Funded Ratio Calculator

Funded Ratio Formula:

\[ \text{Funded Ratio} = \frac{\text{Assets}}{\text{Liabilities}} \times 100 \]

Funded Ratio:

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1. What is Funded Ratio?

Funded Ratio is a financial metric that measures the percentage of liabilities covered by assets. It indicates the financial health and stability of an organization or individual by showing how well liabilities are supported by available assets.

2. How Does the Calculator Work?

The calculator uses the Funded Ratio formula:

\[ \text{Funded Ratio} = \frac{\text{Assets}}{\text{Liabilities}} \times 100 \]

Where:

\( \text{Assets} \) — Total value of all assets in dollars
\( \text{Liabilities} \) — Total value of all liabilities in dollars

Explanation: The formula calculates what percentage of liabilities are covered by available assets. A ratio of 100% means assets exactly cover liabilities.

3. Importance of Funded Ratio

Details: Funded Ratio is crucial for assessing financial stability, determining creditworthiness, and making informed financial decisions. It helps identify potential financial risks and opportunities for improvement.

4. Using the Calculator

Tips: Enter total assets and total liabilities in dollars. Both values must be positive numbers, and liabilities must be greater than zero for valid calculation.

5. Frequently Asked Questions (FAQ)

Q1: What is a good Funded Ratio?
A: Generally, a ratio above 100% is considered good as it indicates assets exceed liabilities. However, optimal ratios vary by industry and financial context.

Q2: How often should Funded Ratio be calculated?
A: It should be calculated regularly, typically quarterly or annually, to monitor financial health and track changes over time.

Q3: What's the difference between Funded Ratio and debt-to-asset ratio?
A: While both measure financial health, Funded Ratio shows coverage of liabilities by assets, while debt-to-asset ratio focuses on the proportion of assets financed by debt.

Q4: Can Funded Ratio be over 100%?
A: Yes, a ratio over 100% indicates that assets exceed liabilities, which is generally a positive financial position.

Q5: What types of organizations use Funded Ratio?
A: Corporations, non-profits, pension funds, government entities, and individuals all use this metric to assess financial stability and make informed decisions.