Final answer:
The assets-to-capital multiple (ACM) for a Canadian bank is the ratio of total assets to total capital. It is calculated by dividing total assets by total capital.
Step-by-step explanation:
The Assets-to-Capital Multiple (ACM) for a Canadian bank is a financial metric used to assess the relationship between a bank's total assets and its regulatory capital. Specifically, the ACM is calculated by dividing a bank's total assets by its regulatory capital. Regulatory capital includes various forms of capital such as common equity tier 1 capital, tier 1 capital, and total capital, as defined by regulatory authorities.
The formula for ACM is
ACM= RegulatoryCapital
_____________
TotalAsset
This ratio provides insights into the leverage and risk exposure of a Canadian bank. A higher ACM indicates a higher level of leverage, suggesting that the bank is financing a larger portion of its assets with capital rather than with deposits or other liabilities. Regulatory authorities use the ACM as a tool to monitor and regulate the financial health and stability of banks within the Canadian financial system.