How Do You Calculate The Reserve Ratio?
Reserve ratio is a financial term used to describe the amount of money that a bank has. Specifically, it expresses how much of a bank’s total deposits are kept on hand. Because the majority of a bank’s deposits are not simply stored away in a vault, but rather are sent out again in the form of loans and investments, the value of deposits that a bank has on record is not always a good indicator of how much cash the bank has at its immediate disposal. So to accurately gauge how much money a bank currently has available, it is necessary to know the bank’s reserve ratio. Determine the total value of deposits that the bank has on record. This number expresses the amount that the bank would have to pay out if all of the bank’s clients wanted to withdraw all of their money immediately. Determine how much cash the bank has on hand. This includes the money in the bank’s safe, the bank’s registers and any other physical location to which the bank personnel have immediate access. Divide the amoun
