Investing Activities Represents cash flow from the purchase and sale of assets

Investing activities represents cash flow from the

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Investing Activities: Represents cash flow from the purchase and sale of assets other than inventories (e.g. purchase of a factory plant) Financing Activities: Represents cash flow generated or spent on raising and repaying share capital and debt together with the payments of interest and dividends. 4. Statement of Changes in Equity
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Statement of Changes in Equity, also known as the Statement of Retained Earnings, details the movement in owners' equity over a period. The movement in owners' equity is derived from the following components: Net Profit or loss during the period as reported in the income statement Share capital issued or repaid during the period Dividend payments Gains or losses recognized directly in equity (e.g. revaluation surpluses) Effects of a change in accounting policy or correction of accounting error (accounting-simplified.com/financial/statements/types.html) 2.1.4 Methods of financial statement analysis CAMEL Model CAMELS rating is an international (primarily USA) supervisory rating system to classify a bank / financial institution's overall condition according to 6 factors. The six factors are represented by the acronym 'CAMELS. It is basically ratio based model for evaluating the performance of banks. It is a management tool that measures capital adequacy, assets quality, and efficiency of management, earnings’ quality and liquidity of financial institutions. CAMEL is a system of rating for on-site examinations of banks. Officially known as the uniform financial institutions rating system (UFIRS), CAMEL is a supervisory rating system adopted by the Federal Financial Institutions Examination council (FFIEC) on 1979. BREAKING DOWN 'CAMELS Rating System' The acronym CAMELS stand for the following factors that examiners use to rate bank institutions: Capital Adequacy Examiners assess institutions' capital adequacy through capital trend analysis. Examiners also check if institutions comply with regulations pertaining to risk-based net worth requirement. To get a high capital adequacy rating, institutions must also comply with interest and dividend rules and practices. Other factors involved in rating and assessing an institution's capital adequacy are its growth plans, economic environment, ability to control risk, and loan and investment concentrations. Capital Adequacy reflects the overall financial condition of the banks. It also indicates whether the bank has enough capital to absorb unexpected losses. Capital Adequacy ratio acts as an indicator of bank leverage. The main components of this ratio are , Equity capital to total assets= Total shareholders/Total Asset Leverage Ratio = Total DEBT/Total Shareholders’ Equity Debt equity ratio (DIR): this ratio indicates the degree of leverage of a bank .It indicates how much though the equity.
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Asset Quality Asset quality covers an institutional loan's quality which reflects the earnings of the institution.
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