Bank A has the following balance sheet:A ssetsReserves $50 millionLiabilitiesDeposits $200 millionBank capital 850 millionSecurities $50 millionLoans $150 millionBank B has the following balance sheet:A ssetsLiabilitiesDeposits $225 millionBank capital $25 millionReserves $50 millionSecurities $50 millionLoans $150 million1. Both banks earn 85 million as an annual after-tax profit. Calculate ROA(return on asset) and ROE (return on equity) for both banks.

Return on equity is the measure of profitability on the basis of equity it owns.

Answered: Bank A has the following balance sheet:…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Given below is the balance sheet for the Bank of New Providence: Assets ($1,000,000s) Liabilities ($1,000,000s) Cash 52 Deposits 650 T-bills and Bonds 257 Long-term debt 326 Loans to Other Banks 95 Equity 88 Commercial Loans 364 Mortgages 296 Total 1,064 Total 1,064 The net profit for the bank was $10.3 million. A required reserve is specified at 5% of deposits. What is the Bank's EM?
According to the information given in the table below, which of the following is cash flow from financing? Net income 68,300 Decrease in Bank Loan 49,400 Increase in Bonds 22,500 Decrease in Equipment 38,250 Increase in Common stock 41,000 Select one: a. 30100 b. 55200 c. 33000 d. 14100
Clayton Industries has the following account balances: Current assets Noncurrent assets The company wishes to raise $45,000 in cash and is considering two financing options: Clayton can sell $45,000 of bonds payable, or it can issue additional common stock for $45,000. To help in the decision process, Clayton's management wants to determine the effects of each alternative on its current ratio and debt-to-assets ratio. Required a-1. Compute the current ratio for Clayton's management. Note: Round your answers to 2 decimal places. Currently If bonds are issued If stock is issued $ 22,000 Current liabilities 77,880 Noncurrent liabilities stockholders' equity Currently If bonds are issued If stock is issued Current Ratio 2.44 to 1 a-2. Compute the debt-to-assets ratio for Clayton's management. Note: Round your answers to 1 decimal place. Bonds Stock to 1 to 1 Debt to Assets Ratio Additional Retained Earnings $ 9,000 50,000 48,888 % % % b. Assume that after the funds are invested, EBIT…
The following data relates to a bank, Tolland Union. The bank earned $3.530B of in interest revenue and paid $2.471B in interest expense last year. During the year, write offs and reserves for bad loans was a charge of $75M. This was partially offset by fees and points earned from loans and loan origination, increasing income of $24M. During that year, the bank generated net earnings of $860M. The bank has $24.9B of interest earning assets, AND total assets of $31.5B. The shareholders’ equity is $5.9B. What is the bank’s return on assets (ROA)?
The table below is the balance sheet for the Oilers Bank, which has a target reserve ratio of 5%. Liabilities/Equity Demand Deposits Shareholders' equity Assets $4,000 62,000 17,000 9,000 Reserves $72,000 20,000 Loans Securities Fixed assets Total 92,000 Total 92,000 a. The Oilers Bank is over-reserved v by $ b. The bank makes a loan equal to the excess reserves and the borrower writes a cheque (for the full amount of the loan) to another customer of the bank, who then deposits it. The new amount of excess reserves is $ c. Instead, the cheque written by the borrower is cleared against the Oilers Bank (the cheque was written to a customer of another bank). The amount of excess reserves held by the Oilers Bank is $ 14 of 40 Next > < Prev
Use the Table below to answer this question (Table: Bank Balance Sheet) Based on the table, what is the leverage ratio at the bank? Bank Balance Sheet Assets Reserves $10,000 Deposits $100,000 Loans Securities 40,000 10 05 100,000 4.67 Liabilities & Net Worth Debt 20,000 Equity 30,000
Solve it correctly
QUESTION 1 a. Hong Leong Bank Berhad has a return on assets of 1 percent and a return on equity of 9 percent. You are required to compute the equity multiplier for the bank. b. Suppose that from a new checkable deposit, Public Bank Berhad holds RM2 million in vault cash, RM8 million on deposit with the Federal Reserve, and RM1 million in required reserves. Given this information, how many percent of a required reserve ratio that Public Bank Berhad faces? c. The yield on a corporate bond is 9% and it is currently selling at par. The marginal tax rate is 20%. A par value municipal bond with a coupon rate of 8.56% is available. Which security is better buy?
Bank two currently has $500 million in transaction deposits. The bank has $65 million in reserves. The and its Federal reserve requirement ratio is 12%. The bank's required reserves are excess reserves are A. $60 million; $0. B. $60 million; $5 million. C. $440 million; $5 million. D. $600 million; $60 million.
A bank has total interest income of $85 million and total noninterest income of $15 million. locker's rent received $10. This bank has total interest expenses of $35 million and total non-interest expenses ( excluding provision for loan losses ) of $30 million. it's provision for loan losses is $20 million and its taxes are $15. What is this bank's net income ?

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