Download SFM and AFM Formulae Ebook

A Formula is a simple way of expressing information. These are usually used
in Science and Mathematics apart from commerce areas.
In Commerce, formulae are used in several areas like Interest and Annuity
calculations, Capital Budgeting, Portfolio Management, Standard Costing,
Marginal Costing, PERT Analysis, Learning Curve effects etc. In commerce
areas, unlike Science and Mathematics, the derivations and proving of
formulae is of not much importance nor ever asked in examinations. What
is required is the awareness of the formula with all its components,
nomenclature and meanings of the terms used in it. More important thing is,
the areas where formulae can be applied and the assumptions under which
they hold good is also required to be known.

When formulas are expressed in the form of equations they help in finding
the value of the unknown variable, given the rest of the variables and the

This helps us in doing iterations and performing sensitivity analysis
and “what if?” analysis. Formulae can be used in spread sheet computations
also to express relationships and their inter linkages.
Formulae help in solving the problems in a faster and simple way. Further,
we can devise shortcuts as well through which we can save lot of time and
laborious workings.
Very often, I come across with students saying that they have mugged up all
the formulae but yet not able to solve the problems in examinations. This is
something like that a person who knows all the alphabets from A to Z wants
to claim that he is an expert in English literature. It is not just sufficient to
know a formula. As said earlier, it is also required to know all its
components, their nomenclatures, the areas where they can be applied and
the more important thing is the underlying assumptions and limitations
under which it can be used. Students are required to be familiar with these
aspects to fully enjoy the luxury of formulas through which they can save
time and laborious workings. This can be achieved by following two things.
Firstly, you need to understand the theory of respective areas of the
formulae and secondly, solving several varieties of problems using the
formulae and practicing them. This principle holds good for mnemonics also.
In this case you must be able to write atleast few small sentences though
not a big paragraph by recollecting a single letter or word.
C A Coaching Centre, Nallakunta, Hyderabad. P V Ram, B. SC., ACA, ACMA – 98481 85073
(Offering Coaching for CA & CMA Aspirants) Page 3 of 34
Students are suggested to study the theory of the subject well and
understand it fully. When formulas are come across they need to jot down
the formulae along with their nomenclature at a single place for quick
reference. They need to solve as many problems as possible. After doing
this they can memorise the formulae. Further, if you start memorising
formulae after studying theory well and solving problems, it will be very easy
to understand, remember and apply them. In fact, in this method, some of
the formulae would have already got registered in your brain and do not
require the effort of memorising also.
Suggestions and Comments are welcome!
P V Ram


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