Bank Y and Bank Z both have assets of $1 billion. The return on assets for both banks is the same. Bank Y has liabilities of $750 million while Bank Z's liabilities are $850 million. In which bank would you prefer to hold an equity stake?
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- A bank has $217 million in assets in the 0 percent risk-weight category. It has $223 million in assets in the 20 percent risk-weight category. It has $189 million in assets in the 50 percent risk-weight category and has $29 million in assets in the 100 percent risk-weight category. This bank has $28 million in Tier 1 capital and $56 million in Tier 2 capital. What is this bank's ratio of Tier 1 capital to total assets? Type your answer as percentage and not as decimal (i.e. 5.2 and not 0.052). Round to the nearest two decimals if needed. Do not type the % symbol.a)Assume that the following data is extracted from the financial statements of Richy-Rich bank: equity is $350 million, interest expense is $115 million, provision for loan loss (P) is $35 million, noninterest income is $30 million, noninterest expense is $50 million and a tax rate is 33%. What is the minimum total interest income required to give a return on equity (ROE) of 20%? Show workings when necessary. b) Be-smart Bank reported an equity multipler ratio of 6.5 at the end of year 2021. If the bank’s total debt at the end of year 2021 was $5 million, how much of its assets were financed with equity? Show calculations when necessary. c) What are the main sources of funding for commercial banks? Using bullet points, classify these sources and briefly describe each category.Using the Du Pont method, evaluate the effects of the following relationships for the Butters Corporation. a. Butters Corporation has a profit margin of 5 percent and its return on assets (investment) is 22.5 percent. What is its assets turnover? (Round your answer to 2 decimal places.) b. If the Butters Corporation has a debt-to-total-assets ratio of 55.00 percent, what would the firm's return on equity be? (Input your answer as a percent rounded to 2 decimal places.) c. What would happen to return on equity if the debt-to-total-assets ratio decreased to 50.00 percent? (Input your answer as a percent rounded to 2 decimal places.)
- BNB bank estimates that its total revenues will amount to $350 million, and its total expenses (including taxes) will equal $220 million this year. Its liabilities total $3,800 million while its equity capital amounts to $110 million. What is the bank's return on assets? Is this ROA high or low? How could you find out?You are evaluating the balance sheet for Goodman bees corporation from the balance sheet you find the following balances cash and marketable securities equal $400,000, account receivable equals $1,200,000, Inventory equals $2,100,000 acured wages and taxes $500,000 accounts payable $800,000 notes payable $600,000 calculate goodman bees networking capital. answer in dollars not millions round your answer to the nearest dollar amount networking capital1 If Net Income is $15,000 and Total Assets are $100,000, for every $1 in assets, how much net profit should the bank have? 2 If Net Income is $10,000 and Total Equity Capital (Bank Capital) is $40,000, for every $1 in equity what is the shareholder’s return?
- Using the DuPont method, evaluate the effects of the following relationships for the Butters Corporation. A.Butters Corporation has a profit margin of 5.5 percent and its return on assets (investment) is 8.75 percent. What is its assets turnover? Round your answer to 2 decimal places. ______ times B.If the Butters Corporation has a debt-to-total-assets ratio of 65.00 percent, what would the firm’s return on equity be? Note: Input your answer as a percent rounded to 2 decimal places. C.What would happen to return on equity if the debt-to-total-assets ratio decreased to 60.00 percent? Input your answer as a percent rounded to 2 decimal places.You are considering a stock investment in one of two firms (LotsofDebt, Inc. and LotsofEquity, Inc.), both of which operate in the same industry. LotsofDebt, Inc. finances its $38.00 million in assets with $33.75 million in debt and $4.25 million in equity. LotsofEquity, Inc. finances its $38.00 million in assets with $4.25 million in debt and $33.75 million in equity. Calculate the debt ratio. (Round your answers to 2 decimal places.) Calculate the equity multiplier. (Round your answers to 2 decimal places.) Calculate the debt-to-equity. (Round your answers to 2 decimal places.)You are considering a stock investment in one of two firms (LotsofDebt, Inc. and LotsofEquity, Inc.), both of which operate in the same industry. LotsofDebt, Inc. finances its $38.00 million in assets with $33.75 million in debt and $4.25 million in equity. LotsofEquity, Inc. finances its $38.00 million in assets with $4.25 million in debt and $33.75 million in equity. Calculate the debt ratio. (Round your answers to 2 decimal places.) debt ratio Lotsofdebt Inc: % Lotsofequity Inc: % Calculate the equity multiplier. (Round your answers to 2 decimal places.) Equity Multiplier Lotsofdebt Inc: Timess Lotsodequity Inc: Times Calculate the debt-to-equity. (Round your answers…
- Use the following scenario to solve A-C. H2X Incorporated has accounts payable of $400,000 (a typical amount for the company, non-interest bearing), a bank loan of $700,000 at 9% interest rate, a bank loan of $1,000,000 at 6.5% interest rate, and equity of $2,800,000. Its income tax rate is 32%. Management estimates the company’s cost of equity is 14%. A. What is the company’s weighted average cost of capital on non-interest-bearing debt, interest bearing debt, and equity (or total invest capital)? a. 11% b. 10% c. 9% d. 12% B. Company managers are considering selling more stock to raise $500,000 of new equity to purchase $500,000 of new manufacturing equipment. What would the new weighted average cost of capital be if this plan were implemented? a. 10% b. 12% c. 9% d. 11% C. Company managers are projecting that the new manufacturing equipment from question 15 will produce a return on assets of 11%. Should the company proceed with this plan? a. No, because…You are evaluating the balance sheet for Goodman Bees Corporation. From the balance sheet you find the following balances: cash and marketable securities = $400,000, accounts receivable = $1,200,000, inventory = $2,100,000, accrued wages and taxes = $500,000, accounts payable = $800,000, and notes payable = $600,000. Calculate Goodman Bees' net working capital. (Enter your answer in dollars not in millions. Round your answer to the nearest dollar amount.)You are considering a stock investment in one of two firms (LotsofDebt, Inc. and LotsofEquity, Inc.), both of which operate in the same industry. LotsofDebt, Inc. finances its $36.00 million in assets with $33.00 million in debt and $3.00 million in equity. LotsofEquity, Inc. finances its $36.00 million in assets with $3.00 million in debt and $33.00 million in equity. Calculate the debt ratio. (Round your answers to 2 decimal places.) LotsofDebt, Inc. = ___.__% LotsofEquity, Inc. = ___.__% Calculate the equity multiplier. (Round your answers to 2 decimal places.) LotsofDebt, Inc. =______ times LotsofEquity, Inc. = ______ times Calculate the debt-to-equity. (Round your answers to 2 decimal places.) LotsofDebt, Inc. =______ times LotsofEquity, Inc. = ______ times