The Texas Ratio is a financial ratio used to evaluate the health of a financial institution. It is calculated by dividing the total non-performing assets (NPA) by the total capital plus the allowance for loan and lease losses (ALLL). A ratio of less than 1.0 is generally considered healthy, while a ratio greater than 1.0 indicates that the institution may be in trouble.
The Texas Ratio was developed by James E. "Chip" Diller, Jr., a former examiner for the Federal Deposit Insurance Corporation (FDIC). It is named after the state of Texas, where a large number of banks failed during the 1980s and early 1990s.
The Texas Ratio is a valuable tool for evaluating the health of a financial institution, but it should be used in conjunction with other measures, such as the CAMELS Rating, to get a complete picture.
Is a lower cash ratio better?
A lower cash ratio is not necessarily better. The cash ratio is a measure of a company's liquidity, which is the ability to meet short-term obligations. A lower cash ratio may indicate that a company is having difficulty meeting its short-term obligations.
Is a low or high LTV better?
The answer to this question depends on your specific situation and goals. In general, a low LTV (loan-to-value) ratio is better because it means you have more equity in your home. This can give you more negotiating power if you need to refinance or sell your home, and it can also help you avoid foreclosure if you encounter financial difficulties. A high LTV ratio, on the other hand, can make it difficult to refinance your home or sell it for a profit. How do you interpret ratio results? There are a number of ways to interpret ratio results, and the interpretation will vary depending on the specific ratio being used. However, in general, ratio results can be interpreted in terms of a company's financial strength, efficiency, and profitability.
For example, a high ratio of cash to total assets may indicate that a company is financially strong, as it has a large amount of liquidity. A low ratio of inventory to sales may indicate that a company is efficient, as it is able to turnover its inventory quickly. And a high ratio of net income to total revenue may indicate that a company is profitable, as it is generating a lot of income relative to its overall sales.
What is US 3/5 ratio?
The US 3/5 ratio is a financial ratio that is used to measure the solvency of a company. It is calculated by dividing the total liabilities of a company by the total equity of the company. A company with a US 3/5 ratio of less than 1 is considered to be solvent, while a company with a US 3/5 ratio of greater than 1 is considered to be insolvent.
What is NPL coverage ratio?
NPL coverage ratio is a metric used to assess the ability of a financial institution to cover its non-performing loans (NPLs) from its current earnings. The ratio is calculated by dividing the financial institution's net income available to cover NPLs by the total amount of NPLs. A high NPL coverage ratio indicates that the financial institution has a strong ability to cover its NPLs from its current earnings.