CA Inter FM formula sheet Jan 2027: 49 formulas by chapter
This CA Inter FM formula sheet for January 2027 has 49 formulas, chapter by chapter, each written the way ICAI's own study material prints it, with the chapter PDF linked so you can check it. It covers every FM chapter that carries numericals (Chapters 3 to 9; Chapters 1 and 2 are mainly theory). Below the tables are two questions from ICAI's January 2027 RTP worked with these formulas, and the places where ICAI's notation differs from most coaching sheets.
FM is Section A of Paper 6, 50 of its 100 marks. ICAI's January 2027 exam notice (PDF) (opens in a new tab) puts Group II on 8, 10 and 12 January 2027, 2 PM to 5 PM, with reading time from 1:45 PM. It gives group dates only, not paper-wise ones.
Where these CA Inter FM formulas come from
ICAI's study material notice for January 2027 (PDF) (opens in a new tab) names the July 2024 edition (Reprint August 2025 and onwards) plus the RTP for January 2027 for Paper 6A. Every formula below is taken from that edition's chapter PDFs, which you can download free on boslive.icai.org: Module 1 (opens in a new tab) has Chapters 1 to 6 and Module 2 (opens in a new tab) has Chapters 7 to 9.
So if you search for "CA Inter FM formulas PDF ICAI", the honest answer is this: ICAI doesn't publish a separate formula sheet. The formulas sit inside each chapter, and the sheet below collects them. Our CA Inter ICAI study material page lists the other papers' modules too.
Notation follows ICAI: t is the tax rate, NP the net proceeds (issue price less flotation cost), RV the redemption value, n the remaining life, Ke the cost of equity and Ko the overall cost of capital.
FM ratio formulas, CA Inter Chapter 3
From Chapter 3, Ratio Analysis (PDF) (opens in a new tab). Students search "fm ratio formula ca inter" and "roi formula fm ca inter"; both are here.
| # | Formula | What it gives |
|---|---|---|
| 1 | Current assets ÷ current liabilities | Current ratio |
| 2 | Quick assets ÷ current liabilities; quick assets = current assets − inventories − prepaid expenses | Quick (acid test) ratio |
| 3 | Total outside liabilities ÷ shareholders' equity | Debt to equity ratio |
| 4 | Earnings available for debt service ÷ (interest + instalments) | DSCR; earnings = PAT + non-cash expenses + interest + other adjustments |
| 5 | EBIT ÷ interest | Interest coverage ratio |
| 6 | PAT ÷ preference dividend | Preference dividend coverage ratio |
| 7 | Cost of goods sold (or sales) ÷ average inventory; average = (opening + closing) ÷ 2 | Inventory turnover ratio |
| 8 | Credit sales ÷ average receivables; collection period = 360 days ÷ this ratio | Receivables turnover and collection period |
| 9 | Annual net credit purchases ÷ average payables | Payables turnover ratio |
| 10 | EBIT ÷ capital employed × 100; capital employed = total assets − current liabilities | ROCE (pre-tax); post-tax uses EBIT(1 − t) |
| 11 | (PAT − preference dividend) ÷ equity shareholders' funds × 100 | Return on equity |
| 12 | Net profit margin × asset turnover × equity multiplier | ROE by the Du Pont model |
| 13 | Profit available to equity shareholders ÷ equity shares outstanding | EPS |
| 14 | Market price per share ÷ EPS | P/E ratio |
| 15 | DPS ÷ EPS | Dividend payout ratio |
Return on investment (ROI) in the chapter is the family name for rows 10 to 12: ICAI splits it into return on assets, ROCE and ROE, and says to take average capital employed when the figures allow. ICAI also notes a DSCR of 1.5 to 2 is normally satisfactory, which is often the one-line comment an answer needs after the number.
Cost of capital formulas (Chapter 4)
From Chapter 4 (PDF) (opens in a new tab):
| # | Formula | What it gives |
|---|---|---|
| 16 | Kd = I(1 − t) ÷ NP | Irredeemable debentures |
| 17 | Kd = [I(1 − t) + (RV − NP) ÷ n] ÷ [(RV + NP) ÷ 2] | Redeemable debentures |
| 18 | Kp = PD ÷ P0 | Irredeemable preference shares |
| 19 | Kp = [PD + (RV − NP) ÷ n] ÷ [(RV + NP) ÷ 2] | Redeemable preference shares (no tax adjustment) |
| 20 | Ke = D1 ÷ P0 + g; for a new issue, D1 ÷ (P0 − F) + g | Growth (Gordon) approach; F = flotation cost per share |
| 21 | Ke = E ÷ P | Earnings price approach |
| 22 | g = b × r | Growth from retention ratio and return |
| 23 | Ke = Rf + β(Rm − Rf) | CAPM |
| 24 | Kr: same formulas as Ke, with P = current market price | Cost of retained earnings; no flotation cost |
| 25 | Ko = Kd × D ÷ (D + S) + Ke × S ÷ (D + S) | WACC (book or market value weights); Chapter 4 works it as a table of cost × weight, Chapter 5 prints this form |
The trap in row 24: ICAI says that for Ke, P is the net proceeds after flotation, but for Kr, P is the current market price. Using the same P for both is a common reason the WACC comes out wrong.
ICAI also allows cost of debt by the present value method, which is an IRR on the debenture's cash flows. May 2026 asked exactly that in Q1(b), with the 10% and 12% PV factors printed in the question; you can see it in ICAI's Paper 6 suggested answers (PDF) (opens in a new tab).
Capital structure and leverage formulas (Chapters 5 and 6)
From Chapter 5 (PDF) (opens in a new tab) and Chapter 6 (PDF) (opens in a new tab):
| # | Formula | What it gives |
|---|---|---|
| 26 | Value of the firm = EBIT ÷ Ko | Firm value from overall cost of capital |
| 27 | (EBIT − I1)(1 − t) ÷ E1 = (EBIT − I2)(1 − t) ÷ E2 | EBIT-EPS indifference point; E = number of equity shares |
| 28 | Interest + preference dividend ÷ (1 − t) | Financial break-even point (EBIT at which EPS is zero) |
| 29 | Ke = Ko + (Ko − Kd) × debt ÷ equity | MM without tax: cost of equity of a levered firm |
| 30 | Vg = Vu + TB | MM with tax; TB = present value of the tax shield |
| 31 | Kog = Keu(1 − tL); L = debt ÷ (debt + equity) | MM with tax: WACC of a levered firm |
| 32 | DOL = contribution ÷ EBIT = % change in EBIT ÷ % change in sales = 1 ÷ margin of safety | Operating leverage |
| 33 | DFL = EBIT ÷ EBT; with preference shares, EBIT ÷ [EBIT − interest − PD ÷ (1 − t)] | Financial leverage |
| 34 | DCL = DOL × DFL = contribution ÷ EBT = % change in EPS ÷ % change in sales | Combined leverage |
The trap in row 33: preference dividend is paid out of after-tax profit, so it is grossed up by (1 − t) before it sits next to interest. Row 28 does the same. ICAI's chapter also notes that DOL and DFL can never lie between zero and one.
Investment decision formulas, including IRR (Chapter 7)
From Chapter 7 (PDF) (opens in a new tab). "IRR formula FM CA Inter" is row 40.
| # | Formula | What it gives |
|---|---|---|
| 35 | Initial investment ÷ annual after-tax net cash flow | Payback period (uniform cash flows) |
| 36 | Average annual cash inflow ÷ initial investment | Payback reciprocal |
| 37 | Average annual net income ÷ investment (initial or average) | Accounting rate of return |
| 38 | NPV = Σ Ct ÷ (1 + k)^t − I | Net present value |
| 39 | Sum of discounted cash inflows ÷ initial outlay (or total discounted outflow); accept if ≥ 1 | Profitability index |
| 40 | IRR = LR + [NPV at LR ÷ (NPV at LR − NPV at HR)] × (HR − LR) | IRR by interpolation; LR, HR = lower and higher rate |
| 41 | MIRR = (terminal value of inflows ÷ PV of outflows)^(1/n) − 1 | Modified IRR, inflows reinvested at the cost of capital |
ICAI's own MIRR example compounds the inflows at 8% to ₹2,13,587, divides by the ₹1,36,000 outflow to get 1.5705, and takes the fifth root: 9%.
Dividend decision formulas (Chapter 8)
From Chapter 8 (PDF) (opens in a new tab):
| # | Formula | What it gives |
|---|---|---|
| 42 | P = [D + (r ÷ Ke)(E − D)] ÷ Ke | Walter's model |
| 43 | P0 = E1(1 − b) ÷ (Ke − br) | Gordon's model; br = growth |
| 44 | P0 = (P1 + D1) ÷ (1 + Ke) | MM: price today |
| 45 | Δn = [I − (E − nD1)] ÷ P1 | MM: new shares to issue; I = investment, E = earnings |
Walter and Gordon point the same way: if r > Ke, the price is highest at nil payout; if r < Ke, at 100%; if r = Ke, payout doesn't matter.
Working capital formulas (Chapter 9)
From Chapter 9's units: Unit I (PDF) (opens in a new tab), Unit II (PDF) (opens in a new tab), Unit IV (PDF) (opens in a new tab) and Unit V (PDF) (opens in a new tab):
| # | Formula | What it gives |
|---|---|---|
| 46 | Operating cycle = R + W + F + D − C; cycles a year = 360 (or 365) ÷ operating cycle | R, W, F = raw material, WIP, finished goods periods; D = debtors; C = creditors |
| 47 | C = √(2UP ÷ S) | Baumol's optimum cash balance; U = annual disbursement, P = cost per transaction, S = opportunity cost |
| 48 | [d ÷ (100 − d)] × (365 ÷ t); with compounding, [100 ÷ (100 − d)]^(365 ÷ t) − 1 | Cost of not taking a cash discount; t = credit days − discount days |
| 49 | Net annual cost of factoring ÷ amount available for advance × 100, or ÷ advances to be paid × 100 (advance less interest deducted by the factor) | Effective cost of factoring |
Each period in row 46 has its own base: raw material at cost of consumption per day, WIP at cost of production per day, finished goods at cost of goods sold per day, debtors at credit sales per day, creditors at credit purchases per day. Mixing these bases is an easy way to lose marks.
Two things not on the sheet. Unit II explains the Miller-Orr model through its limits (an upper limit h, a return point z and zero as the lower limit) and prints no formula, so learn it as theory. And Unit III, inventory, is a single page that sends you to Chapter 2 of Paper 4 (Material Cost); EOQ and stock levels are covered in our CA Inter costing important questions.
Two ICAI January 2027 RTP sums, worked with this sheet
ICAI's Paper 6 RTP for January 2027 (PDF) (opens in a new tab) has a numerical for almost every row group above. Two are worth writing yourself before you read ICAI's answer.
1. EBIT-EPS indifference (RTP Q6, row 27). Zenith Ltd. has 10 lakh shares and ₹40 lakh of 10% debentures (interest ₹4 lakh). It needs ₹50 lakh: Plan A issues 2 lakh shares at ₹25; Plan B issues 12% debentures (extra interest ₹6 lakh). Tax 30%.
- Set (X − 4)(0.7) ÷ 12 = (X − 10)(0.7) ÷ 10.
- So 10(X − 4) = 12(X − 10), and X = ₹40 lakh.
- Check: EPS is ₹2.10 under both plans at that EBIT.
- At the expected EBIT of ₹30 lakh, EPS is ₹1.52 (A) against ₹1.40 (B); financial break-even (row 28) is ₹4 lakh against ₹10 lakh. ICAI recommends Plan A.
2. Walter's model (RTP Q8, row 42). Lotus Ltd.: EPS ₹10, Ke 12%, r 15%.
| Payout | Working | Price |
|---|---|---|
| 0% | [0 + (0.15 ÷ 0.12)(10)] ÷ 0.12 | ₹104.17 |
| 40% | [4 + (0.15 ÷ 0.12)(6)] ÷ 0.12 | ₹95.83 |
| 100% | 10 ÷ 0.12 | ₹83.33 |
Since r is above Ke, ICAI's answer puts the optimum payout at nil. The same RTP's leverage sum (Q7) gives DOL 1.67, DFL 1.20 and DCL 2.00, so a 20% rise in sales lifts EPS by 40%. Our CA Inter RTP Jan 2027 guide lists every paper's file.
How to use the formula sheet in the exam hall
A formula earns marks only when it's on the answer sheet. ICAI's May 2026 FM questions printed "Working notes should form part of the answer", and step marks follow the working, not just the final figure; see how step marking works in CA exams. Three habits keep those marks:
- Write the formula line before the numbers. "Kd = I(1 − t) ÷ NP" followed by the substitution shows the method even if the arithmetic slips.
- Label every working note. "WN 2: number of shares under Plan A" lets the reader find where your EPS came from.
- End with the decision. Accept, reject, Plan A, nil payout: in the RTP answers above, the last line is where the conclusion sits.
To see what this looks like after checking, here is a real CA answer sheet checked step by step, with the reason for each mark cut written beside the line that lost it.
For the six formula errors ICAI's examiners flagged in recent FM papers (current sales in the leverage sum, cash discount financing cost, cash cycle and more), see the trap table in our CA Inter FM SM mock test guide. ICAI's own Paper 6 mock tests are on Monday 30 November and Monday 14 December, 10 AM to 1 PM, downloadable from boslive.icai.org; the full timetable is in ICAI MTP Jan 2027 dates.
Frequently asked questions
Are formulas given in the CA Inter FM paper?
Don't count on one: ICAI's May 2026 Paper 6 printed no formula list. Factors that depend on a rate are often printed inside the question, though: May 2026 Q1(b) printed PV factors at 10% and 12% for the cost-of-debt sum. Learn the formulas; don't learn the tables.
Where can I get the CA Inter FM formulas PDF from ICAI?
ICAI doesn't issue a separate FM formula PDF. The formulas are inside the chapter PDFs of the July 2024 edition (Reprint August 2025), free on boslive.icai.org and linked chapter by chapter above.
Which FM chapters have the most formulas?
Ratio analysis (Chapter 3) and cost of capital (Chapter 4) together give 25 of the 49 rows here. Investment decisions (Chapter 7) is the next largest. Chapters 1 and 2 are mainly theory.
Should I learn the Miller-Orr formula for CA Inter?
ICAI's Inter study material explains Miller-Orr through its limits and gives no formula for them, so prepare it as a concept. Baumol's model (row 47) is the cash formula the chapter prints.
How do I revise 49 formulas before the exam?
Write the sheet from memory once a day for a week, then only the rows you missed. After each mock, add the formula behind every step you lost. Our CA Inter revision planner keeps an FM formula day on the calendar.
Test the sheet on a full Paper 6
A formula sheet proves itself under the clock. Our CA Inter FM and SM test series gives you full-syllabus Paper 6 mocks for January 2027 at the level of ICAI's own paper and on its latest pattern, testing every amendment applicable to this attempt. You write by hand, upload one PDF of your answer sheet and get the checked copy within 24 hours: ICAI-style step-wise marks, the reason for every mark cut and the correct line to write. Writing all three Group II papers? See CA Inter Group II mock tests, or every level of our CA test series and CA mock tests.