Examine the balance sheet of commercial banks in the following table. Assets $ Billion % Total Liabilities and Net Worth $ Billion % Total Real assets Liabilities Equipment and premises $ 153.7 1.0 % Deposits $ 10,273.3 67.7 % Other real estate 28.9 0.2 Debt and other borrowed funds 963.0 6.3 Total real assets $ 182.6 1.2 % Federal funds and repurchase agreements 985.0 6.5 Other 912.0 6.0 Total liabilities $ 13,133.3 86.6 % Financial assets Cash $ 882.3 5.8 % Investment securities 5,032.1 33.2 Loans and leases 6,663.3 43.9 Other financial assets 1,207.2 8.0 Total financial assets $ 13,784.9 90.8 % Other assets Intangible assets $ 419.4 2.8 % Other 786.7 5.2 Total other assets $ 1,206.1 7.9 % Net worth $ 2,040.3 13.4 % Total $ 15,173.6 100.0 % $ 15,173.6 100.0 %

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter13: Marketable Securities And Derivatives

Section: Chapter Questions

Problem 27P

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Question

Examine the balance sheet of commercial banks in the following table.

Assets	$ Billion	% Total	Liabilities and Net Worth	$ Billion	% Total
Real assets						Liabilities
Equipment and premises	$	153.7	1.0	%		Deposits	$	10,273.3	67.7	%
Other real estate		28.9	0.2			Debt and other borrowed funds		963.0	6.3
Total real assets	$	182.6	1.2	%		Federal funds and repurchase agreements		985.0	6.5
						Other		912.0	6.0
						Total liabilities	$	13,133.3	86.6	%

Financial assets
Cash	$	882.3	5.8	%
Investment securities		5,032.1	33.2
Loans and leases		6,663.3	43.9
Other financial assets		1,207.2	8.0
Total financial assets	$	13,784.9	90.8	%
Other assets
Intangible assets	$	419.4	2.8	%
Other		786.7	5.2
Total other assets	$	1,206.1	7.9	%		Net worth	$	2,040.3	13.4	%
Total	$	15,173.6	100.0	%			$	15,173.6	100.0	%

Balance sheet of FDIC-insured commercial banks and savings institutions

Note: Column sums may differ from total because of rounding error.

Source: Federal Deposit Insurance Corporation, www.fdic.gov, March 2016.

a. What is the ratio of real assets to total assets? (Round your answer to 4 decimal places.)

b. What is the ratio of real assets to total assets for nonfinancial firms in the following table? (Round your answer to 4 decimal places.)

Assets	$ Billion	% Total	Liabilities and Net Worth	$ Billion	% Total
Real assets						Liabilities
Equipment and software	$	4,442	16.3	%		Bonds and mortgages	$	5,404	19.9	%
Real estate		9,883	36.3			Bank loans		818	3.0
Inventories		1,774	6.5			Other loans		1,386	5.1
Total real assets	$	16,099	59.2	%		Trade debt		1,786	6.6
						Other		4,688	17.2
						Total liabilities	$	14,082	51.8	%

Financial assets
Deposits and cash	$	697	2.6	%
Marketable securities		1,116	4.1
Trade and consumer credit		2,322	8.5
Other		6,959	25.6
Total financial assets	$	11,094	40.8	%		Net worth	$	13,111	48.2	%
Total	$	27,193	100.0	%			$	27,193	100.0	%

Balance sheet of U.S. nonfinancial corporations

Note: Column sums may differ from total because of rounding error.

Source: Flow of Funds Accounts of the United States, Board of Governors of the Federal Reserve System, March 2016.

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