Every relationship, one place.

NII = (Earning assets × Asset yield) − (Funding × Funding cost)

Interest earned minus interest paid.

NIM = NII ÷ Earning assets

The spread expressed as a percentage of the money put to work.

EL = PD × LGD × EAD

Probability of default times loss given default times exposure at default.

Contribution = Revenue − Expected loss − Servicing cost

What each loan adds before fixed costs.

Break-even loans = Fixed costs ÷ Contribution per loan

The number of loans needed to cover the platform.

Payback = Customer acquisition cost ÷ Contribution per loan

How many loans it takes to earn back the cost of winning a customer.

F = S × (1 + r)ᵀ

The price that makes carrying the asset and agreeing to buy it later equivalent.

Payoff = max(S − K, 0)

The value of the right to buy at the strike.

Profit = max(S − K, 0) − Premium

Payoff after the cost of the option.

CM = Price − Variable cost per unit

The cash each sale leaves behind to cover fixed costs.

Price

Selling price per unit

Variable cost

Direct cost per unit

CM ratio = CM ÷ Price

The share of every taka of sales that survives variable costs.

Break-even units = Fixed costs ÷ CM

The volume at which contribution covers fixed costs exactly.

Units = (Fixed costs + Target profit) ÷ CM

The volume needed to deliver a planned profit.

MoS = (Expected units − Break-even units) ÷ Expected units

How far sales can fall before the business makes a loss.

DOL = Contribution ÷ Operating profit

The multiple by which a change in sales is amplified into a change in profit.

P = Σ [C ÷ (1 + y)ᵗ] + F ÷ (1 + y)ⁿ

The present value of every coupon plus the present value of face value, discounted at the yield to maturity.

C

Coupon payment per period

F

Face value repaid at maturity

y

Yield to maturity

n

Number of periods to maturity

Current yield = Annual coupon ÷ Price

The income return, ignoring any gain or loss at maturity.

Coupon = y → par; Coupon > y → premium; Coupon < y → discount

The relationship that tells you which way the bond trades.

ΔP ÷ P ≈ −Modified duration × Δy

A first-order estimate of how much price moves for a small change in yield.

Current ratio = Current assets ÷ Current liabilities

A quick read on short-term financial strength.

Gross margin = (Revenue − COGS) ÷ Revenue

The share of each sale left after direct costs.

ROE = Net income ÷ Shareholders' equity

Profit generated for each unit of owners' capital.

D/E = Total debt ÷ Shareholders' equity

How much debt the business carries relative to equity.

F = S × (1 + i_domestic) ÷ (1 + i_foreign)

The forward rate that removes any riskless gain from borrowing one currency and lending the other.

Expected change in spot ≈ Inflation differential

The currency of the higher-inflation country is expected to depreciate.

FCF = Net income + D&A − ΔWorking capital − Capex

The bridge from accounting profit to the cash a model can actually deploy.

D&A

Depreciation and amortisation, a non-cash charge added back

ΔWorking capital

Cash absorbed by receivables, inventory, and payables

Capex

Cash spent on long-lived assets

Re = Rf + β × (Rm − Rf)

The return shareholders require, built from the risk-free rate plus a premium for market risk.

Rf

Risk-free rate

β

Sensitivity of the shares to the market

Rm

Expected market return

Rd (after tax) = Rd × (1 − t)

The interest rate reduced by the tax shield on interest.

E/V and D/V, where V = E + D

Market values, not book values, drive the weights.

WACC = (E/V) × Re + (D/V) × Rd × (1 − t)

The blended after-tax cost of all capital.

EV = Multiple × Metric

Applies a peer multiple to the company's own metric.

Equity value = Enterprise value − Net debt

Moves from the value of the business to the value of the shares.

Value = FCF₁ ÷ (WACC − g)

The value of cash flows growing at a constant rate forever.

D = Σ [t × PV(CFₜ)] ÷ Price

The present-value-weighted average time to the bond's cash flows, in years.

t

Time of the cash flow, in periods

PV(CFₜ)

Present value of that cash flow

D* = D ÷ (1 + y ÷ m)

The percentage price change for a one-point change in yield.

y

Yield to maturity

m

Coupons per year

ΔP ≈ P × [−D* × Δy + ½ × C × Δy²]

A second-order estimate of the price change for a move in yield.

D*

Modified duration

C

Convexity

Δy

Change in yield, as a decimal

V₀ = D₁ ÷ (r − g)

Value per share equals next year's dividend divided by the required return minus the growth rate.

D₁

Dividend expected next year

r

Required return for the risk

g

Perpetual dividend growth rate

D₁ = D₀ × (1 + g)

Grows the dividend just paid by one year.

r = (D₁ ÷ V₀) + g

Rearranges the model: the return is the dividend yield plus the growth rate.

Gap = Rate-sensitive assets − Rate-sensitive liabilities

How much of the book reprices when rates move.

ΔNII = Gap × Δrate

The first-order effect of a rate move on earnings.

VaR = z × σ × Position value

The loss a position is expected to exceed only rarely over a set horizon and confidence level.

LCR = High-quality liquid assets ÷ Net cash outflows over 30 days

Whether a firm can survive a stressed month.

FV = PV × (1 + r)ⁿ

Grows a present amount forward by a constant rate per period.

PV

Present value

r

Rate per period

n

Number of periods

PV = FV ÷ (1 + r)ⁿ

Brings a future amount back to today's value.

σp² = w1²σ1² + w2²σ2² + 2·w1·w2·ρ·σ1·σ2

Portfolio risk is not the average of the parts; correlation decides how much of it survives.

w

Weight of each asset

σ

Volatility of each asset

ρ

Correlation between the two return series

β = Cov(Ra, Rm) ÷ Var(Rm) = ρ × (σa ÷ σm)

How much a holding moves when the market moves by one unit.

Cov(Ra, Rm)

Covariance of the asset with the market

Var(Rm)

Variance of the market return

Sharpe = (E(R) − Rf) ÷ σ

Excess return per unit of total risk. Suits a whole portfolio.

Treynor = (E(R) − Rf) ÷ β

Excess return per unit of systematic risk. Suits one sleeve of a diversified book.

α = E(R) − [Rf + β × (Rm − Rf)]

The return left over once the beta has been paid for.

DFL = EBIT ÷ (EBIT − Interest)

How much a change in operating profit moves earnings per share.

DCL = DOL × DFL = Contribution ÷ (EBIT − Interest)

The total amplification from sales to earnings per share.

EPS = (EBIT − Interest) × (1 − t) ÷ Shares

Profit available to each share after interest and tax.

Coverage = EBIT ÷ Interest expense

How many times operating profit covers the interest bill.

Expected fine = Probability of penalty × Size of penalty

The probability-weighted cost of a failure.

NPV = PV(Expected fine avoided) − Cost of controls

Whether prevention pays on the numbers alone.

E(R) = Σ (pᵢ × Rᵢ)

The probability-weighted average of each possible outcome.

E(R) = Rf + β × (Rm − Rf)

Estimates the return required for holding a risky asset relative to the market.

Rf

Risk-free rate

β

Sensitivity to the market

Rm

Expected market return

Real return = (1 + nominal) ÷ (1 + inflation) − 1

The return after removing the effect of inflation.

NWC = Current assets − Current liabilities

The short-term resources supporting operations.

CCC = Inventory days + Receivable days − Payable days

The number of days cash is tied up before it returns through sales and collection.

CM = Price − Variable cost per unit

What each sale contributes towards fixed costs and profit.

Break-even revenue = Break-even units × Price

The sales value needed to cover all costs.

NPV = Σ [CFₜ ÷ (1 + r)ᵗ] − C₀

Sum the discounted cash flows, then subtract the initial investment.

CFₜ

Cash flow in period t

r

Discount rate per period

C₀

Initial investment at time zero

DFₜ = 1 ÷ (1 + r)ᵗ

The multiplier that converts a period-t cash flow to today.

FV = PV × (1 + r × n)

Interest is paid on the original principal only.

FV = PV × (1 + r)ⁿ

Each period earns interest on the previous balance.

0 = Σ [CFₜ ÷ (1 + IRR)ᵗ] − C₀

The discount rate at which the present value of inflows equals the outlay.

Accept when IRR > cost of capital

For a conventional project, IRR above the hurdle rate is equivalent to a positive NPV.

MIRR = (FV of inflows ÷ PV of outflows)^(1/n) − 1

Reinvests cash flows at the cost of capital, removing IRR's unrealistic reinvestment assumption.

Payback = Years before full recovery + Unrecovered ÷ Cash flow that year

Time until cumulative cash flow returns the initial investment.

Same as payback, using discounted cash flows

Payback measured in present-value terms, so it respects the time value of money.

PI = PV of inflows ÷ Initial investment

Value created per taka invested, useful when capital is rationed.

Assets = Liabilities + Equity

Everything a business owns is financed by debt or by owners' capital.

Assets

Resources controlled by the business

Liabilities

Amounts owed to others

Equity

Owners' residual interest

FV = PV × (1 + g)ⁿ

Compare revenue or profit across years by applying a constant growth rate.

PV = PMT × [1 − (1 + r)⁻ⁿ] ÷ r

Values an equal payment received each period, such as a loan instalment or lease.

PMT

Payment per period

r

Rate per period

n

Number of periods