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Megalopolis Bank has the following balance sheet and income statement. For Megalopolis, calculate: Return on equity Return on assets Asset utilization

Megalopolis Bank has the following balance sheet and income statement. For Megalopolis, calculate: Return on equity Return on assets Asset utilization

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Megalopolis Bank has the following balance sheet and income statement.

For Megalopolis, calculate:

  1. Return on equity
  2. Return on assets
  3. Asset utilization
  4. Equity multiplier
  5. Profit margin
  6. Interest expense ratio
  7. Provision for loan loss ratio
  8. Noninterest expense ratio
  9. Tax ratio

 

 

**Balance Sheet (in millions)** **Assets** - Cash and due from banks: $9,000 - Investment securities: $23,000 - Repurchase agreements: $42,000 - Loans: $90,000 - Fixed assets: $15,000 - Other assets: $4,000 - **Total assets**: $183,000 **Liabilities and Equity** - Demand deposits: $19,000 - NOW accounts: $89,000 - Retail CDs: $28,000 - Debentures: $19,000 - **Total liabilities**: $155,000 - Common stock: $12,000 - Paid-in capital: $4,000 - Retained earnings: $12,000 - **Total liabilities and equity**: $183,000 **Income Statement** - Interest on fees and loans: $9,000 - Interest on investment securities: $4,000 - Interest on repurchase agreements: $6,000 - Interest on deposits in banks: $1,000 - **Total interest income**: $20,000 - Interest on deposits: $9,000 - Interest on debentures: $2,000 - **Total interest expense**: $11,000 - **Net interest income**: $9,000 - Provision for loan losses: $2,000 - **Noninterest income**: $2,000 - Noninterest expenses: $1,000 - **Income before taxes**: $8,000 - Taxes: $3,000 - **Net income**: $5,000
Transcribed Image Text:**Balance Sheet (in millions)** **Assets** - Cash and due from banks: $9,000 - Investment securities: $23,000 - Repurchase agreements: $42,000 - Loans: $90,000 - Fixed assets: $15,000 - Other assets: $4,000 - **Total assets**: $183,000 **Liabilities and Equity** - Demand deposits: $19,000 - NOW accounts: $89,000 - Retail CDs: $28,000 - Debentures: $19,000 - **Total liabilities**: $155,000 - Common stock: $12,000 - Paid-in capital: $4,000 - Retained earnings: $12,000 - **Total liabilities and equity**: $183,000 **Income Statement** - Interest on fees and loans: $9,000 - Interest on investment securities: $4,000 - Interest on repurchase agreements: $6,000 - Interest on deposits in banks: $1,000 - **Total interest income**: $20,000 - Interest on deposits: $9,000 - Interest on debentures: $2,000 - **Total interest expense**: $11,000 - **Net interest income**: $9,000 - Provision for loan losses: $2,000 - **Noninterest income**: $2,000 - Noninterest expenses: $1,000 - **Income before taxes**: $8,000 - Taxes: $3,000 - **Net income**: $5,000
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