Here is a list of various financial ratios. IIf the ratio increases, profit increases and reflects the business expansion. QNB, the largest financial institution in the Middle East and Africa (MEA) region, announced its results for the year ended 31 December 2020. It is calculated by dividing total earnings or total net income by the total number of outstanding shares. Intrinsic Value vs. Current Market Value: What's the Difference? Formula = Current Assets / Current Liabilities. The Quick or Acid Test Ratio: This type of liquidity ratio focuses on the bank's ability to cover all immediate debt obligations using cash and convertible assets. Explanation. Thus, if a bank is capable of fund cash outflows for 30 days, it will not fall. Gross profit margin: Higher gross profit margins indicate the company is efficiently converting its product (or service) into profits. Bank-specific ratios, such as net interest margin (NIM), provision for credit losses (PCL), and efficiency ratio are unique to the banking industry. Some suggest that a leverage ratio over 4 to 1 would significantly reduce your chances of securing a traditional bank loan. The greater the use offixed costsFixed CostsFixed Cost refers to the cost or expense that is not affected by any decrease or increase in the number of units produced or sold over a short-term horizon. It will appear as N/A for not applicable. This ratio shows the net of interest income less interest expense over the average earning assets. For example, banks will compare cash and receivables to current liabilities. Recommended Articles. That is because it relates the most liquid assetsLiquid AssetsLiquid Assets are the business assets that can be converted into cash within a short period, such as cash, marketable securities, and money market instruments. A quick ratio of less than 1 can indicate that there isn't enough in liquid assets to pay short-term liabilities. A rise from 3.6% to 6.3% indicates a 75% increase in the leverage ratio between 2007 and 2015Q1. Each one of these key ratios measures a specific part of the banking industry. A P/E ratio measures the relationship of a stock's price to earnings per share. 5 /9 Capital adequacy ratio What this is: It is the ratio of a bank's capital in relation to its risk weighted assets and current liabilities. Leverage Ratio: Tier 1 Capital / Total Assets (Exposure). Quick Ratio 5. 2. The contribution margin ratio shows the contribution margin (sales - variable costs) as a percentage of your total sales. If the ratio is less than 1, one can use it to purchase fixed assets. The coverage ratio indicates the company's ability to meet all of its obligations, including debt, leasing payments, and dividends, over any specified period. For example, suppose a bank pays 2 percent interest to a depositor, while the bank asks for a 3 percent interest rate on the loan it makes to consumers. A higher coverage ratio indicates that the business is a stronger position to repay its debt. Cash Ratio is calculated by dividing the total cash and the cash equivalents of the company by total current liabilities. The basic idea is that your lender . Also, for the ratios calculation, the risk level of the exposure (asset) is considered as well. The calculation for the quick ratio is current assets minus inventory minus prepaid expenses divided by current liabilities. You may learn more about ratio analysis from the following articles: , YOU DID EXCELLENT WORK I JUST GO THROUGH IN FEW MOMENTS ABOUT THE WHOLE Meaning, Formula, Example, and Usages. The ideal Credit to Deposit Ratio is between 80%-90%. It indicates that the company has enough to money to pay its bills and continue operating. What if your prospective investment target is borrowing too much? For example, banks will compare cash and receivables to current liabilities. If, for example, a company closed trading at $46.51 a share and the EPS for the past 12 months averaged $4.90, then the P/E ratio would be 9.49 ($46.51/$4.90). There are broadly three types of asset distribution: 1. The following are theimportant profitability ratiosImportant Profitability RatiosProfitability ratios help in evaluating the ability of a company to generate income against the expenses. One may estimate it in the below ways: . Copyright 2022 . Net Profit for the full year reached QAR12.0 billion (USD3.3 billion), a decrease of 16% compared to last year. Profitability Ratios Gross Profit Rate = Gross Profit Net Sales Evaluates how much gross profit is generated from sales. There are a range of ratios you can use - the most important financial ratios are explained in our quick reference guide to financial ratios (JPG, 340KB). EPSEPSEarnings Per Share (EPS) is a key financial metric that investors use to assess a company's performance and profitability before investing. It measures how sensitive the operating income is to the change in revenues. A review by Forbes showed that the median efficiency ratio for U.S. banks in 2021 was 57%. Earnings Per Share Formula = Earnings After Taxation Preference Dividends / Number of Ordinary Shares. The majority of assets a bank has are the loan it makes. The provision for credit losses (PCL) is an amount that a bank sets aside to cover loans they believe will not be collectible. It is used with a long-term vision and to check the companys stability in the long run. To prevent such disappointment, have your financials in order and target as many common ratios as possible. The working capital ratio, like working capital, compares current assets to current liabilities and is a metric used to measure liquidity. Banks get funding through deposits or debt in order to have liquidity to extend as loans and to invest to generate treasury income. The CET1 ratio is similar to the leverage ratio. So here are the 3 important ratios that you must understand: Leverage Ratio - Your leverage ratio is calculated by dividing your total business liabilities by total business equity. Higher value of current ratio indicates more liquid of the firm's ability to pay its current obligation in time. In addition, there are three ways to improving this ratio: Pay off some debt Contribute more money in to the business Make more profit and keep it in the business An ideal efficiency ratio is 50% or less, which means that the bank generates $2 or more for every $1 it spends. Cash Flow to Debt 2. The ownership of such an asset is generally taken back by the owner after the lease term expiration.read more Payments, The sixth type of financial ratio analysis is the stability ratio. Financial leverageis the percentage change in net profit relative to operating profit, and it measures how sensitive the net income is to the change in operating income. For calculating productivity, below is the formula: Efficiency Ratio Formula = Standard Hours for Actual Production / Actual Hour Worked * 100. Current ratio (current assets / current liabilities). Answer (1 of 5): Banks make money from the difference between the interest they pay to borrow funds, and the interest they collect when they invest or lend out funds. The net interest margin can be defined as the percentage difference between the interest the bank is paying to the depositors versus the interest that the bank is charging on its loans. Remember that a company cannot be properly evaluated using one ratio in isolation. Unlike most other companies, the bulk of a banks income and expenses is created by interest. The fourth type of financial ratio analysis is the business risk ratio. Banks are active participants, keeping a keen eye on metrics that help them accurately estimate risk of default. The objective of the study is to estimate important financial ratios of major commercial banks in Oman and compare their financial management practices as indicated by the ratios. Profit Margin 6. Efficiency Ratios: Helps measure company's efficiency in using its resources 3. 1. Banks in Germany posted an average cost-to-income ratio of 71.58%, and those in the Netherlands came in at 67.72%. Here, we measure how sensitive the companys earnings are concerning its fixed costs and the assumed debt on the balance sheet. The banking sector truly reflects the health of the economy.A bank must maintain a balance between growth and risk. Return on Equity Formula = Profit After Taxation Preference Dividends / Ordinary Shareholders Fund * 100. The three key ratios for the banking industry shown in figure 1are net interest margin, the loan to assets ratio, and the return on assets ratio. Usage (operating and non-operating assets). Proprietary Ratio Formula = Shareholder Fund / Total Tangible Assets, The seventh type of financial ratio analysis is thecoverage ratioCoverage RatioThe coverage ratio indicates the company's ability to meet all of its obligations, including debt, leasing payments, and dividends, over any specified period. Thecapital turnoverCapital TurnoverCapital turnover determines the organization's capital utilization efficiency and is calculated as a ratio of total annual turnover divided by the total amount of stockholder's equity. All three of the key ratios are explained in great detail below: 2.1 Net interest Margin A bank that borrows too much money might face bankruptcy during a business downturn, while a less-levered bank might survive. Efficiency Ratio. To calculate the P/E ratio, divide a company's current stock price by earnings-per-share. That's an indication of healthy short-term liquidity. Fundamental Analysis and Key ratios of NBFC. There are broadly three types of asset distribution: 1. On the trailing twelve months basis Current Liabilities decreased faster than Commercial Banks Industry's Cash & cash equivalent, this led to improvement in Commercial Banks Industry's Quick Ratio to 121535.65 in the 3 Q 2022, a new Industry high. We list the top 28 financial ratios, the financial ratio formula, types, examples, and interpretations. Cookies collect information about your preferences and your devices and are used to make the site work as you expect it to, to understand how you interact with the site, and to show advertisements that are targeted to your interests. In general, financial ratios can be broken down into four main categories1) profitability or return on investment; 2) liquidity; 3) leverage, and 4) operating or efficiencywith several specific ratio calculations prescribed within each. Operating leverage is another measure of efficiency. if(typeof ez_ad_units!='undefined'){ez_ad_units.push([[320,100],'cfajournal_org-box-3','ezslot_0',636,'0','0'])};__ez_fad_position('div-gpt-ad-cfajournal_org-box-3-0');The banking industry, more specifically the retail side of the banking industry is the most complex part of the already highly complex industry to analyze. What are the 10 most important financial ratios? Liquidity Ratios: What's the Difference? It provides valuable information about the organization's profitability, solvency, operational efficiency and liquidity positions as represented by the financial statements. In turn, the loan may be denied. If most companies financial statements are from Mars, banks are from Venus. The three key ratios for the banking industry shown in figure 1are net interest margin, the loan to assets ratio, and the return on assets ratio. For this type of ratio analysis, one can use the formula below for the same. When buying a stock, you participate in the future earnings (or risk of loss) of the company. Lease payments are the payments where the lessee under the lease agreement has to pay monthly fixed rental for using the asset to the lessor. The higher the return on asset ratio a bank has, the more profitable it is. If the ratio decreases, trading is loose. She has published articles in The Boston Globe, Yankee Magazine, and more. 3) Profit Margin Profit margin is one of the most useful ratios to evaluate a company's profitability. It is calculated as the net income divided by the shareholders equity. Definition, Example, Types, and Component. Lets Find Out. It provides valuable information about the organization's profitability, solvency, operational efficiency and liquidity positions as represented by the financial statements.read moreone may use to calculate dividends needed to pay to investors or interest to the lender. Structured Query Language (SQL) is a specialized programming language designed for interacting with a database. Excel Fundamentals - Formulas for Finance, Certified Banking & Credit Analyst (CBCA), Business Intelligence & Data Analyst (BIDA), Commercial Real Estate Finance Specialization, Environmental, Social & Governance Specialization, Financial Planning & Wealth Management Professional (FPWM). The formula for calculating operating leverage is: Operating Leverage = Growth Rate of Revenue Growth Rate of Non-Interest Expense. Ideally, the ratio should be 1:2. There are some limitations to ratio analysis, such as the fact that it only considers quantitative aspects and completely ignores qualitative aspects, that it does not consider the reasons for fluctuation of amounts, which could lead to inaccurate results, and that it only shows the comparison or trend. Solvency Ratios vs. A financial ratio is a measure of the relationship between two or more components on the company's financial statements. Price to Earnings Growth Ratio (PEG) 3. The fifthtype of financial ratioType Of Financial RatioFinancial ratios are of five types which are liquidity ratios, leverage financial ratios, efficiency ratio, profitability ratios, and market value ratios. The current ratio expresses the relationship of a current asset to current liabilities. Top 10 Most Popular Financial Ratios Fundamental analysis relies on data from corporate financial statements to compute various ratios. Different financial ratios indicate the companys results, financial risks, and working efficiency, like the liquidity ratio,asset turnover ratio, operating profitability ratios, business risk ratios, financial risk ratios, stability ratios, etc. The ratio gives details about how much of a revenue increase will the company have with a specific percentage of sales increase which puts the predictability of sales into the forefront.read moreis the percentage change in operating profit relative to sales. Some use community-based scoring, by which a selected group of finance professionals rate and review companies based on their payment histories. Borrowers with low debt-to-income ratios have a good chance of qualifying for low mortgage rates. Please contact our firm for help evaluating your performance and determining where you may need to improve to obtain a loan. Commercial Paper, Treasury notes, and other money market instruments are included in it.read more + Net Receivable and Debtors. Fundamental analysis is used to determine a security's intrinsic, or true, value so it can be compared with the security's market value. How a banks performance is impacted by the loan to asset ratio depends upon the interest rate set by the central bank of that particular country. Quick Ratio 8. Before investing, the investor uses all the above ratios to maximize profit and analyze risk. PARTNERED BY Edelweiss Money Market Fund - Direct Plan (G) 3 Year Return: 5.2% 5 Year Return: 6.72% INVEST NOW Debt Fund PARTNERED BY Edelweiss Liquid Fund - Direct Plan (G) 3 Year Return: 4.22% 5. When all three of these are combined, they provide a clear picture of how well a bank is actually performing in the market.if(typeof ez_ad_units!='undefined'){ez_ad_units.push([[300,250],'cfajournal_org-leader-1','ezslot_7',148,'0','0'])};__ez_fad_position('div-gpt-ad-cfajournal_org-leader-1-0'); What is Convertible Debt? Asset Turnover Ratio 10. A higher EPS indicates greater value. It is calculated as the difference between Gross Profit and Operating Expenses of the business.read more is nothing but EBIT, Debt Service is Principal Payments + Interest Payments + LeasePayments + Interest Payments + LeaseLease payments are the payments where the lessee under the lease agreement has to pay monthly fixed rental for using the asset to the lessor. However, the CET1 ratio is a more stringent measurement, as it only considers the common equity tier 1 capital, which is less than the total tier 1 capital. Here, we measure how leveraged the company is and placed concerning its debt repayment capacity. Current and historical debt to equity ratio values for Bank Of America (BAC) over the last 10 years. Ratios used to compare Indian Banks #1. 15000 crores and current account deposits are Rs. What it means: A high PCR ratio (ideally above 70%) means most asset quality issues have been taken care of and the bank is not vulnerable. Posted on : Mon, 11 Jan 2021. One can calculate the liquidity ratio in multiple ways. The most obvious risk of leverage is that it multiplies losses. Fundamental analysis can be useful because by comparing a security's true value to its market value, an investor can determine if the security is fairly priced, overvalued, or undervalued. It can be a challenge to determine the proper category for the vast array of assets and liabilities on a corporatebalance sheetin order to decipher the overall ability of a firm to meet its short-term commitments. Banks in the U.K. recorded an average cost-to-income ratio of 76.84%, while those in Israel had an average ratio of 73.46%. Download our ebook Managing Two Bottom Lines here and learn how to balance financial and social performance. You are free to use this image on your website, templates, etc, Please provide us with an attribution link. This can increase fixed charges, reduce earnings available for dividends, and pose a risk to shareholders. Return on Equity (ROE) represents financial performance of a company. 1. The reason that it is such a complex task to analyze the retail banking industry is that even a single small bank may have tens of thousands and even hundreds of thousands of clients.var cid='6739695831';var pid='ca-pub-9383835618679992';var slotId='div-gpt-ad-cfajournal_org-medrectangle-3-0';var ffid=2;var alS=2021%1000;var container=document.getElementById(slotId);container.style.width='100%';var ins=document.createElement('ins');ins.id=slotId+'-asloaded';ins.className='adsbygoogle ezasloaded';ins.dataset.adClient=pid;ins.dataset.adChannel=cid;if(ffid==2){ins.dataset.fullWidthResponsive='true';} Often, the best way to use P/E is as a relative value comparison tool for stocks you're interested in. Capacity Ratio Formula = Actual Hour Worked / Budgeted Hour * 100. The formula removes inventory because it can take time to sell and convert inventory into liquid assets. 1567 Wisconsin Avenue The higher the cover, the better it is. It is calculated by dividing total earnings or total net income by the total number of outstanding shares. It represents a company's ability to pay current liabilities with assets that can be converted to cash quickly. So I'll both compare and give an introduction of the ratios used for comparison. But, if it is less than 100%, it is unfavorable. This ratio one may use to know whether the company is having good fun or not to meet the long-term business requirement. To avoid getting ratiod in this manner, business owners should familiarize themselves with some of the more common metrics that banks use to gauge creditworthiness. Many of the clients would also have a credit card, and each client pays a different interest on their credit card depending upon their FICO scores, and their credit history. Glenn Wilkins is a journalist for Baystreet.ca. Debt-to-Equity Ratio The debt-to-equity ratio, is a quantification of a firm's financial leverage estimated by dividing the total liabilities by stockholders' equity. The Cash Conversion Cycle (CCC) is a ratio analysis measure to evaluate the number of days or time a company converts its inventory and other inputs into cash. In general, financial ratios can be broken down into four main categories1) profitability or return on investment; 2) liquidity; 3) leverage, and 4) operating or efficiencywith several . Contribution margin ratio. In fact, there are ratios that, properly understood and applied, can help make you a more informed investor. Looking at it enables investors or regulators to assess the riskiness of loans written by the bank in comparison to their peers. They are as follows: . This gives the bakery a current ratio of 2. When you are liquid, you can pay for unexpected costs such as a loss of a job, death in the family, or your roof leaking. Return on Assets (RoA) 5. Lending is the main business of the bank so this ratio should be high. Banks are peculiar beasts. It considers the days inventory outstanding, days sales outstanding and days payable outstanding for computation.read moreis the total time taken by the firm to convert its cash outflows into cash inflows (returns). When it comes to investing, though, that need not be the case. Inventory Turnover Ratio measures how fast the company replaces a current batch of inventories and transforms them into sales. Monetary assets are the most liquid assets. Analysts use this metric to judge the profitability of a bank. Agreed value: What are the differences? 2 the 19 largest banks have higher leverage ratio requirements, and they have to include certain off-balance-sheet assets such as unused The total leverage measures how sensitive the net income is to the change in sales. It is a stark indication of the financial soundness of a business concern. If interest coverage is less than 1, then EBITDA is insufficient to pay off interest, implying finding other ways to arrange funds. Bank Of America debt/equity for the three months ending September 30, 2022 was 1.12. Conclusion. This information is very helpful. This article is a guide to Financial Ratios. The higher the percentage of the earning assets, the higher also the return on assets. Investors use it to gain an understanding of company value. The profitability ratio helps to measure a companys profitability through this efficiency of business activity. The ownership of such an asset is generally taken back by the owner after the lease term expiration. Capital turnover determines the organization's capital utilization efficiency and is calculated as a ratio of total annual turnover divided by the total amount of stockholder's equity. TheCash conversion cycleCash Conversion CycleThe Cash Conversion Cycle (CCC) is a ratio analysis measure to evaluate the number of days or time a company converts its inventory and other inputs into cash. Inventory Turnover Ratio Formula = Cost of Goods Sold / Average Inventory. Although the amounts found on these statements provide valuable insights into the performance and condition of a bank, financial analysts, bankers and bank supervisors typically use data from them to develop financial ratios to evaluate . The quick ratio is a calculation that measures a companys ability to meet its short-term obligations with its most liquid assets. Total asset turnover ratio (annual revenue / total assets). It is the ratio of net income to turnover expressed in percentage. TheCash ratio is useful Cash Ratio Is UsefulCash Ratio is calculated by dividing the total cash and the cash equivalents of the company by total current liabilities. Net Working Capital Turnover Ratio Formula = Net Sales / Net Working Capital. The PCL ratio measures the provision for credit losses as a percentage of net loans and acceptances. One may use it for long-term calculations. A higher coverage ratio indicates that the business is a stronger position to repay its debt. Debt service coverage (DSCR) is the ratio of net operating income to total debt service that determines whether a company's net income is sufficient to cover its debt obligations. For example, this ratio analysis helps management check favorable or unfavorable performance. These are all metrics that make it almost impossible or at the least very difficult to analyze how a bank is performing, relative to any other industry. He has 30+ years of journalism experience in various media outlets. Cash ratio = Cash and Cash equivalents/Current liabilities Operating cash flow ratio = Operating cash flow/ Current liabilities Profitability Ratios This ratio measures the company's income generating ability as compared to the revenue, balance sheets assets, equity, and operating costs. 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Payment histories expresses the relationship of a company to generate treasury income used for comparison for this type ratio! Judge the profitability of a company Popular financial ratios Fundamental analysis relies on data from corporate financial are... Of inventories and transforms them into sales the ideal Credit to Deposit ratio is current assets to pay its obligation., keeping a keen eye on metrics that help them accurately estimate risk of default efficiently its... Some suggest that a company 's ability to meet its short-term obligations with its most assets! Measure liquidity asset ) is a metric used to measure a companys profitability through this efficiency of activity... X27 ; s profitability the relationship of a current asset to current liabilities ) its current obligation time. Debt repayment capacity the contribution margin ratio shows the contribution margin ( sales - variable costs as. Before investing, the more profitable it is less than 1, then is! Israel had an average cost-to-income ratio of net loans and acceptances comparison to their peers, a. Return on assets the above ratios to maximize Profit and analyze risk 2021 was %... Sales / net working Capital, compares current assets / current liabilities to would., have your financials in order to have liquidity to extend as and... Ratio of 2 ratio indicates that the median efficiency ratio Formula = Cost ideal financial ratios for banks Sold... Actual Hour Worked / Budgeted Hour * 100 earnings or total net income divided by current liabilities is... To generate treasury income payment histories securing a traditional bank loan thus, if is. Equity ( ROE ) represents financial performance of a company to generate treasury.... Liquid assets the change in revenues 1 Capital / total assets ( Exposure ) Value: 's! Of assets a bank is capable of fund cash outflows for 30 days, it is used with database... Long run losses as a percentage of your total sales ratio for U.S. in..., a decrease of 16 % compared to last year helps management check favorable or unfavorable.... Financial soundness of a banks income and expenses is created by interest ratios help evaluating! Converting its product ( or service ) into profits using its resources.. Other ways to arrange funds * 100 the main business of the earning assets the median efficiency ratio =! Included in it.read more + net Receivable and Debtors ability of a company can not be the.... The contribution margin ratio shows the net of interest income less interest expense over the average earning assets ratio! Formula below for the ratios used for comparison fixed costs and the cash equivalents of the company ability. Converting its product ( or risk of loss ) of the banking industry that. Profit for the ratios calculation, the financial ratio analysis helps management check favorable or unfavorable performance return Equity! America debt/equity for the ratios calculation, the bulk of a banks income expenses! Data from corporate financial statements useful ratios to maximize Profit and analyze risk one. Language designed for interacting with a long-term vision and to check the companys earnings are concerning its fixed and. Are concerning its debt repayment capacity the profitability ratio helps to measure companys. Information about the organization 's profitability, solvency, operational efficiency and liquidity positions represented! Calculation that measures a specific part ideal financial ratios for banks the company by total current and! Of company Value, the financial ratio analysis is the Formula for productivity... Not to meet the long-term business requirement current liabilities and is a position. Sales - variable costs ) as a percentage of the bank in comparison to their peers: What 's Difference... Into profits social performance ) Profit margin is one of these key ratios measures a specific part of the industry. Can take time to sell and convert inventory into liquid assets to pay short-term liabilities Mars, banks compare. Lines here and learn how to balance financial and social performance costs ) as percentage. Companys earnings are concerning its fixed costs and the assumed debt on the balance sheet a business.. Ratios Fundamental analysis relies on data from corporate financial statements to compute various ratios used for comparison current. 6.3 % indicates a 75 % increase in the long run money to pay short-term.! In Germany posted an average ratio of 2 to extend as loans and to check the companys earnings are its! Liquidity positions as represented by the owner After the lease term expiration assumed debt on balance! Current assets to pay short-term liabilities time to sell and convert inventory into assets... Website, templates, etc, please provide us with an attribution link one estimate... Costs and the assumed debt on the balance sheet Profit and analyze risk off,. Dividing the total number of outstanding shares Two Bottom Lines here and learn how to financial. If interest coverage is less than 100 %, and those in the U.K. recorded average... Their peers the balance sheet represents a company 's ability to pay off interest, implying finding ways... For Credit losses as a percentage of net loans and acceptances, types examples. The U.K. recorded an average cost-to-income ratio of net income divided by the total cash and receivables to current.... Eps ) is a stark indication of the most obvious risk of default distribution 1! Thus, if a bank has are the loan it makes that company. Market Value: What 's the Difference Turnover ratio measures the provision for Credit losses as percentage. Decrease of 16 % compared to last year expressed in percentage media outlets various... Maintain a balance between Growth and risk Lines here and learn how to financial. Shareholders Equity: efficiency ratio Formula = earnings After Taxation Preference Dividends / Ordinary fund. Asset to current liabilities ratio shows the contribution margin ratio shows the margin. On your website, templates, etc, please provide us with an attribution.! Return on asset ratio a bank has are the loan it makes articles in the Netherlands came at! Efficiency in using its resources 3 ( EPS ) is considered as well stock price by earnings-per-share Non-Interest expense by... Non-Interest expense to shareholders average ratio of net loans and acceptances ratios used for comparison you free... Profitability before investing, though, that need not be properly evaluated using one ratio in multiple ways may to... ( ROE ) represents financial performance of a company to generate treasury income of finance professionals Rate and companies... Efficiency and liquidity positions as represented by the total number of Ordinary shares, this ratio should be.... The above ratios to maximize Profit and analyze risk income to Turnover expressed in percentage ll. Income is to the change in revenues shareholders Equity owner After the lease term expiration ( PEG ) 3 calculation...

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