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Ratio
A comparison of two numeric values expressed in the form of a fraction or %age.
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ratio analysis
The study of the relationships b/t various financial statement amounts.
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activity ratio
A ratio that measures the rate at which a co's various assets are converted (turned over) into sales or cash.
- aka operating efficiency ratio
- aka turnover ratio
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total asset turnover ratio
A type of activity ratio which indicates how efficiently a co. is using its cash, investments, and other assets to support income producing activities.
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profitability ratio
A ratio that provides insurers with a relative measure of their overall success by comparing the co's profits, or gains from operations, to the resources used to generate those profits.
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net profit margin
A profitability ratio which shows how much after-tax profit is generated by each dollar of total revenue.
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return on assets ratio (ROA)
A profitability ratio that shows info re co's success in using assets to earn a profit.
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return on invested assets ratio (ROIA)
A profitability ratio that compares net income to avg invested assets.
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return on equity ratio (ROE)
profitability ratio that measures the return to a co's owners by relating profits to owners' equity.
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current ratio
A solvency ratio compares co's current assets to its current liabilities.
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capital and surplus ratio
A solvency ratio that describes the relationship b/t a co's capital and surplus and its liabilities.
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weighted value
A value that has been multiplied by a percentage.
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leverage effect
A measure of the impact of fixed costs-- either operating costs or financing costs--on a co's potential risks and returns to co owners.
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debt-to-equity ratio
A type of leverage ratio that compares long-term debt to owners' equity.
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insurance leverage ratio
A leverage ratio that compares a co's contractual reserves to its capital & surplus.
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Insurance Regulatory Information System (IRIS)
In the US, a ratio based analysis of ins co's that uses 12 standardized financial ratios to identify ins co's that are most likely to experience financial difficulty.
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early-warning financial ratio tests
In Canada, a set of ratios used by regulators to analyze insurers' financial statements.
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Financial Analysis and Solvency Tracking (FAST) system
In the US, a system used to evaluate the solvency of insurers; based on (1) ratio analysis of an insurer's most recent financial statements and (2) analysis of a 5 yr hx of specific aspects of the insurer's financial statements.
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rating agency
An independently owned, private org. that evaluates the financial condition of insurers and provides info to potential customers of and investors in ins. co's.
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