Calculate the credit-deposit ratio from total advances and total deposits to assess a bank’s lending-to-deposit balance for banking analysis.
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Cd Ratio Formula
The CD ratio, or credit-deposit ratio, compares a bank’s total advances to its total deposits. The calculator uses the decimal form of the ratio.
CDR = A / D
To express the result as a percentage, multiply the decimal result by 100.
CDR% = (A / D) * 100
- CDR = credit-deposit ratio in decimal form
- CDR% = credit-deposit ratio as a percentage
- A = total advances, or total loans and credit extended
- D = total deposits
The calculator divides total advances by total deposits. If total advances are 800,000 and total deposits are 1,000,000, the CD ratio is 0.8000. As a percentage, that is 80%.
The reset function clears the total advances, total deposits, and calculated CD ratio fields. The calculation steps show the entered values and the division used to get the result.
CD Ratio Result Guide
The meaning of a CD ratio depends on the bank, market, regulations, and reporting period, but the ranges below give a general way to read the result.
| CD Ratio | Percentage Form | General Interpretation |
|---|---|---|
| Below 0.60 | Below 60% | Lower loan deployment compared with deposits |
| 0.60 to 0.80 | 60% to 80% | Moderate use of deposits for lending |
| 0.80 to 1.00 | 80% to 100% | High lending activity relative to deposits |
| Above 1.00 | Above 100% | Advances exceed deposits, which may indicate reliance on other funding sources |
Decimal to Percentage Conversion
| Calculator Output | Percentage |
|---|---|
| 0.5000 | 50% |
| 0.7500 | 75% |
| 0.9000 | 90% |
| 1.1000 | 110% |
Example
Example 1: Calculate the CD ratio from advances and deposits
Suppose total advances are $750,000 and total deposits are $1,000,000.
CDR = 750000 / 1000000 = 0.7500
The CD ratio is 0.7500, or 75%.
Example 2: Advances exceed deposits
Suppose total advances are $1,250,000 and total deposits are $1,000,000.
CDR = 1250000 / 1000000 = 1.2500
The CD ratio is 1.2500, or 125%.
FAQ
What is a CD ratio?
A CD ratio is the credit-deposit ratio. It shows how much of a bank’s deposits are being used as advances or loans. A ratio of 0.80 means advances equal 80% of deposits.
Is a higher CD ratio always better?
Not always. A higher CD ratio can show that deposits are being actively used for lending, which may support income. However, a very high ratio can also point to liquidity pressure because more funds are tied up in advances.
Why can total deposits not be zero?
The formula divides total advances by total deposits. Division by zero is not possible, so the calculator requires deposits to be greater than zero.
