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For example, in India insurers are required to maintain a minimum ratio of 1.5. [1] For pension plans, the solvency ratio is the ratio of pension plan assets to liabilities (the pensions to be paid). Another measure of the pension plan's ability to pay all pensions in perpetuity is the going concern ratio, which measures the cost of pensions if ...
The total-debt-to-total-assets ratio or assets to liabilities ratio, is used to measure a company's performance. ... If companies are in the business of making loans, for example, by definition ...
Asset and liability management (often abbreviated ALM) is the term covering tools and techniques used by a bank or other corporate to minimise exposure to market risk and liquidity risk through holding the optimum combination of assets and liabilities. [1]
Formally, the duration gap is the difference between the duration - i.e. the average maturity - of assets and liabilities held by a financial entity. [3] A related approach is to see the "duration gap" as the difference in the price sensitivity of interest-yielding assets and the price sensitivity of liabilities (of the organization) to a change in market interest rates (yields).
Debt ratio = Total Debts / Total Assets = Total Liabilities / Total Assets Financial analysts and financial managers use the ratio in assessing the financial position of the firm. Companies with high debt to asset ratios are said to be highly leveraged, and are associated with greater risk. A high debt to asset ratio may also ...
The accounting equation relates assets, liabilities, and owner's equity: Assets = Liabilities + Owner's Equity. The accounting equation is the mathematical structure of the balance sheet. Probably the most accepted accounting definition of liability is the one used by the International Accounting Standards Board (IASB). The following is a ...
In finance, an asset–liability mismatch occurs when the financial terms of an institution's assets and liabilities do not correspond. Several types of mismatches are possible. An asset-liability mismatch presents a material risk at institutions with significant debt exposure, such as banks or sovereign governments.
Profit risk is a risk measurement methodology most appropriate for the financial services industry, in that it complements other risk management methodologies commonly used in the financial services industry: credit risk management and asset liability management (ALM). [2]