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20+ Calculators Tax Planning
Corporate Finance Bond Pricing
Home / Accounting & Costing
Accounting is the systematic process of recording, classifying, summarising, and interpreting financial transactions. It is the "language of business."
Foundational Concepts
Double-Entry Bookkeeping Every transaction affects at least two accounts - a debit and a credit of equal amount.
Accrual vs Cash Accounting Accrual: Revenue recorded when earned, expenses when incurred. Cash: Only when cash changes hands.Going Concern Assumption that a business will continue operating for the foreseeable future.
Materiality Information is material if its omission could influence economic decisions.
Conservatism (Prudence) Recognise losses early, gains only when certain.
The Accounting Cycle
Source Document Journal Entries General Ledger Trial Balance Adjusting Entries Financial Statements
Revenue - COGS = Gross Profit Gross Profit - OpEx = EBIT EBIT - Interest - Tax = Net Income
EBITDA = EBIT + Depreciation + Amortisation
Example: Revenue Rs 50L. COGS Rs 20L. OpEx Rs 15L. D&A Rs 3L. Interest Rs 2L. Tax 25%.Net Income = 9.75L.
Assets = Liabilities + Shareholders' Equity
Working Capital = Current Assets - Current Liabilities
Example: CA Rs 25L (Cash 5L, Receivables 12L, Inventory 8L). CL Rs 15L. Working Capital = 25L - 15L = Rs 10L.
CFO + CFI + CFF = Net Change in Cash
Free Cash Flow = CFO - Capital Expenditure
Opening Equity + Net Income +/- OCI - Dividends = Closing Equity
FIFO (First In, First Out) Oldest inventory sold first. In inflation: lower COGS, higher profits, higher taxes .
LIFO (Last In, First Out) Newest inventory sold first. In inflation: higher COGS, lower profits, lower taxes . Not permitted under IFRS.
Weighted Average Cost Weighted average cost per unit after each purchase. Smooths price fluctuations.
Example: Buy 100 units @ Rs 10, then 100 units @ Rs 15. Sell 120 units.FIFO: COGS = (100x10) + (20x15) = Rs 1,300. LIFO: COGS = (100x15) + (20x10) = Rs 1,700. Weighted Avg: COGS = 120 x 12.50 = Rs 1,500.
Aspect US GAAP IFRS
Issued by FASB IASB Used in United States 140+ countries Inventory FIFO, LIFO, Weighted Avg FIFO, Weighted Avg only Dev Costs Expensed Capitalised if criteria met Approach Rules-based Principles-based
COGS = Opening Inventory + Purchases + Manufacturing Costs - Closing Inventory
Cost Behaviour
Type Total Behaviour Per-Unit Examples
Fixed Constant Decreases with volume Rent, Insurance, Salaries Variable Proportional to output Constant per unit Materials, Commissions Semi-Variable Fixed base + variable Decreases then stabilises Electricity, Phone
CAPEX vs OPEX
Aspect CAPEX OPEX
Definition Long-term asset investments Day-to-day expenses Accounting Capitalised, depreciated Fully expensed Cash Flow Investing Activities Operating Activities Tax Depreciation over years Full deduction immediately
DOL = Contribution Margin / EBIT
Example: Sales Rs 50L. Variable Rs 30L. Fixed Rs 10L. EBIT = 10L. Contribution = 20L.DOL = 20L/10L = 2.0x. A 10% sales increase produces 20% EBIT increase.
Home / Financial Ratios
Category Ratio Formula Ideal
Liquidity Current Ratio CA / CL 1.5-2.0 Quick Ratio (CA - Inventory) / CL 1.0-1.5 Cash Ratio Cash / CL >0.5 Solvency Debt-to-Equity Debt / Equity <2.0 Debt Ratio Liabilities / Assets <0.6 Interest Coverage EBIT / Interest >1.5 Efficiency Asset Turnover Revenue / Assets >1.0 Inventory Turnover COGS / Avg Inventory 5-10x Receivables Turnover Credit Sales / Avg Receivables >6x Profitability Gross Margin Gross Profit / Revenue >40% Net Margin Net Income / Revenue >10% ROA Net Income / Assets >5% ROE Net Income / Equity >15% Market Value EPS (NI - Pref Div) / Shares Higher P/E Price / EPS 15-25 P/B Price / Book Value 1-3 EV/EBITDA Enterprise Value / EBITDA 6-12
Z = 1.2X1 + 1.4X2 + 3.3X3 + 0.6X4 + 1.0X5
Z > 2.99 Safe Zone Low bankruptcy probability.
1.81 - 2.99 Grey Zone Uncertain. Requires investigation.
Z < 1.81 Distress Zone High bankruptcy probability.
ROE = Net Margin x Asset Turnover x Equity Multiplier
Company A: 9% margin, 1.0x turnover, 2.0x leverage = 18% ROE.Company B: 3% margin, 2.0x turnover, 3.0x leverage = 18% ROE.Company B is riskier - driven by leverage.
Home / Corporate Finance
Net Present Value (NPV)
NPV Sum of all future cash flows discounted to present value, minus initial investment. Accept if NPV > 0.
$$NPV = -C_0 + \sum_{t=1}^{n} \frac{CF_t}{(1+r)^t}$$
Internal Rate of Return (IRR)
IRR Discount rate that makes NPV = 0. Accept if IRR > hurdle rate (WACC).
Payback Period
Payback Time to recover initial investment. Accept if payback < target. Ignores time value of money.
Payback = Years before recovery + (Remaining / Cash flow in recovery year)
Cash Conversion Cycle = DSO + DIO - DPO
DSO (Days Sales Outstanding) Average days to collect receivables. DSO = (Avg Receivables / Revenue) x 365.
DIO (Days Inventory Outstanding) Average days inventory held. DIO = (Avg Inventory / COGS) x 365.
DPO (Days Payable Outstanding) Average days to pay suppliers. DPO = (Avg Payables / COGS) x 365.
Example: DSO=45, DIO=60, DPO=30. CCC = 45+60-30 = 75 days.
Payout Ratio Dividends / Net Income. A 40% payout means Rs 4 of every Rs 10 earned is distributed.
Retention Ratio 1 - Payout Ratio. Earnings reinvested in the business.
Share Buyback Company repurchases shares, reducing count and increasing EPS.
Home / Portfolio & Investment
Expected Portfolio Return
$$E(R_p) = \sum_{i=1}^{n} w_i \times E(R_i)$$
Portfolio Variance (Two-Asset)
$$\sigma_p^2 = w_1^2\sigma_1^2 + w_2^2\sigma_2^2 + 2w_1 w_2 \rho_{12} \sigma_1 \sigma_2$$
Performance Metrics
Sharpe Ratio = (Rp - Rf) / sigma_p
Treynor Ratio = (Rp - Rf) / beta_p
Jensen's Alpha = Rp - [Rf + beta(Rm - Rf)]
$$CAPM: E(R_i) = R_f + \beta_i [E(R_M) - R_f]$$
Bond Fixed-income instrument. Borrower pays periodic coupons and returns face value at maturity.
Yield to Maturity (YTM) Total annualised return if held to maturity. The bond's true rate of return.
Duration Measure of price sensitivity to interest rate changes. Duration of 5 = ~5% price drop per 1% rate increase.
$$P = \sum_{t=1}^{n} \frac{C}{(1+y)^t} + \frac{F}{(1+y)^n}$$
Home / Credit & Lending
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Character Repayment track record. Assessed via CIBIL score.
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Capacity Ability to repay. Assessed via DSCR, FOIR.
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Capital Borrower's own investment ("skin in the game").
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Collateral Assets pledged as security.
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Conditions External factors - economy, industry, regulation.
Probability of Default (PD) Likelihood borrower will default over a specific period.
Loss Given Default (LGD) Percentage of exposure lost if default occurs. LGD = 1 - Recovery Rate.
Exposure at Default (EAD) Total amount exposed when default occurs.
Expected Loss (EL) EL = PD x LGD x EAD. Used for pricing and provisioning.Example: Rs 50L loan. PD=2%, LGD=40%, EAD=Rs 45L.EL = 2% x 40% x 45L = Rs 36,000.
Standard 0-90 DPD
SMA-1 1-30 overdue
SMA-2 31-60 overdue
SMA-3 61-90 overdue
NPA >90 overdue
CIBIL Score Ranges
300-579 Poor
580-669 Fair
670-749 Good
750-900 Excellent
Home / Financial Modeling
$$\text{Enterprise Value} = \sum_{t=1}^{n} \frac{FCF_t}{(1+WACC)^t} + \frac{TV}{(1+WACC)^n}$$
Terminal Value = FCF_n x (1+g) / (WACC - g)
Enterprise Value (EV) Market Cap + Total Debt - Cash. Total value to all capital providers.
Free Cash Flow (FCF) EBIT x (1-Tax) + D&A - Capex - Change in WC.
WACC $$(E/V \times R_e) + (D/V \times R_d \times (1-T))$$
Home / All Calculators
Investment
Loan & Banking
Corporate Finance
Personal Finance
Home / Business Analysis & PM
SWOT Analysis Strengths, Weaknesses, Opportunities, Threats. Strategic planning framework.MoSCoW Prioritisation Must, Should, Could, Won't. Requirements prioritisation technique.RACI Matrix Responsible, Accountable, Consulted, Informed. Role definition framework.Design Thinking Empathise, Define, Ideate, Prototype, Test. User-centred innovation process.
Director / Head
8-12 years
Home / Leadership (CTO/CPO)
Owns "WHAT" and "WHY"
Customer Value - solving real problemsProduct Roadmap - feature prioritisationP&L Ownership - revenue, growth
Owns "HOW" and "WITH WHAT"
Architecture - microservices, cloudScalability - 1K to 10M+ usersSecurity - Zero Trust, SOC2
Home / Regulatory & RBI
SNFA = Significant Negative Factors Approach. Forward-looking supervisory framework to identify early warning signals of stress in banks.
Asset Quality NPA trends, PCR, restructured assets.
Earnings NIM, fee income, ROA trends.
Capital Adequacy CRAR (min 9%), CET1 (5.5%).
Basel III CRAR 9%, CET1 5.5%, LCR >100%, NSFR >100%.
CRR % of NDTL as cash with RBI. Currently 4.5%.
SLR % of NDTL in govt securities. Currently 18%.
KYC / AML Know Your Customer / Anti-Money Laundering.
DPDP Act 2023 India's Digital Personal Data Protection Act. Penalties up to Rs 250 Cr.
GDPR EU data privacy law. Fines up to 4% of global revenue.
Home / Tax Planning (India)
Taxable Income Rate
0 - 3,00,000 Nil 3,00,001 - 7,00,000 5% 7,00,001 - 10,00,000 10% 10,00,001 - 12,00,000 15% 12,00,001 - 15,00,000 20% Above 15,00,000 30%
Type Holding Rate
STCG - Equity <12 months 20% LTCG - Equity >12 months 12.5% above Rs 1.25L STCG - Debt <24 months Slab rates LTCG - Property >24 months 12.5%
Section Instrument Limit
80C EPF, PPF, ELSS, LIC, NSC Rs 1.5L 80CCD(1B) NPS (additional) Rs 50,000 80D Health Insurance Rs 25K + 25K 24(b) Home Loan Interest Rs 2L
Home / Wealth & Personal Finance
50% Needs
30% Wants
20% Savings
Loss Aversion Feeling losses 2x more than gains.
Herd Mentality Following the crowd without analysis.
Anchoring Fixating on reference price.
Confirmation Bias Seeking confirming evidence only.
Retirement Corpus = Annual Expenses x 25 (4% Safe Withdrawal Rule)
Home / Glossary & Keywords
A - Accounting & Auditing Absorption Costing, Accrual Accounting, ABC, Altman Z-Score, Amortisation, Asset Turnover
B - Banking & Balance Sheet Balance Sheet, Bank Guarantee, Basel III, Bond Pricing, Break-Even, BCP
C - Credit & Capital CAGR, CAPM, Capital Gains, Cash Credit, CIBIL, COGS, Compound Interest, CRR, Current Ratio
D - Depreciation & DCF DCF, D/E, Depreciation, Dividend Yield, DPDP, DuPont, Duration, DSCR, DSO/DIO/DPO
E-H EBITDA, EMI, Enterprise Value, EPS, Expected Loss, FIFO, FCF, FOIR, GAAP, GDPR, IFRS, Income Tax, IRR
L-P LTV, Letter of Credit, LIFO, Loan Amortisation, NPA, NPV, NPS, P/E, P/B, Portfolio Variance
R-Z RACI, RBI, ROA, ROE, ROIC, Rule of 72, SIP, Sharpe, SLR, SNFA, SWOT, WACC, Working Capital
CFA Candidates CPA Candidates
MBA Finance Credit Officers
CFOs CTOs
CPOs Product Managers
Business Analysts Risk Managers
Wealth Advisors Startup Founders
Auditors Compliance Officers