The return on earning assets is a financial solvency ratio that compares a company’s interest income with its earning assets.
This is a measure of how much income the assets bring to the firm.
A higher return on earning assets is preferred, which indicates that the company is effectively using its assets.
A high return on income-producing assets also indicates that the entity is able to meet its short-term debt obligations and is not at risk of default or insolvency.
Banks must find a balance between the number of loans offered, the rates charged and the term of the loan compared to assets to achieve the right ratio.
Increasing low returns on earning assets will require a restructuring of the institution’s pricing policy, risk management approach and investment strategy.
Accounting ratios, an important subset of financial ratios, are a group of metrics used to measure a company’s performance and profitability based on its financial statements.
The acid test, or quick ratio, compares a company’s shortest-term assets to its shortest-term liabilities to see if the company has enough cash to pay off its immediate liabilities, such as short-term debt.
Activity Ratio broadly describes any type of financial measure that helps investors and analysts evaluate how effectively a company is using its assets to generate revenue and cash.
Performance Based Management (ABM) is a means of analyzing a company’s profitability by looking at every aspect of its business to determine its strengths and weaknesses.
A ballpark figure is a rough estimate of what something might mean in numerical terms when a more precise number is estimated, such as the cost of a product.
Benefit Cost Ratio (BCR) is a measure showing the relationship between the relative costs and benefits of a proposed project, expressed in monetary or qualitative terms.
The binomial distribution is a probability distribution that generalizes the probability that a value will take on one of two independent values given a set of parameters or assumptions.