Net Interest Margin

Written by Jerry Ratzlaff on . Posted in Manufacturing Engineering

Net interest margin, abbreviated as NIM, can determine weather the earning assets are actually making enough money to justify the interest expense or if the company would of been better off just paying off its debt to decrease the interest expense.

 

net interest margin Formula

\(\large{ NIM =  \frac{ IR \;-\; IP }{ AA }   }\)  

Where:

\(\large{ NIM }\) = net interest margin

\(\large{ AA }\) = average assets

\(\large{ IP }\) = interest paid

\(\large{ IR }\) = investment returns

 

Tags: Equations for Manufacturing