Definition of Operating Ratio (OR) & Loan to Deposit Ratio (LDR)

Operating Ratio (OR)

This ratio is used to measure operational efficiency and effectiveness of a company by comparing one line to another. (Dendawijaya, 2005:119). The ratio of operational costs is the ratio between operating costs with operating revenues. That is, the lower the more efficient means BOPO bank's performance in controlling operational costs, with the cost efficiency of the bank's profits will be even greater.

Loan to Deposit Ratio (LDR)
This ratio is used to measure how far the bank's ability to repay all the public funds and its own capital by relying on credit that has been distributed to the public. In other words the bank can meet its short-term obligations, such as the release of funds to repay depositors when billed and can provide credit request has been submitted. According Riyadi (2004:147), LDR can be used as performance measures of institutional intermediary institutions linking those excess funds (surplus units of funds) with those who need funds (unit deficit of funds).

Tag : About Operating Ratio, Bank Ratio, Car Ratio, Loan Ratio

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