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1.6.6.3 Statistical Technique: 1.6.6.3.1 Mean (Average)

The document discusses financial tools used to analyze the financial performance of organizations. It defines the loans to fixed deposit ratio, which is the total loans divided by the total fixed deposits, as a tool used by banking insurance companies. It then introduces the concept of mean or average as an arithmetic technique that sums all observed data and divides it by the total observations. The formula for calculating the mean is provided.

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Biraj Parajuli
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39 views1 page

1.6.6.3 Statistical Technique: 1.6.6.3.1 Mean (Average)

The document discusses financial tools used to analyze the financial performance of organizations. It defines the loans to fixed deposit ratio, which is the total loans divided by the total fixed deposits, as a tool used by banking insurance companies. It then introduces the concept of mean or average as an arithmetic technique that sums all observed data and divides it by the total observations. The formula for calculating the mean is provided.

Uploaded by

Biraj Parajuli
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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in short term securities to ensure that any monies needed can be accessed in the short term.
Although many depositors may not be as concerned when a financial institution is insured, the
loan to deposit ratio may be used to ensure that any money needed is immediately available.
Banking insurance companies may also find this ratio or some variation of it of use when
underwriting the policy to determine insurability. Conversely, if the ratio i too low, the bank may
not be earning as much as it could be. It is calculated as follows:

𝑇𝑜𝑡𝑎𝑙 𝐿𝑜𝑎𝑛
Loans to fixed deposit ratio = 𝐹𝑖𝑥𝑒𝑑 𝐷𝑒𝑝𝑜𝑠𝑖𝑡

1.6.6.3 Statistical Technique

Financial tools are instruments that help to analyse and interpret the financial performance of an
organization. In other words, financial tools help to analyse the strength and weakness of a firm.

1.6.6.3.1 Mean (Average)

The arithmetic mean is the most commonly used and readily understood measure of central
tendency in a data set. In statistics, the term average refers to any of the measures of central
tendency. The arithmetic mean of a set of observed data is defined as being equal to the sum of the
numerical values of each and every observation divided by the total number of observations.

∑𝑋
Mean = 𝑁

Where,

∑X = sum of the observation.

N = Number of observation.

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