DEFINITION of 'RiskAdjusted Capital Ratio'
A measure of a financial institutions that compares total adjusted capital (TAC) to the institutions riskweighted assets. There are many variations of riskadjusted capital ratios, depending on how the analyst defines capital. Riskadjusted capital ratios are used to assess the capital adequacy of a financial institution. Analyzing these ratios can help determine whether a bank has enough capital to withstand a downturn in the economy.
BREAKING DOWN 'RiskAdjusted Capital Ratio'
For instance, Standard and Poor's calculates adjusted common equity by taking common shareholder's equity, and adding minority interestequity and subtracting items such as dividends, revaluation reserves, goodwill, tax loss carry forwards, interestonly strips and other adjustments. Then, preferred stock and general reserves are added to this adjusted common equity to get their total adjusted capital.

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Investing
Calculating the Tier 1 Capital Ratio
The Tier 1 capital ratio is a measure of a depository financial institutionâ€™s financial health and capital adequacy. 
Managing Wealth
Explaining RiskAdjusted Return
Riskadjusted return is a measurement of risk for an investment or portfolio. 
Markets
Explaining RiskWeighted Assets
Riskweighted assets is a banking term that refers to a method of measuring the risk inherent in a bankâ€™s assets, which is typically its loan portfolio. 
Markets
How Equity Capital Markets Work
An equity capital market is a market existing between companies and financial institutions that raises money for the companies. 
Markets
What's Economic Capital?
While regulatory and economic capital use some of the same measurements of risk to determine how much capital a firm should hold in reserve, economic capital uses more realistic measures. 
Investing
Key Financial Ratios to Analyze Investment Banks
Find out which financial ratios are most useful when analyzing an investment bank, and why tracking capital efficiency is especially important. 
Investing
Calculating Days Working Capital
A companyâ€™s days working capital ratio shows how many days it takes to convert working capital into revenue. 
Investing
Debt Ratios: Capitalization Ratio
By Richard Loth (Contact  Biography)The capitalization ratio measures the debt component of a company's capital structure, or capitalization (i.e., the sum of longterm debt liabilities and ... 
Markets
Is Your Bank On Its Way Down?
Find out how the Tier 1 capital ratio can be used to tell if your bank is going under. 
Investing
Explaining Cost Of Capital
Cost of capital is the cost of funds used to finance a business.

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Learn about the capital adequacy ratio, what the ratio measures, how it is calculated and what it means when a bank has a ... Read Answer >> 
What measures can be used to evaluate the capital adequacy of a bank?
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What is the minimum capital adequacy ratio that must be attained under Basel III?
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What are some of the wellknown noload funds?
Find out more about the capital to riskweighted assets ratio, what the ratio measures and the formula used to calculate ... Read Answer >> 
How do I calculate the capital to risk weight assets ratio for a bank in Excel?
Learn more about the capital to riskweighted assets ratio and how to calculate a bank's capital adequacy ratio using Microsoft ... Read Answer >> 
What ratios are most commonly used to judge working capital management?
Learn about the various working capital ratios that investors and analysts consider when evaluating a company's financial ... Read Answer >>