Ratios
You can set up ratios that are used to evaluate the strengths and weaknesses of financial institutions on the Ratios setup page.
The system calculates many ratios by default to assist institutions with the financial analysis process. Ratios are calculated each time a screen or report requests ratio data. Ratio values are not stored.
Ratios are available if the financial institution is licensed for the Forecasting module and you have the necessary permissions.
Predefined Ratios
The current lists of ratios and the formulas used to calculate each are found at . Banks see a list of Federal Deposit Insurance Corporation (FDIC) ratios, and credit unions see National Credit Union Administration (NCUA) ratios. Each financial institution sees the ratios that are appropriate for them.
The system maintains the predefined ratios and groups the ratios into the following six categories:
- Capital Ratios - Provide an indication of protection against insolvency during periods of loss or negligible earnings.
- Asset Quality Ratios - Reflect the credit risk concerning the loan and investment portfolios, other real estate owned, other assets, and off-balance sheet transactions.
- Earning Ratios - Show not only the amount and trend of earnings, but also factors that can affect the quality of future earnings.
- Liquidity Ratios - Show the ability of the institution to meet present and anticipated cash flow needs for such things as funding loan demand, deposit withdraws, and payment of expenses.
- Other Ratios - Provide information that focuses on some general performance measurements.
- Profitability Ratios - Provide additional information, often focusing on non-interest income and expense measurements.
Predefined ratios can be repositioned within a category's list of ratios, but they cannot be deleted. You can copy a predefined ratio, specify Decimal Places, set Policy Limits, and view the Formula Results of the formula calculation, but you cannot change the ratio's other settings or modify the formula.
