CFA Formula Sheet Level 1

Written by: Nik Ventouris

Last updated:

Navigating the vast landscape of financial formulas as you enter the final stages of your preparation for the CFA Level 1 exam can be daunting, especially since the CFA institute doesn’t provide official CFA formula sheets.

For this reason, we’ve set out to condense all the essential equations you need into this CFA Formula Sheet Level 1 article. Designed with the intricacies of the CFA Level 1 exam in mind, this guide aims to help streamline your final revision process and boost your confidence as you inch closer to the exam day.

CFA Exam Formulas: General Overview

Below you can find an overview of the essential formulas organized by the respective sections of the CFA Level 1 exam. This will better help you to discover the mathematical foundations tested in each session.

Remember to focus on understanding the underlying principles and applications of these categorized formulas rather than just memorizing them.

For a more exhaustive list of all the possible formulas you may be required to use in the CFA Level 1 exam, be sure to have a look at our official Formula sheet CFA level 1 PDF document.

Ethical and Professional Standards

Since this section of the CFA curriculum primarily tests your understanding of the CFA Code of Ethics and Standards of Professional Conduct, it doesn’t have many formulas to learn.

However, one might need to understand the formula for calculating total return in an ethical context:

  • Total Return = (Ending value – Beginning value + Income) / Beginning value

Quantitative Methods

This section has numerous formulas. Some of the most important include:

  • Future Value (FV) = PV(1 + r)^n
  • Present Value (PV) = FV / (1 + r)^n
  • Expected Return = ∑[P(i) x R(i)] where P(i) is the probability of each outcome and R(i) is the return of each outcome
  • Variance = ∑[P(i) x (R(i) – Expected Return)^2]
  • Correlation = Cov(X,Y) / (σX x σY)

Many candidates find the Quantitative Measures section of the CFA curriculum to be one of trickiest to grasp due its highly technical nature and complex content. To ensure you master this intricate field and ace your CFA Level 1 exam, you’ll need to invest in your study materials.


Interested in enhancing your CFA Level 1 studies? We recommend having a look at Kaplan’s in-depth study materials

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Alternatively, you can have a look at our in-depth CFA Level 1 overview.


The key formulas to pay attention to in this section are:

  • GDP = C + I + G + (X-M)
  • Elasticity = % change in Quantity / % change in Price
  • Price Index = (Cost of Basket in Current Year/Cost of Basket in Base Year) x 100

Financial Statement Analysis

Some of the key formulas here include:

  • Current Ratio = Current Assets / Current Liabilities
  • Quick Ratio = (Current Assets – Inventory) / Current Liabilities
  • Inventory turnover = (Cost of Goods Sold) / (Average Inventory)
  • Return on Equity (ROE) = Net Income / Total Equity

Corporate Issuers

Important formulas here include:

  • Weighted Average Cost of Capital (WACC) = (Weight of Debt x Cost of Debt x (1 – Tax Rate)) + (Weight of Equity x Cost of Equity)
  • Net Present Value (NPV) = ∑ [CFt / (1 + r)^t] – Initial Investment
  • Internal Rate of Return (IRR) is the rate where NPV = 0

Portfolio Management

Key formulas include:

  • Expected Portfolio Return = Weight of Asset 1 x Expected Return of Asset 1 + Weight of Asset 2 x Expected Return of Asset 2
  • Portfolio Variance = (Weight of Asset 1)^2 x (Variance of Asset 1) + (Weight of Asset 2)^2 x (Variance of Asset 2) + 2 x (Weight of Asset 1) x (Weight of Asset 2) x (Covariance of Asset 1 and Asset 2)

Equity Investments

Key formulas here include:

  • Dividend Discount Model (DDM) = Dividend per Share / (Cost of Equity – Growth Rate)
  • Price to Earnings (P/E) = Market Price per Share / Earnings per Share
  • Free cash to equity = net income + depreciation-increase in working capital-fixed capital investment-debt principal repayments + new debt issues

Fixed Income

Key formulas include:

  • Yield to Maturity (YTM) = (C + (F – P) / n) / (F + P) / 2
  • Modified Duration = Macaulay Duration / (1 + (YTM/n))


Key formulas include:

  • Payoff for a call (put) option = max[0, S – X] (max[0, X – S])
  • Payoff for a forward contract = S – X

Alternative Investments

This section focuses more on definitions and principles rather than formulas.

To make sure you have a solid grasp on the theory of this section of the curriculum, it’s important to rely on quality study materials.

Ready to get started? StateRequirement recommends having a look at Kaplan’s study materials and resources.

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CFA Formula Sheet Level 1 FAQ

Is a Formula Sheet allowed in CFA Level 1?

No, the CFA Institute does not allow any supplemental materials, including CFA exam formula sheets. Therefore, it’s crucial that you have memorized the essential formulas and possess the understanding to be able to effectively apply them. For a more detailed breakdown of these essential formulas, see our CFA Formula Sheet Level 1.

How many formulas do you need to memorize for CFA Level 1?

While there is no specific number of formulas you’ll need to memorize for the CFA Level 1 exam, you can expect to need to be familiar with over 100 formulas across the ten subject areas. The key lies in deeply understanding the theory surrounding these formulas, not just memorizing them. To get started with this, see our CFA Level 1 article.

Is the CFA Level 1 hard?

The CFA Level 1 can be quite a challenging exam due to the breadth of topics covered and the depth of understanding required. However, with diligent study, a clear understanding of the exam format, and efficient preparation strategies, many CFA candidates successfully pass the exam.

How to pass the CFA Level 1 easily?

While there is no surefire way to pass the CFA Level 1 easily, having a strong study plan, starting your preparation early, and focusing on understanding the core concepts (e.g., cash flows and the net operating cycle) will go a long way. Make sure to take advantage of resources like study guides and mock exams to hone your knowledge and time management skills.

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