Capital Adequacy Ratio Calculator

Work out capital adequacy ratio instantly with clear inputs, formula shown and shareable results.

About Capital Adequacy Ratio Calculator

Capital adequacy measures regulatory capital against risk weighted assets. Surplus capital above the minimum supports new lending in inverse proportion to the requirement, so at an 11.5% minimum each unit of spare capital supports nearly nine of risk assets.

Formula

Capital adequacy

CAR = (Tier 1 + Tier 2) / RWA; lending capacity = headroom / minimum ratio

Worked example

With the default values below, Capital Adequacy Ratio Calculator returns Capital Adequacy Ratio of 12.1053%. Change any input above and every figure here is recalculated in your browser.

Inputs used

Tier 1 Capitalminimum 0: 90,000,000
Tier 2 Capitalminimum 0: 25,000,000
Risk Weighted Assetsminimum 0: 950,000,000
Regulatory Minimumaccepts 5–20 %: 11.5 %

Results

Capital Adequacy Ratio: 12.1053%
Tier 1 Ratio: 9.4737%
Capital Above The Minimum: $5,750,000.00
Additional Risk Assets Supportable: $50,000,000.00

Step by step

1Values used
2Capital adequacy
3Capital Adequacy Ratio= 12.1053
4Tier 1 Ratio= 9.4737
5Capital Above The Minimum= 5,750,000.00
6Additional Risk Assets Supportable= 50,000,000.00

Assumptions and limits

The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
In particular, this calculator does not take inflation, tax, fees or charges or compounding frequency into account.
Figures are rounded for display to 4 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
Figures are estimates based on the inputs given. Bank charges, regulatory minima and market rates change and differ between institutions and jurisdictions. This is not financial advice — confirm with your bank or treasury policy.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Figures are estimates based on the inputs given. Bank charges, regulatory minima and market rates change and differ between institutions and jurisdictions. This is not financial advice — confirm with your bank or treasury policy.

Frequently Asked Questions

Why weight assets by risk?

Because a government bond and an unsecured loan pose very different loss risk, so a flat asset measure would misprice capital.

What counts as Tier 2 capital?

Subordinated debt and certain reserves — loss-absorbing but only on liquidation, so it is capped relative to Tier 1.