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Efficiency Ratio  A. Calculate the efficiency ratios for Bank X and Bank Y and what can you conclude from the  results obtained. B. By decomposing the ratio into its major components, clearly show the sources of the  difference in the two banks’ efficiency ratios. Please summarise the results in a table  format. C. What is(are) the major contributor(s) for the difference in the performance of the two banks  as revealed by the results in (B) above?

Efficiency Ratio  A. Calculate the efficiency ratios for Bank X and Bank Y and what can you conclude from the  results obtained. B. By decomposing the ratio into its major components, clearly show the sources of the  difference in the two banks’ efficiency ratios. Please summarise the results in a table  format. C. What is(are) the major contributor(s) for the difference in the performance of the two banks  as revealed by the results in (B) above?

Managerial Accounting: The Cornerstone of Business Decision-Making
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter15: Financial Statement Analysis
Section: Chapter Questions
Problem 49E
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Efficiency Ratio 
A. Calculate the efficiency ratios for Bank X and Bank Y and what can you conclude from the 
results obtained.
B. By decomposing the ratio into its major components, clearly show the sources of the 
difference in the two banks’ efficiency ratios. Please summarise the results in a table 
format.
C. What is(are) the major contributor(s) for the difference in the performance of the two banks 
as revealed by the results in (B) above?

B BALANCE SHEETS AS AT 31 DECEMBER: (K' Million) Assets Balances with banks Investment in securities Total loans and advances Allowance for Loan losses Total earning assets Notes and coins Balances with BoZ Other assets Total assets Liabilities and Shareholders' equity Demand deposits Savings deposits Time deposits Total deposits Balances due to banks Other borrowed funds Total interest bearing liabilities Non-interest bearing liabilities Shareholders' equity Total liabilities and shareholders' equity C BANK X 2021 D 2022 2,003 681 6,122 9,449 7,831 10,152 (339) (364) 15,617 19,918 686 696 1,598 2,894 1,624 2,894 19,525 26,401 10,111 12,230 1,717 2,350 3,663 4,563 15,491 19,144 0 1,325 1,633 16,816 20,777 1,477 3,479 1,233 2,145 19,525 26,401 E F BANK Y 2021 G 2022 9,218 7,917 4,768 4,780 6,927 8,091 (553) (470) 20,361 20,318 1,830 1,809 2,394 4,036 1,169 1,393 25,753 27,556 437 347 15,520 14,409 977 1,102 4,549 4,467 21,046 19,978 649 250 21,830 20,878 1,668 3,467 2,255 3,212 25,753 27,556
Transcribed Image Text:B BALANCE SHEETS AS AT 31 DECEMBER: (K' Million) Assets Balances with banks Investment in securities Total loans and advances Allowance for Loan losses Total earning assets Notes and coins Balances with BoZ Other assets Total assets Liabilities and Shareholders' equity Demand deposits Savings deposits Time deposits Total deposits Balances due to banks Other borrowed funds Total interest bearing liabilities Non-interest bearing liabilities Shareholders' equity Total liabilities and shareholders' equity C BANK X 2021 D 2022 2,003 681 6,122 9,449 7,831 10,152 (339) (364) 15,617 19,918 686 696 1,598 2,894 1,624 2,894 19,525 26,401 10,111 12,230 1,717 2,350 3,663 4,563 15,491 19,144 0 1,325 1,633 16,816 20,777 1,477 3,479 1,233 2,145 19,525 26,401 E F BANK Y 2021 G 2022 9,218 7,917 4,768 4,780 6,927 8,091 (553) (470) 20,361 20,318 1,830 1,809 2,394 4,036 1,169 1,393 25,753 27,556 437 347 15,520 14,409 977 1,102 4,549 4,467 21,046 19,978 649 250 21,830 20,878 1,668 3,467 2,255 3,212 25,753 27,556
INCOME STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (K' Million) Interest Income Interest income from loans and advances Interest income from investments in securities Interest income from banks and financial institutions Total Interest Income Interest Expense Interest expense paid on deposits Interest expense paid to banks and financial institutions Interest expense paid on other borrowed funds Total Interest Expense Operating Income (Total Revenue) Interest Income Non-interest income Total Operating Income Operating Expense Interest expenses Provision for loan losses Non-interest expenses Total Operating Expense Profit before taxes (or Pre-tax Net Operating Income) Taxes Profit after taxes (or Net Income) Balance Sheet Income Statement 1,925 1,612 7 3,543 750 249 999 3,543 1,538 5,082 999 165 2,222 3,386 1,696 640 1,056 (+) 1,456 856 23 2,335 333 187 17 537 2,335 1,236 3,570 537 110 1,472 2,119 1,452 565 887
Transcribed Image Text:INCOME STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (K' Million) Interest Income Interest income from loans and advances Interest income from investments in securities Interest income from banks and financial institutions Total Interest Income Interest Expense Interest expense paid on deposits Interest expense paid to banks and financial institutions Interest expense paid on other borrowed funds Total Interest Expense Operating Income (Total Revenue) Interest Income Non-interest income Total Operating Income Operating Expense Interest expenses Provision for loan losses Non-interest expenses Total Operating Expense Profit before taxes (or Pre-tax Net Operating Income) Taxes Profit after taxes (or Net Income) Balance Sheet Income Statement 1,925 1,612 7 3,543 750 249 999 3,543 1,538 5,082 999 165 2,222 3,386 1,696 640 1,056 (+) 1,456 856 23 2,335 333 187 17 537 2,335 1,236 3,570 537 110 1,472 2,119 1,452 565 887
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