Capital to Asset Ratio Bank Formula: An Overview of FX Trading

The Capital to Asset Ratio, or CAR, is a key formula used by banks and forex traders to calculate the financial health of a company or entity. CAR is calculated by dividing the entity’s total capital by its total assets, and is used to measure the entity’s capacity to pay its financial obligations and grow its capital. Banks use this ratio to judge the safety and risk associated with lending funds to a particular entity. For forex traders, CAR helps to identify highly-leveraged opportunities that could result in significant returns on investments.

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