List of 63 useful exam formulas for paper F9

As we all know , formulas are the mathematical expressions to calculate values for different case scenarios. In ACCA paper  f9, there are major some areas like Working Capital  Management, Business Valuation, Risk Management, Business Finance and Investment  appraisal which require ,  knowledge of formulas to calculate values and solution of the questions  asked in exams.


It means , remembering these formulas is vital in f9 studies. So considering the importance of these formulas i tried to combine all formulas used in financial management paper here in this article after spending a lot of time on going through books , notes and internet research.You can find below these formulas under two headings 'Exam Formulas' and 'Formulas to Learn'.   

Exam Formulas :   

These formulas will be given on your exam question paper sheet , so you don,t need to worry about remembering these mathematical expressions.

1- Economic Order Quantity = Square root 2CoD/Ch      

2- Miller-Orr Model= Return Point = Lower limit + (1/3 * Spread )

3- Spread = 3 ( 3/4* transaction cost * variance of cash flows / interest rates )1/3

4- The Capital Asset Pricing Model = E(ri) =Rf + Bi (E (rm) - Rf)

5- The Asset Beta Formula = Ba = ( Ve /  Ve+Vd (1-T) * Be ) + ( Vd (1-T)/ Ve+Vd(1-T) * Bd)

6- The Growth Model  = Po = Do (1+g) /  ( re - g )

7- Gordon,s Growth Approximation = g = bre

8- The Fisher Formula = ( 1+ i ) = ( 1 + r )( 1 + h )

9- Purchasing Power Parity  =   S1 = So * ( 1 + hc ) / ( 1+ hb )

10-Interest Rate Parity = Fo = So * ( 1 + ic ) / ( 1 + ib )

11-The Weighted Average Cost of Capital = WACC = ( Ve / Ve + Vd ) ke + ( Vd / Ve + Vd ) kd(1-T)

Formulas to Learn :

These formulas are not given on exam question paper . So guys you have to remember these expressions to attempt an exam of F9.

1- ROCE = Profit before interest and tax / Capital employed 

2- ROCE = Profit margin * Asset turnover

3- Gearing = Debt / Equity or Debt / Debt + Equity

4- Gearing = Prior Charge Capital / Equity capital ( including reserves )

5- Interest coverage = PBIT / Interest

6- Current ratio = Current assets / Current liabilities

7- Quick ratio = Current assets -  Inventory / Current liabilities

8- Earning per share ( E. P. S ) = Profits distributable to ordinary shareholders ( Earnings ) / No. of ordinary shares issued

9- Price Earnings Ratio ( P/E ) = Market price per share / E.P.S

10- Dividend Yield = Dividend per share / Market price per share * 100

11- Accounts payable period = Payables / Purchases or Cost of sales  * 365 days

12- Accounts receivables days = Receivables / Credit sales * 365 days

13- Inventory days = Inventory / Cost of sales * 365 days

14- Inventory days = Finished goods / cost of sales * 365 days

15- Work in progress days ( W.I.P ) = Average W.I.P / Cost of sales * 365

16- Raw material days = Average raw material inventory / Annual raw material purchases * 365 days

17- Equivalent annual cost ( E.A.C  ) = PV of cost over one replacement cycle / Annuity factor for the number of years in the cycle

18- IRR = a + NPVa / NPVa - NPVb * ( b - a )

19- Cost of equity = Ke = D1 / Po + g

20- Cost of debt = Kd = i ( 1 - T ) / Po

21- Cost of preference shares = Kpref = Preference dividend / Market Value = d / Po

22- Profitability index ( P. I ) = PV of cash flows  ( Without capital investment ) / Capital investment
                                                        
23- Conversion value = Po ( 1 + g )^n  * R  Where ,

Po = Current share price  , g = Annual growth in share price  , R = No. of shares  , n = No. of years

24- Ke = Dividend growth model = Do ( 1 + g ) / Po + g

25- Asset turnover = Sales / Total assets
26- Earnings per share  = E.P.S = Earnings ( PAT ) / No . of ordinary shares

27- Earnings = E.P.S * No. of ordinary shares

28- Dividend cover = E.P.S / D.P.S = Earnings per share / Dividend per share

29- Inverse of dividend cover = 1 / P/E * Div. Yield

30- Dividend per share = E.P.S / Dividend cover

31- Nominal discount rate = 1+i  = ( 1 + r ) ( 1 +h )

32- Operating gearing = Contribution / PBIT ( Operating profit )

33- Financial gearing = Debt / Debt + Equity

34- Operating profit = Profit from operations / Sales revenue 

35- Net profit = Net profit / Net sales or Profit before tax / Sales

36- Return on Equity ( R.O.E ) = Profit after tax ( P.A.T ) / Equity

37- Minimum ( Buffer ) inventory level = Re-order level - ( Avg. usage * Ag. lead time )

38- Average inventory = Buffer or min. inventory level + Re-order quantity / 2

39- PBIT ( Operating profit ) = Interest cover * interest payable

40- Total shareholder return = ( P1 - Po ) + D1 / Po

41- Inventory =  Inventory days * C.G.S / 365

42- Receivables = Receivable days * Credit sales / 365

43- Payables = Payable days * Credit purchases / 365

44- Annual discount cost = [{( 100 / 100 -d )^365/t  } - 1 ] %

45- Overdraft = Total assets ( C.A + N.C.A ) - N.C.L ( O. S.C+ R.E + Long term loan ) - C. L ( Payables )
46- Assets = Liability + Capital

47- Total assets = Total liabilities + Capital ( Equity + O.S.C + R.E )

48- Cash operating cycle = Inventory + Payables - Receivables

49- Net working capital = Current assets - Current liabilities

50- TERP = No. of old shares * old share price + No. of new shares * New share price / Total no. of shares ( old + new )

51- Value of rights = TERP - New share price

52- Net assets = Total assets( N.C.A+C.A )  - Total liabilities ( N.C.A+C.L ) - Preference shares


Important Note : If you find any typo  error  or mathematical error please let us know we will rectify it . And if some formulas are missing or you know some other useful formulas that should be here in above formula list then share with us we will update our formula list. In both cases you can Email us on below given  'Contact Us' Form  or can comment below to notify us about above mentioned cases.

Share on Google Plus