CAIIB | Module C | Unit 18 Part 2 | ABM Exam [FREE EPDF]

• The structure of a balance sheet (assets & liabilities)
• Key financial concepts like reserves, capital, and current vs. non-current assets
• The profit & loss statement, including gross profit, net profit, and operating expenses
• Important ratios and formulas you MUST know for the ABM paper

This session is perfect for:

• Banking professionals preparing for JAIIB & CAIIB exams
• Finance students who want to solidify their understanding of financial statements
• Anyone who wants to decode financial jargon easily

👉 Watch the video below for a complete breakdown:

Understanding the Balance Sheet

What is a Balance Sheet?

A balance sheet is a snapshot of a company’s financial position at a specific point in time. It shows:

• Assets (what the company owns)
• Liabilities (what the company owes)
• Equity (owner’s funds in the business)

1. Liability Side (Sources of Funds)

Liabilities represent the sources of funds a company uses. These include:

• Share Capital – Money raised from shareholders (Equity & Preference Shares)
• Reserves & Surplus – Retained earnings & other special reserves
• Long-Term Liabilities – Loans, debentures, bonds issued for funding
• Short-Term Liabilities – Creditors, outstanding expenses, unpaid dividends

2. Asset Side (Application of Funds)

Assets represent how the company utilizes its funds. Key components include:

• Fixed Assets – Land, buildings, machinery
• Current Assets – Cash, bank balance, stock, receivables
• Investments – Stocks, bonds, securities
• Intangible Assets – Patents, trademarks, goodwill

📌 Exam Tip: In banking, balance sheets are mostly in vertical format, listing sources and uses of funds.

Profit & Loss (P&L) Statement Explained

What is a P&L Statement?

The Profit & Loss Statement shows a company’s income and expenses over a period. It helps determine whether the company made a profit or loss.

Key Formulas:

• Gross Profit = Net Sales – COGS
• Operating Profit = Gross Profit – Operating Expenses
• Net Profit = Operating Profit + Non-Operating Income – Interest – Taxes

Advanced Bank Management | Credit Delivery Part 4 | Module C [Free Epdf]

Understanding Financial Ratios

To better analyze financial statements, you must understand key financial ratios:

• Current Ratio = Current Assets / Current Liabilities
• Debt-to-Equity Ratio = Total Liabilities / Shareholders’ Equity
• Return on Assets (ROA) = Net Income / Total Assets
• Return on Equity (ROE) = Net Income / Shareholder’s Equity

Understanding these ratios will help in making better financial decisions and preparing for banking exams.

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