Commercial Banking Notes
Capital adequacy ratio (CAR) also called Capital to Risk (Weighted) Assets Ratio (CRAR)[1], is a ratio of a bank's capital to its risk. National regulators track a bank's CAR to ensure that it can absorb a reasonable amount of loss [2] and are complying with their statutory Capital requirements.
Capital (Finance)
In a fundamental sense, capital consists of anything that can enhance a person's power to perform economically useful work. A stone or an arrow is a capital for a caveman who can use it as a hunting instrument. A road is a capital for inhabitants of a city. A personal computer is a capital for a student.
In economics, capital, capital goods, or real capital are the factor of production used to create goods or services that are not themselves significantly consumed (though they may depreciate) in the production process. Capital goods may be acquired with money or financial capital. At any moment in time, total physical capital may be referred to as the capital stock, a usage different from the same term applied to a business entity.
Liquidity Ratios
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What Does Liquidity Ratios Mean?
A class of financial metrics that is used to determine a company's ability to pay off its short-terms debts obligations. Generally, the higher the value of the ratio, the larger the margin of safety that the company possesses to cover short-term debts.
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Investopedia explains Liquidity Ratios
Common liquidity ratios include the current ratio, the quick ratio and the operating cash flow ratio. Different analysts consider different assets to be relevant in calculating liquidity. Some analysts will calculate only the sum of cash and equivalents divided by current liabilities because they feel that they are the most liquid assets, and would be the most likely to be used to cover short-term debts in an emergency.
A company's ability to turn short-term assets into cash to cover debts is of the utmost importance when creditors are seeking payment.
Capital (Finance)
In a fundamental sense, capital consists of anything that can enhance a person's power to perform economically useful work. A stone or an arrow is a capital for a caveman who can use it as a hunting instrument. A road is a capital for inhabitants of a city. A personal computer is a capital for a student.
In economics, capital, capital goods, or real capital are the factor of production used to create goods or services that are not themselves significantly consumed (though they may depreciate) in the production process. Capital goods may be acquired with money or financial capital. At any moment in time, total physical capital may be referred to as the capital stock, a usage different from the same term applied to a business entity.
Liquidity Ratios
[pic]
What Does Liquidity Ratios Mean?
A class of financial metrics that is used to determine a company's ability to pay off its short-terms debts obligations. Generally, the higher the value of the ratio, the larger the margin of safety that the company possesses to cover short-term debts.
[pic]
Investopedia explains Liquidity Ratios
Common liquidity ratios include the current ratio, the quick ratio and the operating cash flow ratio. Different analysts consider different assets to be relevant in calculating liquidity. Some analysts will calculate only the sum of cash and equivalents divided by current liabilities because they feel that they are the most liquid assets, and would be the most likely to be used to cover short-term debts in an emergency.
A company's ability to turn short-term assets into cash to cover debts is of the utmost importance when creditors are seeking payment.