Definition: Capital Adequacy Ratio (CAR) is the ratio of a bank's capital in relation to its risk weighted assets and current liabilities. It is decided by central banks and bank regulators to prevent commercial banks from taking excess leverage and becoming insolvent in the process.
What is a good capital ratio?
Determining a Good Working Capital Ratio Generally, a working capital ratio of less than one is taken as indicative of potential future liquidity problems, while a ratio of 1.5 to two is interpreted as indicating a company is on the solid financial ground in terms of liquidity.
What is the capital ratio for banks?
The capital ratio is the percentage of a bank's capital to its risk-weighted assets. Weights are defined by risk-sensitivity ratios whose calculation is dictated under the relevant Accord. Basel II requires that the total capital ratio must be no lower than 8%.
What is TAC ratio?
The FOS/TAC ratio is an indicator for assessing fermentation processes. The TAC value is an estimation of the buffer capacity of the sample and the FOS value corresponds to the volatile fatty acids content. It is calculated empirically according to the Nordmann method.
What is capital to risk asset ratio?
The capital-to-risk weighted assets ratio, also known as the capital adequacy ratio, is one of the most important financial ratios used by investors and analysts. The ratio measures a bank's financial stability by measuring its available capital as a percentage of its risk-weighted credit exposure.