IFSE Institute

Canadian Investment Funds Course – Formulas

The following are formulas you must memorize for your exam:

Note: The following is a study aid. It is NOT a complete list of what you need to
know for your exam. You are responsible for all the material found in your online
course.

Net Asset Value per Share (NAVPS):

Management Expense Ratio (MER):

Calculation of a Front-end Load:

Current yield for a bond:

Inflation rate:

Unemployment rate:

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Financial Ratios:

Liquidity ratios:

Working capital ratio (or current ratio):

Quick ratio (or acid test):

Book value per common share (BVPS):

Profitability ratios:

Net profit margin:

Gross profit margin:

Operating profit margin:

Return on investment (ROI):

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Return on common equity:

Earnings per common share (EPS):

Debt and equity ratios:

Debt-equity ratio:

Interest coverage:

Preferred dividend coverage:

Market ratios:

Price to earnings (P/E) Ratio:

Dividend yield:

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Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA):

Total, Net, and Taxable Income:

Total, Net, and Taxable Income

Employment earnings
+ investment income
+ professional income
+ business income
+ all other income (i.e. WSIB benefits, social assistance
payments, etc.)

Total income

- all deductions (RRSP contributions, childcare expense, etc.)

Net income

- additional deductions (non-capital losses, social assistance

payments, workers' compensation benefits)

Taxable Income

Adjusted cost base (ACB):

Purchase price + expenses incurred as part of the purchase

Capital gain/loss:

Proceeds of disposition – ACB – expenses incurred as part of the sale

Year’s basic exemption (YBE) = $3,500

OAS Clawback:

15% of any amount over the yearly OAS clawback threshold, which you will be
given.

GIS Clawback:

$1 for every $2 of your base income (excluding OAS income).

Total RRSP contribution room for the year:

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18% of your previous year's earned income up to the maximum contribution limit,
adjusted for carry-forward contribution room and pension-related items, as
outlined below:

Withholding tax for withdrawals from RRSPs:

Withdrawal Amount All provinces

except Quebec
the first $5,000 10%
between $5,000 and $15,000 20%
amounts over $15,000 30%

Minimum withdrawal for a RRIF:

1 ÷ (90 – age). You do not need to memorize the RRIF schedule.

You will also be expected to know the following:

• How to calculate ACB/unit after purchases, distributions, and switches

• Perform calculations using deferred sales charges
• How to calculate earned income for RRSPs
• What are qualified and non-qualified investments for RRSPs
• Whether options are in/out/at the money
• Basic calculations involving buying on margin
• Using exchange rates
• FINTRAC limits
• Accredited Investor amounts
• Homebuyers’ Plan (HBP) and Lifelong Learning Plan (LLP) limits and
details
• RESP limits and CESG payment details

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Formulas you will be given.

You are expected to know how to use them.

Dividend gross-up and credit mechanism:

It depends on which year the dividends are received. You will be provided with
the gross-up and credit rates

Quoted yield of a T-bill:

Purchase price of a T-bill:

Future value of an investment using Time Value of Money calculations:

Required rate of return:

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Expected total annual return:

Intrinsic value of a stock:

You do NOT need to know how to find:

• The value of a perpetual bond

• The market value of a mortgage-backed security

You will also be given the following information as part of the question.

• CPP contribution rates

• Year’s maximum pensionable earnings (YMPE) – although you must
know the YBE
• CPP/OAS/GIS payment amounts
• OAS/GIS clawback thresholds – although you need to know how to
calculate the clawback
• Federal/Provincial marginal tax rates
• Provincial dividend tax credits
• RRSP contribution limits
• Money purchase limits

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