How do I calculate the liquidity?
It is important for banks to understand how to calculate the liquidity coverage ratio in order to protect the financial system. The liquidity coverage ratio is calculated by dividing a bank's high-quality liquid assets into its net cash outflow over a 30-day period. The ratio must be at least 100% in order to be in compliance with regulations. Banks can use tools like Sourcetable to calculate the ratio, which is a good way to determine a bank's liquidity position. The formula for calculating the liquidity coverage ratio is:
Liquidity Coverage Ratio = High-quality liquid assets / Net cash outflow over 30 day period