JAIIB AFM MARATHON 3
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Accounting and Financial Management for Bankers — JAIIB.
One-liners from this chapter
Free sample — 8 of 65 rapid-fire Q&A cards.
What does the term 'accrual basis of accounting' mean in the context of bank financial statements?
Under accrual basis, income and expenses are recognised when they are earned or incurred, regardless of when cash is actually received or paid. Banks in India are required to follow this basis as per RBI guidelines.
What is 'Quick Ratio' and how does it differ from the Current Ratio?
Quick Ratio excludes inventory; measures immediate short-term liquidity.
What is the formula for calculating the Current Ratio?
Current Ratio = Current Assets / Current Liabilities. A ratio of 2:1 is generally considered satisfactory for assessing short-term liquidity.
What is 'Net Present Value' (NPV) and what does a positive NPV indicate?
NPV is present value of cash inflows minus outflows; positive NPV means project is viable.
What is meant by 'Net Interest Margin' (NIM) for a bank?
NIM is the difference between interest income earned and interest paid out, expressed as a percentage of average earning assets. It is a key profitability indicator for banks.
What is 'Internal Rate of Return' (IRR) in project appraisal?
IRR is discount rate at which NPV of project equals zero.
How is Return on Assets (ROA) calculated for a bank?
ROA = Net Profit After Tax / Average Total Assets × 100. It measures how efficiently a bank uses its assets to generate profit.
What is 'Payback Period' and what is its main limitation?
Payback Period is time to recover initial investment; ignores time value of money.
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