What Are the Three Pillars of the Proposed New Basel

question 12

Essay

What are the three pillars of the proposed new Basel Accord (Basel II)?

Calculate and interpret liquidity ratios such as the current ratio and times interest earned.

Calculate and interpret efficiency ratios such as accounts receivable turnover and inventory turnover.

Calculate and interpret profitability ratios such as net income margin and return on equity.

Calculate and interpret solvency ratios and understand their relevance to long-term financial sustainability.

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Definitions:

Favorable Variance

A financial term indicating that actual spending was less than budgeted amounts, or revenue was higher than expected.

Fixed Overhead

Refers to the regular, static expenses of operating a business that are not affected by changes in production volume or sales.

Production Budget

A financial plan outlining the costs associated with the production process, including materials, labor, and overhead for a specific period.