Increase in Reserves

Discussion in 'CT5' started by Johnson Adeleke, Jul 3, 2018.

  1. Johnson Adeleke

    Johnson Adeleke Member

    What is the increase in reserves and why is it a form of outgo?
     
    Johnson Adeleke, Jul 3, 2018
    #1
  2. Mohit Gulati

    Mohit Gulati Active Member

    For example you had reserve of $1000 in previous year now your
    required reserve is $1200 and interest rate is 10%
    so 10% of 1000 is 100
    that means 1000+100 = 1100
    so net increase in reserve is 1200-1100 = 100
    so now company will have to make the reserve of $100 more so that is why this $100 is an outgo
     
    Mohit Gulati, Aug 21, 2018
    #2

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