Question

In: Finance

Given the information below for a bank, what is the Return on Equity? (ROE). Original Interest...

Given the information below for a bank, what is the Return on Equity? (ROE).
Original
Interest income 2,250
Interest Expense 1,500
Total assets 45,000
Security losses or gains 21
Earnings assets 40,000
Total liabilities 38,000
Taxes paid 16
Common shares outstanding 5,000
Noninterest income 800
Noninterest expense 900
Provisions for loan losses 250
A.

8.06%
B.

9.59%
C.

5.79%
D.

6.5%
E.

4.9%

Solutions

Expert Solution

Return on Equity=Net income/Total equity

Net income=Interest income-Interest expenses+security gains/losses-Taxes paid+Non interest income-Non interest expesnes-provisions for loan losses=2250-1500+21-16+800-900-250=405

Total equity =total assets-Total liabilities=45000-38000=7000

Return on equity=405/7000=5.79%

Option C is correct

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

1) The DATA below, is given for Bank A; Return on Assets:1,46 % Return on Equity:...
1) The DATA below, is given for Bank A; Return on Assets:1,46 % Return on Equity: 13,6 % Net Profits: $ 120 Million Based on this DATA, calculate the following values for Bank A. -Total Assets in $: -Total Equity in $: -Equity Multiplyer (LEVERAGE):
The DATA below, is given for Bank A; Return on Assets:1,46 % Return on Equity: 13,6...
The DATA below, is given for Bank A; Return on Assets:1,46 % Return on Equity: 13,6 % Net Profits: $ 120 Million Based on this DATA, calculate the following values for Bank A. -Total Assets in $: -Total Equity in $: -Equity Multiplyer (LEVERAGE):
What is the return on equity for a bank that has an equity multiplier of 10,...
What is the return on equity for a bank that has an equity multiplier of 10, an interest expense ratio of 5%, and a return on assets of 2%? 1) 15.4% 2) 9.1% 3) 11.8% 4) 20.0% 5) 7.0%
What is the current year's return on equity (ROE)? ................................................................. Prior / Current Accounts payable ???...
What is the current year's return on equity (ROE)? ................................................................. Prior / Current Accounts payable ??? ??? Accounts receivable 320,715 397,400 Accruals 40,500 33,750 Additional paid in capital 500,000 541,650 Cash 17,500 47,500 Common Stock 94,000 105,000 COGS 328,500 429,565.00 Current portion long-term debt 33,750 35,000 Depreciation expense 54,000 55,706.00 Interest expense 40,500 42,701.00 Inventories 279,000 288,000 Long-term debt 338,332.00 400,482.00 Net fixed assets 946,535 999,000 Notes payable 148,500 162,000 Operating expenses (excl. depr.) 126,000 161,224.00 Retained earnings 306,000 342,000...
What is the scope of the return on equity model (ROE)? Which two important elements does...
What is the scope of the return on equity model (ROE)? Which two important elements does it incorporate? Why is financial leverage a double-edged sword?
Target ROE problem You are given the following information regarding KTC for 2019: RETURN ON ASSETS...
Target ROE problem You are given the following information regarding KTC for 2019: RETURN ON ASSETS = 7.5% NET PROFIT MARGIN = 6.0% DEBT EQUITY RATIO = 1.5x SALES = $550,000.00 GROSS PROFIT RATE = 50.0% TAX RATE = 34.0% 1) What must KTC project as its 2020's sales in order to generate an additional 5% Return on Equity above last year’s levels (2019’s ROE + 5%, not 2019’s ROE x 105%) 2) Prepare a projected 2020 Profit and Loss...
Target ROE problem You are given the following information regarding KTC for 2019: RETURN ON ASSETS...
Target ROE problem You are given the following information regarding KTC for 2019: RETURN ON ASSETS = 7.5% NET PROFIT MARGIN = 6.0% DEBT EQUITY RATIO = 1.5x SALES = $550,000.00 GROSS PROFIT RATE = 50.0% TAX RATE = 34.0% 1) What must KTC project as its 2020's sales in order to generate an additional 5% Return on Equity above last year’s levels (2019’s ROE + 5%, not 2019’s ROE x 105%) 2) Prepare a projected 2020 Profit and Loss...
When would the return on equity (ROE) definitely equal the return on assets (ROA)? Whenever a...
When would the return on equity (ROE) definitely equal the return on assets (ROA)? Whenever a firm's total debt ratio is equal to zero. Whenever a firm's long-term debt ratio is equal to zero. Whenever a firm's return on equity is equal to 100%. Whenever a firm has no long-term debt. Whenever a firm's debt-to-equity ratio is equal to one.
Return on Equity (ROE)= Sales Margin* Asset turnover* Gearing ratio ROE= Profit/equity Sales Margin= Profit/Sales Asset...
Return on Equity (ROE)= Sales Margin* Asset turnover* Gearing ratio ROE= Profit/equity Sales Margin= Profit/Sales Asset turnover= Sales/Assets Gearing Ratio= Assets/Equity This formula is important from strategy point of view as higher ROE is possible in a low profit margin business by increasing the asset turnover and by taking debt to increase the capital employed. This Question I need it to answer ---> "good very high level summary of the ratios in this DQ. Can you provide back to me...
Calculate ROE given the following information: profit margin = 20%; total asset turnover = 0.64; equity...
Calculate ROE given the following information: profit margin = 20%; total asset turnover = 0.64; equity multiplier = 1.50.
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT