CAPITAL ADEQUACY Definition

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CAPITAL ADEQUACY is a measure of the financial strength of a bank or securities firm, usually expressed as a ratio of its capital to its assets. For banks, there is now a worldwide capital adequacy standard, drawn up by the Basle Committee of the Bank for International Settlements. This ratio requires banks to have capital equal to 8 per cent of their assets.

 

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RELEVANT is having a bearing on or connection with the subject at issue, e.g. relevant revenues from sales of Model XXX.

WORKING CAPITAL (WC) is current assets minus current liabilities; also called net current assets or current capital. It measures the margin of protection for current creditors. It reflects the ability to finance current operations.

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