Univ.-Prof. Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.The Debt-to-Equity (D/E) ratio is a financial leverage ratio that compares a company’s total debt to its total equity. It gives both investors and creditors an understanding of how risky a company’s financing strategy is, and shows the proportion of financing that comes from creditors (in the form of debt) versus the one coming from… read more »
The working capital ratio, also known as the current ratio, is a financial metric that measures a company’s short-term liquidity position. This ratio indicates the company’s ability to cover its short-term liabilities with its short-term assets. The formula to calculate the working capital ratio is: Working Capital Ratio = Current Assets / Current Liabilities Where:… read more »
Operational risk event that results in a loss to the bank. According to the list in Basel II, which is more exemplary and therefore not comprehensive of all events, these are in particular – fraud from within, – fraud from outside, – employment practices and security, – customers, products and business working practices, – interruption… read more »
The practice of even large companies, not only in the USA, to hide losses and debts at subsidiaries. The Sarbanes-Oxley Act of 2002 made this practice a criminal offense in the USA. Thanks to the vigilance of regulators, cases of loss hiding in banks and even in financial conglomerates in the EU have not come… read more »
Unless otherwise defined, public capital includes all assets owned by the state that – have a permanent value and – yield benefits for the general public. – See assets, physical assets, social capital. Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent! University Professor Dr…. read more »
A portfolio or pool contains securities to which third parties have rights (the risk that clear titles become comingled [= mixed] with assets owned legally by a third party). – This became apparent in many cases in the course of the financial crisis that followed the subprime crisis. When special-purpose entities and funds in financial… read more »
The requirement that, in the event of a loss at a bank, either – all employees in the active business area, i.e. not including those employed in merely administrative activities, such as janitor services, telephone exchange or plant security (protective service), or – executives above a certain rank in the hierarchy must contribute to covering… read more »
In the event of a loss of twenty-five percent or more of liable capital, a bank in Germany must notify the supervisory authority without delay; see Sec. 24, Para. 1, № 5 KWG. Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent! University Professor Dr…. read more »
In the language of the supervisory authorities, a natural or legal person who, under unlimited and unconditional liability, provides to a single financial services provider, for each of which it acts, – securities services, together with ancillary services, to clients or potential clients. accepts and forwards instructions or orders from the client in relation to… read more »
Amount of money of value in nonfinancial corporations determined according to certain rules of financial accounting. – See capital ratio. – Cf. Deutsche Bundesbank Monthly Report of June 2006, p. 20 (statement of capital formation and financing of German enterprises since 1991), p. 58 f. (reservations about the statistics; failure to take intersectoral credit relationships… read more »