Capital to Asset Ratio Bank Formula: Understanding Forex Trading

5 min read

The Capital to Asset Ratio, also known as the Capital Adequacy Ratio, is a formula used in banking and Forex trading that measures a bank’s ability to absorb potential losses when assets become impaired. It calculates the bank’s capital in comparison to its total assets and is expressed as a percentage. By having a healthy Capital to Asset Ratio, a bank can ensure it has enough reserves to protect against any future losses and remain solvent. This ratio is essential for banks to meet regulations and maintain customers’ trust.