Finance Numericals

Reserves: It is an appropriation of profit. Company kept aside some amount of profit to meet future contingencies. Reserve is created to meet the uncertain events of future. Reserve is divided into two parts: capital reserve and revenue reserve. A capital reserve is created from capital gain which arises from profit on sale of fixed assets, premium on issue of new shares etc. The capital reserve is not available for dividend distribution. It is available for capital losses. A revenue reserve is created from revenue profit. The revenue reserve is further divided into two parts: general reserve and specific reserve. General reserve is created to meet the uncertain future needs. Specific reserve is created for particular purpose like debenture redemption fund, reserve for discount etc. To make the growth and strength of a company reserve is required in a company. Reserve act as an internal source of finance for a company. If any year there is no profit, in that case the profit kept as r

Cash Reserve Ratio: The fixed percentage of deposited money in a bank is kept with central bank (Reserve Bank of India) is known as cash reserve ratio and also known as CRR. The cash reserve ratio helps to control the flow of money in an economy. Statutory Liquidity Ratio: The fixed percentage of liquid assets like government bonds, gold etc. is kept with bank itself is known as statutory liquidity ratio. It helps to limit the credit expansion of a bank in an economy. The cash reserve ratio and statutory liquidity ratio both are mandatory by central bank of India. Let’s find out the difference between cash reserve ratio and statutory liquidity ratio: Point of difference Cash Reserve Ratio Statutory Liquidity Ratio What is cash reserve ratio and statutory liquidity ratio? The fixed percentage of total deposited amount in a bank is kept with central bank as a reserve is known as cash reserve ratio. The fixed p