Return on equity (ROE)

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter 12, Problem 11P

a)

Summary Introduction

To determine: Return on equity (ROE)

a)

Expert Solution

Explanation of Solution

Calculation of return on equity:

ROE=Net incomeTotal equity=$2,275($5,000+$4,000+$6,125)=$2,275$15,125=15.04%

Therefore, return on equity is 15.04%

b)

Summary Introduction

To determine: Return on assets (ROA).

b)

Expert Solution

Explanation of Solution

Calculation of ROA:

ROA=Net incomeTotal assets=$2,275$137,500=1.65%

Therefore, return on assets is 1.65%

c)

Summary Introduction

To determine: Asset utilization.

c)

Expert Solution

Explanation of Solution

Calculation of asset utilization:

Asset utilization=Interest income+non-interest incomeTotal assets=$8,623+$950$137,500=6.96%

Therefore, asset utilization is 6.96%

d)

Summary Introduction

To determine: Equity multiplier.

d)

Expert Solution

Explanation of Solution

Calculation of equity multiplier:

Equity multiplier=Total assetsTotal shareholder's equity=$137,500($5,000+$4,000+$6,125)=9.09X

Therefore, equity multiplier is 9.09X

e)

Summary Introduction

To determine: Profit margin.

e)

Expert Solution

Explanation of Solution

Calculation of profit margin:

Profit margin=Net incomeSales=$2,275$8,623+$950=23.76%

Therefore, profit margin is 23.76%

f)

Summary Introduction

To determine: Interest expense ratio.

f)

Expert Solution

Explanation of Solution

Calculation of interest expense ratio:

Interest expense ratio=EBITTotal Interest expense=$4,158($8,623+$950)=43.43%

Therefore, interest expense ratio is 43.43%

g)

Summary Introduction

To determine: Provision for loan loss ratio.

g)

Expert Solution

Explanation of Solution

Calculation of provision for loan loss ratio:

Provision for loan loss ratio=Provison for loansNet-charge offs=$200$8,623+$950=2.09%

Therefore, provision for loan loss ratio is 2.09%

h)

Summary Introduction

To determine: Non-interest expense ratio.

h)

Expert Solution

Explanation of Solution

Calculation of non-interest expense ratio:

Non-interest expense ratio=Non-interest expenseInterest income+non-interest income=$1,720$8,623+$950=17.97%

Therefore, non-interest expense ratio is 17.97%

i)

Summary Introduction

To determine: Tax ratio.

i)

Expert Solution

Explanation of Solution

Calculation of tax ratio:

Tax ratio=TaxesNet income=$1,220$8,623+$950=12.74%

Therefore, tax ratio is 12.74%

j)

Summary Introduction

To determine: Overhead efficiency.

j)

Expert Solution

Explanation of Solution

Calculation of overhead efficiency:

Non-interest expense ratio=ExpensesRevenue=$950$1,720=55.23%

Therefore, non-interest expense ratio is 55.23%

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

Please help me with this , with tge store name puebleo in St. Thomas US virgin islands

I would like to expand pueblo in S5. Thomas virgin islands to Spain. Please help with an analysis expansion.

Please help me with this, guidelines for the super market pueblo in St. Thomas US virgin islands

Answer 2

Question

Chapter 12, Problem 11P

a)

Summary Introduction

To determine: Return on equity (ROE)

a)

Expert Solution

Explanation of Solution

Calculation of return on equity:

ROE=Net incomeTotal equity=$2,275($5,000+$4,000+$6,125)=$2,275$15,125=15.04%

Therefore, return on equity is 15.04%

b)

Summary Introduction

To determine: Return on assets (ROA).

b)

Expert Solution

Explanation of Solution

Calculation of ROA:

ROA=Net incomeTotal assets=$2,275$137,500=1.65%

Therefore, return on assets is 1.65%

c)

Summary Introduction

To determine: Asset utilization.

c)

Expert Solution

Explanation of Solution

Calculation of asset utilization:

Asset utilization=Interest income+non-interest incomeTotal assets=$8,623+$950$137,500=6.96%

Therefore, asset utilization is 6.96%

d)

Summary Introduction

To determine: Equity multiplier.

d)

Expert Solution

Explanation of Solution

Calculation of equity multiplier:

Equity multiplier=Total assetsTotal shareholder's equity=$137,500($5,000+$4,000+$6,125)=9.09X

Therefore, equity multiplier is 9.09X

e)

Summary Introduction

To determine: Profit margin.

e)

Expert Solution

Explanation of Solution

Calculation of profit margin:

Profit margin=Net incomeSales=$2,275$8,623+$950=23.76%

Therefore, profit margin is 23.76%

f)

Summary Introduction

To determine: Interest expense ratio.

f)

Expert Solution

Explanation of Solution

Calculation of interest expense ratio:

Interest expense ratio=EBITTotal Interest expense=$4,158($8,623+$950)=43.43%

Therefore, interest expense ratio is 43.43%

g)

Summary Introduction

To determine: Provision for loan loss ratio.

g)

Expert Solution

Explanation of Solution

Calculation of provision for loan loss ratio:

Provision for loan loss ratio=Provison for loansNet-charge offs=$200$8,623+$950=2.09%

Therefore, provision for loan loss ratio is 2.09%

h)

Summary Introduction

To determine: Non-interest expense ratio.

h)

Expert Solution

Explanation of Solution

Calculation of non-interest expense ratio:

Non-interest expense ratio=Non-interest expenseInterest income+non-interest income=$1,720$8,623+$950=17.97%

Therefore, non-interest expense ratio is 17.97%

i)

Summary Introduction

To determine: Tax ratio.

i)

Expert Solution

Explanation of Solution

Calculation of tax ratio:

Tax ratio=TaxesNet income=$1,220$8,623+$950=12.74%

Therefore, tax ratio is 12.74%

j)

Summary Introduction

To determine: Overhead efficiency.

j)

Expert Solution

Explanation of Solution

Calculation of overhead efficiency:

Non-interest expense ratio=ExpensesRevenue=$950$1,720=55.23%

Therefore, non-interest expense ratio is 55.23%

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 12, Problem 11P

a)

Summary Introduction

To determine: Return on equity (ROE)

a)

Expert Solution

Explanation of Solution

Calculation of return on equity:

ROE=Net incomeTotal equity=$2,275($5,000+$4,000+$6,125)=$2,275$15,125=15.04%

Therefore, return on equity is 15.04%

b)

Summary Introduction

To determine: Return on assets (ROA).

b)

Expert Solution

Explanation of Solution

Calculation of ROA:

ROA=Net incomeTotal assets=$2,275$137,500=1.65%

Therefore, return on assets is 1.65%

c)

Summary Introduction

To determine: Asset utilization.

c)

Expert Solution

Explanation of Solution

Calculation of asset utilization:

Asset utilization=Interest income+non-interest incomeTotal assets=$8,623+$950$137,500=6.96%

Therefore, asset utilization is 6.96%

d)

Summary Introduction

To determine: Equity multiplier.

d)

Expert Solution

Explanation of Solution

Calculation of equity multiplier:

Equity multiplier=Total assetsTotal shareholder's equity=$137,500($5,000+$4,000+$6,125)=9.09X

Therefore, equity multiplier is 9.09X

e)

Summary Introduction

To determine: Profit margin.

e)

Expert Solution

Explanation of Solution

Calculation of profit margin:

Profit margin=Net incomeSales=$2,275$8,623+$950=23.76%

Therefore, profit margin is 23.76%

f)

Summary Introduction

To determine: Interest expense ratio.

f)

Expert Solution

Explanation of Solution

Calculation of interest expense ratio:

Interest expense ratio=EBITTotal Interest expense=$4,158($8,623+$950)=43.43%

Therefore, interest expense ratio is 43.43%

g)

Summary Introduction

To determine: Provision for loan loss ratio.

g)

Expert Solution

Explanation of Solution

Calculation of provision for loan loss ratio:

Provision for loan loss ratio=Provison for loansNet-charge offs=$200$8,623+$950=2.09%

Therefore, provision for loan loss ratio is 2.09%

h)

Summary Introduction

To determine: Non-interest expense ratio.

h)

Expert Solution

Explanation of Solution

Calculation of non-interest expense ratio:

Non-interest expense ratio=Non-interest expenseInterest income+non-interest income=$1,720$8,623+$950=17.97%

Therefore, non-interest expense ratio is 17.97%

i)

Summary Introduction

To determine: Tax ratio.

i)

Expert Solution

Explanation of Solution

Calculation of tax ratio:

Tax ratio=TaxesNet income=$1,220$8,623+$950=12.74%

Therefore, tax ratio is 12.74%

j)

Summary Introduction

To determine: Overhead efficiency.

j)

Expert Solution

Explanation of Solution

Calculation of overhead efficiency:

Non-interest expense ratio=ExpensesRevenue=$950$1,720=55.23%

Therefore, non-interest expense ratio is 55.23%

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 12, Problem 11P

a)

Summary Introduction

To determine: Return on equity (ROE)

a)

Expert Solution

Explanation of Solution

Calculation of return on equity:

ROE=Net incomeTotal equity=$2,275($5,000+$4,000+$6,125)=$2,275$15,125=15.04%

Therefore, return on equity is 15.04%

b)

Summary Introduction

To determine: Return on assets (ROA).

b)

Expert Solution

Explanation of Solution

Calculation of ROA:

ROA=Net incomeTotal assets=$2,275$137,500=1.65%

Therefore, return on assets is 1.65%

c)

Summary Introduction

To determine: Asset utilization.

c)

Expert Solution

Explanation of Solution

Calculation of asset utilization:

Asset utilization=Interest income+non-interest incomeTotal assets=$8,623+$950$137,500=6.96%

Therefore, asset utilization is 6.96%

d)

Summary Introduction

To determine: Equity multiplier.

d)

Expert Solution

Explanation of Solution

Calculation of equity multiplier:

Equity multiplier=Total assetsTotal shareholder's equity=$137,500($5,000+$4,000+$6,125)=9.09X

Therefore, equity multiplier is 9.09X

e)

Summary Introduction

To determine: Profit margin.

e)

Expert Solution

Explanation of Solution

Calculation of profit margin:

Profit margin=Net incomeSales=$2,275$8,623+$950=23.76%

Therefore, profit margin is 23.76%

f)

Summary Introduction

To determine: Interest expense ratio.

f)

Expert Solution

Explanation of Solution

Calculation of interest expense ratio:

Interest expense ratio=EBITTotal Interest expense=$4,158($8,623+$950)=43.43%

Therefore, interest expense ratio is 43.43%

g)

Summary Introduction

To determine: Provision for loan loss ratio.

g)

Expert Solution

Explanation of Solution

Calculation of provision for loan loss ratio:

Provision for loan loss ratio=Provison for loansNet-charge offs=$200$8,623+$950=2.09%

Therefore, provision for loan loss ratio is 2.09%

h)

Summary Introduction

To determine: Non-interest expense ratio.

h)

Expert Solution

Explanation of Solution

Calculation of non-interest expense ratio:

Non-interest expense ratio=Non-interest expenseInterest income+non-interest income=$1,720$8,623+$950=17.97%

Therefore, non-interest expense ratio is 17.97%

i)

Summary Introduction

To determine: Tax ratio.

i)

Expert Solution

Explanation of Solution

Calculation of tax ratio:

Tax ratio=TaxesNet income=$1,220$8,623+$950=12.74%

Therefore, tax ratio is 12.74%

j)

Summary Introduction

To determine: Overhead efficiency.

j)

Expert Solution

Explanation of Solution

Calculation of overhead efficiency:

Non-interest expense ratio=ExpensesRevenue=$950$1,720=55.23%

Therefore, non-interest expense ratio is 55.23%

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 12, Problem 11P

a)

Summary Introduction

To determine: Return on equity (ROE)

a)

Expert Solution

Explanation of Solution

Calculation of return on equity:

ROE=Net incomeTotal equity=$2,275($5,000+$4,000+$6,125)=$2,275$15,125=15.04%

Therefore, return on equity is 15.04%

b)

Summary Introduction

To determine: Return on assets (ROA).

b)

Expert Solution

Explanation of Solution

Calculation of ROA:

ROA=Net incomeTotal assets=$2,275$137,500=1.65%

Therefore, return on assets is 1.65%

c)

Summary Introduction

To determine: Asset utilization.

c)

Expert Solution

Explanation of Solution

Calculation of asset utilization:

Asset utilization=Interest income+non-interest incomeTotal assets=$8,623+$950$137,500=6.96%

Therefore, asset utilization is 6.96%

d)

Summary Introduction

To determine: Equity multiplier.

d)

Expert Solution

Explanation of Solution

Calculation of equity multiplier:

Equity multiplier=Total assetsTotal shareholder's equity=$137,500($5,000+$4,000+$6,125)=9.09X

Therefore, equity multiplier is 9.09X

e)

Summary Introduction

To determine: Profit margin.

e)

Expert Solution

Explanation of Solution

Calculation of profit margin:

Profit margin=Net incomeSales=$2,275$8,623+$950=23.76%

Therefore, profit margin is 23.76%

f)

Summary Introduction

To determine: Interest expense ratio.

f)

Expert Solution

Explanation of Solution

Calculation of interest expense ratio:

Interest expense ratio=EBITTotal Interest expense=$4,158($8,623+$950)=43.43%

Therefore, interest expense ratio is 43.43%

g)

Summary Introduction

To determine: Provision for loan loss ratio.

g)

Expert Solution

Explanation of Solution

Calculation of provision for loan loss ratio:

Provision for loan loss ratio=Provison for loansNet-charge offs=$200$8,623+$950=2.09%

Therefore, provision for loan loss ratio is 2.09%

h)

Summary Introduction

To determine: Non-interest expense ratio.

h)

Expert Solution

Explanation of Solution

Calculation of non-interest expense ratio:

Non-interest expense ratio=Non-interest expenseInterest income+non-interest income=$1,720$8,623+$950=17.97%

Therefore, non-interest expense ratio is 17.97%

i)

Summary Introduction

To determine: Tax ratio.

i)

Expert Solution

Explanation of Solution

Calculation of tax ratio:

Tax ratio=TaxesNet income=$1,220$8,623+$950=12.74%

Therefore, tax ratio is 12.74%

j)

Summary Introduction

To determine: Overhead efficiency.

j)

Expert Solution

Explanation of Solution

Calculation of overhead efficiency:

Non-interest expense ratio=ExpensesRevenue=$950$1,720=55.23%

Therefore, non-interest expense ratio is 55.23%

Answer 6

Chapter 12, Problem 11P

a)

Summary Introduction

To determine: Return on equity (ROE)

a)

Expert Solution

Explanation of Solution

Calculation of return on equity:

ROE=Net incomeTotal equity=$2,275($5,000+$4,000+$6,125)=$2,275$15,125=15.04%

Therefore, return on equity is 15.04%

Answer 7

Chapter 12, Problem 11P

a)

Summary Introduction

To determine: Return on equity (ROE)

Answer 8

a)

Expert Solution

Explanation of Solution

Calculation of return on equity:

ROE=Net incomeTotal equity=$2,275($5,000+$4,000+$6,125)=$2,275$15,125=15.04%

Therefore, return on equity is 15.04%

Answer 9

a)

Expert Solution

Answer 10

a)

Expert Solution

Answer 11

Expert Solution

Answer 12

b)

Summary Introduction

To determine: Return on assets (ROA).

b)

Expert Solution

Explanation of Solution

Calculation of ROA:

ROA=Net incomeTotal assets=$2,275$137,500=1.65%

Therefore, return on assets is 1.65%

Answer 13

b)

Summary Introduction

To determine: Return on assets (ROA).

Answer 14

b)

Expert Solution

Explanation of Solution

Calculation of ROA:

ROA=Net incomeTotal assets=$2,275$137,500=1.65%

Therefore, return on assets is 1.65%

Answer 15

b)

Expert Solution

Answer 16

b)

Expert Solution

Answer 17

Expert Solution

Answer 18

c)

Summary Introduction

To determine: Asset utilization.

c)

Expert Solution

Explanation of Solution

Calculation of asset utilization:

Asset utilization=Interest income+non-interest incomeTotal assets=$8,623+$950$137,500=6.96%

Therefore, asset utilization is 6.96%

Answer 19

c)

Summary Introduction

To determine: Asset utilization.

Answer 20

c)

Expert Solution

Explanation of Solution

Calculation of asset utilization:

Asset utilization=Interest income+non-interest incomeTotal assets=$8,623+$950$137,500=6.96%

Therefore, asset utilization is 6.96%

Answer 21

c)

Expert Solution

Answer 22

c)

Expert Solution

Answer 23

Expert Solution

Answer 24

d)

Summary Introduction

To determine: Equity multiplier.

d)

Expert Solution

Explanation of Solution

Calculation of equity multiplier:

Equity multiplier=Total assetsTotal shareholder's equity=$137,500($5,000+$4,000+$6,125)=9.09X

Therefore, equity multiplier is 9.09X

Answer 25

d)

Summary Introduction

To determine: Equity multiplier.

Answer 26

d)

Expert Solution

Explanation of Solution

Calculation of equity multiplier:

Equity multiplier=Total assetsTotal shareholder's equity=$137,500($5,000+$4,000+$6,125)=9.09X

Therefore, equity multiplier is 9.09X

Answer 27

d)

Expert Solution

Answer 28

d)

Expert Solution

Answer 29

Expert Solution

Answer 30

e)

Summary Introduction

To determine: Profit margin.

e)

Expert Solution

Explanation of Solution

Calculation of profit margin:

Profit margin=Net incomeSales=$2,275$8,623+$950=23.76%

Therefore, profit margin is 23.76%

Answer 31

e)

Summary Introduction

To determine: Profit margin.

Answer 32

e)

Expert Solution

Explanation of Solution

Calculation of profit margin:

Profit margin=Net incomeSales=$2,275$8,623+$950=23.76%

Therefore, profit margin is 23.76%

Answer 33

e)

Expert Solution

Answer 34

e)

Expert Solution

Answer 35

Expert Solution

Answer 36

f)

Summary Introduction

To determine: Interest expense ratio.

f)

Expert Solution

Explanation of Solution

Calculation of interest expense ratio:

Interest expense ratio=EBITTotal Interest expense=$4,158($8,623+$950)=43.43%

Therefore, interest expense ratio is 43.43%

Answer 37

f)

Summary Introduction

To determine: Interest expense ratio.

Answer 38

f)

Expert Solution

Explanation of Solution

Calculation of interest expense ratio:

Interest expense ratio=EBITTotal Interest expense=$4,158($8,623+$950)=43.43%

Therefore, interest expense ratio is 43.43%

Answer 39

f)

Expert Solution

Answer 40

f)

Expert Solution

Answer 41

Expert Solution

Answer 42

g)

Summary Introduction

To determine: Provision for loan loss ratio.

g)

Expert Solution

Explanation of Solution

Calculation of provision for loan loss ratio:

Provision for loan loss ratio=Provison for loansNet-charge offs=$200$8,623+$950=2.09%

Therefore, provision for loan loss ratio is 2.09%

Answer 43

g)

Summary Introduction

To determine: Provision for loan loss ratio.

Answer 44

g)

Expert Solution

Explanation of Solution

Calculation of provision for loan loss ratio:

Provision for loan loss ratio=Provison for loansNet-charge offs=$200$8,623+$950=2.09%

Therefore, provision for loan loss ratio is 2.09%

Answer 45

g)

Expert Solution

Answer 46

g)

Expert Solution

Answer 47

Expert Solution

Answer 48

h)

Summary Introduction

To determine: Non-interest expense ratio.

h)

Expert Solution

Explanation of Solution

Calculation of non-interest expense ratio:

Non-interest expense ratio=Non-interest expenseInterest income+non-interest income=$1,720$8,623+$950=17.97%

Therefore, non-interest expense ratio is 17.97%

Answer 49

h)

Summary Introduction

To determine: Non-interest expense ratio.

Answer 50

h)

Expert Solution

Explanation of Solution

Calculation of non-interest expense ratio:

Non-interest expense ratio=Non-interest expenseInterest income+non-interest income=$1,720$8,623+$950=17.97%

Therefore, non-interest expense ratio is 17.97%

Answer 51

h)

Expert Solution

Answer 52

h)

Expert Solution

Answer 53

Expert Solution

Answer 54

i)

Summary Introduction

To determine: Tax ratio.

i)

Expert Solution

Explanation of Solution

Calculation of tax ratio:

Tax ratio=TaxesNet income=$1,220$8,623+$950=12.74%

Therefore, tax ratio is 12.74%

Answer 55

i)

Summary Introduction

To determine: Tax ratio.

Answer 56

i)

Expert Solution

Explanation of Solution

Calculation of tax ratio:

Tax ratio=TaxesNet income=$1,220$8,623+$950=12.74%

Therefore, tax ratio is 12.74%

Answer 57

i)

Expert Solution

Answer 58

i)

Expert Solution

Answer 59

Expert Solution

Answer 60

j)

Summary Introduction

To determine: Overhead efficiency.

j)

Expert Solution

Explanation of Solution

Calculation of overhead efficiency:

Non-interest expense ratio=ExpensesRevenue=$950$1,720=55.23%

Therefore, non-interest expense ratio is 55.23%

Answer 61

j)

Summary Introduction

To determine: Overhead efficiency.

Answer 62

j)

Expert Solution

Explanation of Solution

Calculation of overhead efficiency:

Non-interest expense ratio=ExpensesRevenue=$950$1,720=55.23%

Therefore, non-interest expense ratio is 55.23%

Answer 63

j)

Expert Solution

Answer 64

j)

Expert Solution

Answer 65

Expert Solution

Answer 66

Ch. 12 - Prob. 1DYU Ch. 12 - Prob. 2DYU Ch. 12 - Prob. 3DYU Ch. 12 - Prob. 4DYU Ch. 12 - Prob. 5DYU Ch. 12 - Prob. 6DYU Ch. 12 - Prob. 7DYU Ch. 12 - Prob. 8DYU Ch. 12 - Prob. 9DYU Ch. 12 - Prob. 10DYU

Return on equity (ROE)

Concept explainers

Videos

To determine: Return on equity (ROE)

Explanation of Solution

To determine: Return on assets (ROA).

Explanation of Solution

To determine: Asset utilization.

Explanation of Solution

To determine: Equity multiplier.

Explanation of Solution

To determine: Profit margin.

Explanation of Solution

To determine: Interest expense ratio.

Explanation of Solution

To determine: Provision for loan loss ratio.

Explanation of Solution

To determine: Non-interest expense ratio.

Explanation of Solution

To determine: Tax ratio.

Explanation of Solution

To determine: Overhead efficiency.

Explanation of Solution

Want to see more full solutions like this?

Chapter 12 Solutions