount (Principal)

• r = Monthly interest rate (Annual Rate ÷ 12 ÷ 100)

• n = Total number of monthly instalments

Example:

What is the EMI for a loan of Rs. 1,00,000 at 12% annual interest for 2 years?

P = Rs. 1,00,000

Annual Rate = 12% → Monthly r = 12 ÷ 12 ÷ 100 = 0.01

n = 2 × 12 = 24 months

EMI = 100000× 0.01(1+0.01)^24​ / (1+0.01)^24 - 1

= 100000×0.04727 = Rs. 4,727

8. Break-Even Point (Units)

The formula for Break-Even Point (Units) is,

Break-Even Point (Units) = Fixed Costs / (Selling Price per unit - Variable Cost per unit)

• It explains the number of units that need to be sold to cover all fixed and variable costs, resulting in neither profit nor loss.

Example:

If fixed costs are Rs. 40,000, the selling price is Rs. 100 per unit, and the variable cost is Rs. 60 per unit. What is the break-even point?

BEP = 40000 / 100-60

= 40000/40 = 1,000 units.

9. Contribution

The Contribution per unit formula is:

Selling Price per Unit – Variable Cost per Unit

The Total Contribution formula is:

Total Sales – Total Variable Costs

• It shows how much money is left after covering variable costs. This amount helps to cover fixed costs and earn a profit.

Example:

If total sales are Rs. 2,00,000, and the total variable costs are Rs. 1,40,000, what is the contribution?

Contribution = 2,00,000 - 1,40,000 = 60,000

10. P/V Ratio

The formula for P/V Ratio is,

P/V Ratio = Contribution / Sales × 100

• It shows how much contribution is earned from each rupee of sales. The higher the ratio, the better the profitability.

Example:

If the contribution is Rs. 40,000 and the sales are Rs. 2,00,000, what is the P/V Ratio?

P/V Ratio = 40,000 / 2,00,000 × 100

= 0.2×100 = 20%

FAQs

Q: What is the difference between the Present Value and the Future Value of an annuity?

The Future Value (FV) of an annuity calculates the total amount accumulated after regular payments and interest, whereas the Present Value (PV) of an annuity finds the current worth of future payments.

Q: What is the standard formula to calculate EMI?

The standard formula for Equated Monthly Instalment (EMI) is,

EMI=P× r(1+r)^n / (1+r)^n - 1

Q: How is the Break-Even Point calculated in units?

The formula for Break-Even Point (Units) is:

Break-Even Point (Units) = Fixed Costs / (Selling Price per unit - Variable Cost per unit)

Q: What is the formula for calculating the P/V Ratio, and what does it indicate?

The Profit/Volume (P/V) Ratio is calculated as:

P/V Ratio = Contribution / Sales × 100