Profit and Reserve requirements: Difference between pages

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1. ''Accounting''
''Banking''


A surplus arising from the appropriate matching of revenues with expenditure.
The minimum ratio of vault cash and balances ('[[reserves]]') with the [[central bank]] to deposits taken by the bank that the central bank requires commercial banks to hold.  
<br>For example, operating profit or net profit.


An increase in minimum reserve requirements will be likely to lower the supply of money in the economy as banks undertake less lending, and vice versa.


The profit for a period may differ from the cash flow because of:


*Items in cash flow which are not part of profitFor example capital expenditure or the collection of debtors recognised in prior periods; and
The greatest possible ratio would be 100%This is known as '100% reserve banking'.
*Items in profit which are not cash flows.  For example depreciation, amortisation, or making accruals.


 
Any smaller ratio is known as 'fractional reserve banking'.  
 
2.
 
More generally any surplus, gain or net benefit arising.




== See also ==
== See also ==
*[[Accrual]]
* [[Capital adequacy]]
*[[Amortisation]]
* [[Monetary policy]]
*[[Attributable profit]]
* [[Interest on excess reserves]]
*[[Break-even]]
* [[RRR]]
*[[Business]]
*[[Capital expenditure]]
*[[Cash flow]]
*[[Debtors]]
*[[Depreciation]]
*[[Gross profit]]
*[[Loss]]
*[[Net profit]]
*[[Net profit margin]]
*[[Not-for-profit]]
*[[Operating profit]]
*[[Profit and Loss account]]
*[[Profit and Loss reserve]]
*[[Profit margin]]
*[[Profit maximisation]]
*[[Profit warning]]
*[[Profitability]]
*[[Recognition]]
*[[Turn]]
*[[Underlying]]
*[[Unrealised profit]]


[[Category:Accounting,_tax_and_regulation]]
[[Category:Accounting,_tax_and_regulation]]
[[Category:The_business_context]]
[[Category:Corporate_finance]]
[[Category:Investment]]
[[Category:Long_term_funding]]
[[Category:Identify_and_assess_risks]]
[[Category:Manage_risks]]
[[Category:Risk_frameworks]]
[[Category:Cash_management]]
[[Category:Financial_products_and_markets]]
[[Category:Liquidity_management]]

Revision as of 16:56, 4 June 2020

Banking

The minimum ratio of vault cash and balances ('reserves') with the central bank to deposits taken by the bank that the central bank requires commercial banks to hold.

An increase in minimum reserve requirements will be likely to lower the supply of money in the economy as banks undertake less lending, and vice versa.


The greatest possible ratio would be 100%. This is known as '100% reserve banking'.

Any smaller ratio is known as 'fractional reserve banking'.


See also