A security analyst calculates the following ratios for two banks. How should the analyst evaluate the financial health of the two banks. Bank A Bank B ROE 22% 24% ROA 2% 1.5% Equity Multiplier 11X 16X Profit Margin 15% 14% Asset Utilization 13% 11% Spread 3% 3% Interest Exp. Ratio 35% 40% Provision for loan loss ratio 1% 4%

A security analyst calculates the following ratios for two banks. How should the analyst evaluate the financial health of the two banks. Bank A Bank B ROE 22% 24% ROA 2% 1.5% Equity Multiplier 11X 16X Profit Margin 15% 14% Asset Utilization 13% 11% Spread 3% 3% Interest Exp. Ratio 35% 40% Provision for loan loss ratio 1% 4%

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter7: Types And Costs Of Financial Capital

Section: Chapter Questions

Problem 1bM

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