Pooled Cost Of Funds


DEFINITION of 'Pooled Cost Of Funds'

A formula for finding the cost of funds. The pooled cost of funds is determined by dividing the balance sheet into several different categories of specific interest-earning assets. These assets are then matched against corresponding interest-sensitive liabilities.

BREAKING DOWN 'Pooled Cost Of Funds'

The pooled cost of funds often matches assets and liabilities with similar or identical time horizons. It also charges debits and credits to the assets and liabilities, depending on the income they are earning or costing. This formula is generally adjusted for the legal reserves that banks are required to keep as a percentage of their deposits.

  1. Balance Sheet

    A financial statement that summarizes a company's assets, liabilities ...
  2. Interest Sensitive Liabilities

    Any type of short-term deposit held by a bank that pays a variable ...
  3. Debit

    An accounting entry that results in either an increase in assets ...
  4. Asset

    1. A resource with economic value that an individual, corporation ...
  5. Credit

    1. A contractual agreement in which a borrower receives something ...
  6. Liability

    A company's legal debts or obligations that arise during the ...
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  1. Can working capital be depreciated?

    Working capital as current assets cannot be depreciated the way long-term, fixed assets are. In accounting, depreciation ... Read Full Answer >>
  2. Do working capital funds expire?

    While working capital funds do not expire, the working capital figure does change over time. This is because it is calculated ... Read Full Answer >>
  3. How much working capital does a small business need?

    The amount of working capital a small business needs to run smoothly depends largely on the type of business, its operating ... Read Full Answer >>
  4. What does high working capital say about a company's financial prospects?

    If a company has high working capital, it has more than enough liquid funds to meet its short-term obligations. Working capital, ... Read Full Answer >>
  5. How can working capital affect a company's finances?

    Working capital, or total current assets minus total current liabilities, can affect a company's longer-term investment effectiveness ... Read Full Answer >>
  6. What can working capital be used for?

    Working capital is used to cover all of a company's short-term expenses, including inventory, payments on short-term debt ... Read Full Answer >>

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