Financial Accounting, Student Value Edition (4th Edition)
4th Edition
ISBN: 9780134114811
Author: Robert Kemp, Jeffrey Waybright
Publisher: PEARSON
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Chapter 2, Problem 3SC
To determine
Identify the amount of
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Based on the information provided below
about banks A and B, compute for each bank
its return on assets (ROA), return on equity
(ROE) and Equity Multiplier. Show your work.
a. Bank A has net profit after taxes of $2.38
million and the balance sheet below: Bank A
(in millions) Assets Liabilities Reserves $10
Deposits $100 Loans $80 Borrowing $15
Securities $50 Bank Capital $25
b. Bank B has net profit after taxes of $1
million and the balance sheet below: Bank B
(in millions) Assets Liabilities Reserves $8
Deposits $75.0 Loans $60 Borrowing $5.0
Securities $22 Bank Capital $10.0
You observe the following details about a bank (amounts in million)
net interest income: $1,250
net noninterest income: $200
operating expenses: $900
loan loss provisions: $170
gains from trading: $75
Taxes: $150
Total assets: $17,000
Equity: $2,200
What is the bank's ROE? Write your answer expressed as a %, and round to two decimals. For instance, if you think the ROE is 0.0856237, then you write 8.56 below
EMM, Inc. has the following balance sheet:
EMM, Incorporated Balance Sheet as of 12/31/X0
Assets
Liabilities and Equity
Cash
$
680
Accounts payable
$
5,015
Accounts receivable
6,460
Bank note payable
1,705
Inventory
5,780
Long-term assets
3,800
Equity
10,000
$
16,720
$
16,720
If the firm expects sales to rise from $17,000 to $21,000, what are the forecasted levels of accounts receivable, accounts payable, and inventory? Round your answers to the nearest dollar.
Accounts receivable: $
Inventory: $
Accounts payable: $
Will the expansion in accounts payable cover the expansion in inventory and accounts receivable? Round your answers to the nearest dollar.
The expansion in accounts payable of $ the total expansion in inventory and accounts receivable, which is $ .
If the firm earns 12 percent on sales after taxes and retains all of these earnings, what is the firm's forecasted equity? Round your answer to the…
Chapter 2 Solutions
Financial Accounting, Student Value Edition (4th Edition)
Ch. 2 - The order in which assets were listed and...Ch. 2 - Prob. 2DQCh. 2 - How is revenue related to retained earnings?Ch. 2 - Prob. 4DQCh. 2 - Prob. 5DQCh. 2 - Prob. 6DQCh. 2 - Prob. 7DQCh. 2 - Distinguish between journalizing and posting.Ch. 2 - True or false: If the trial balance is in balance,...Ch. 2 - When it is time to prepare the financial...
Ch. 2 - Which sequence of actions correctly summarizes the...Ch. 2 - Prob. 2SCCh. 2 - Prob. 3SCCh. 2 - Prob. 4SCCh. 2 - Prob. 5SCCh. 2 - Which journal entry records obtaining a bank loan...Ch. 2 - RV Wholesale, Inc., paid 1,200 for supplies and...Ch. 2 - Prob. 8SCCh. 2 - Prob. 9SCCh. 2 - Prob. 10SCCh. 2 - Prob. 11SCCh. 2 - Prob. 12SCCh. 2 - Prob. 1SECh. 2 - Prob. 2SECh. 2 - Prob. 3SECh. 2 - Prob. 4SECh. 2 - Accounting terminology (Learning Objectives 2, 3, ...Ch. 2 - Effects of debits and credits on accounts...Ch. 2 - Balancing accounts and normal balances (Learning...Ch. 2 - Types of accounts and effects of debits and...Ch. 2 - Prob. 9SECh. 2 - Journalizing transactions (Learning Objective 3)...Ch. 2 - Prob. 11SECh. 2 - Prob. 12SECh. 2 - Prob. 13SECh. 2 - Accounting terminology (Learning Objectives 1, 2,...Ch. 2 - Prob. 15AECh. 2 - Journalizing transactions (Learning Objective 3)...Ch. 2 - Prob. 17AECh. 2 - Prob. 18AECh. 2 - Prob. 19AECh. 2 - Prob. 20AECh. 2 - Prob. 21AECh. 2 - Prob. 22AECh. 2 - Prob. 23BECh. 2 - Prob. 24BECh. 2 - Prob. 25BECh. 2 - Prob. 26BECh. 2 - Prob. 27BECh. 2 - Prob. 28BECh. 2 - Prob. 29BECh. 2 - Prob. 30BECh. 2 - Prob. 31APCh. 2 - Prob. 32APCh. 2 - Prob. 33APCh. 2 - Prob. 34APCh. 2 - Prob. 35APCh. 2 - Prob. 36APCh. 2 - Prob. 37BPCh. 2 - Prob. 38BPCh. 2 - Prob. 39BPCh. 2 - Prob. 40BPCh. 2 - Prob. 41BPCh. 2 - Prob. 42BPCh. 2 - Prob. 1CECh. 2 - Prob. 1CPCh. 2 - Prob. 1CFSAPCh. 2 - Prob. 1EIACh. 2 - Prob. 2EIACh. 2 - Prob. 1FACh. 2 - Prob. 1IACh. 2 - Prob. 1SBACh. 2 - Prob. 1WC
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- Balance Sheet You are evaluating the balance sheet for Cypress Corporation. From the balance sheet you find the following balances: Cash and marketable securities = $670,000, Accounts receivable = $870,000, Inventory = $570,000, Accrued wages and taxes = $111,000, Accounts payable = $207,000, and Notes payable = $1,070,000. What is Cypress's net working capital? Multiple Choice $1,388,000 O $2,110,000 $722,000 O $3,498,000arrow_forwardIf cash is $5450, accounts receivable is $10059,notes payable is $5285, common stock is $1161 how much is retained earnings?arrow_forwardHow do I get both sides to balance? Assets =Liabilities and Stockholders Equity? I cant seem to find the shareholders equity amount. Assets Liabilities and Stockholders Equity Cash $ 7,000.00 Accounts Payable $14,000 Accounts Recievable $ 19,000.00 Long-Term Debt $140,000 Inventory $170,000.00 Shareholders Equity $7,000 PP&E $ 70,000.00 266,000 $161,000 Cash $ 7,000.00 inventory of TV $ 170,000.00 PP&E 70000 Accounts Recievable $ 19,000.00 Accounts Payable $14,000 Long-Term Debt $140,000 Shareholders Equity XXarrow_forward
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- 28. Assuming the following balance sheet, what is the Bank's CAR? ASSETS ($1,000,000s) Cash Fed Reserve Deposits Treasuries Mortgages Commercial Loans Stocks and Bonds TOTAL ASSETS a. 3.75% b. 5.42% c. 7.85% d. 9.78% e. 10.58% I LIABILITIES AND EQUITY ($1,000,000s) Demand Deposits Time Deposits 185 97 548 Bonds/Other Debt 2561 Equity 1298 236 4925 TOTAL LIABS & EQUITY 2187 2210 258 270 4925arrow_forwardYou are evaluating the balance sheet for SophieLex’s Corporation. From the balance sheet you find the following balances: cash and marketable securities = $280,000; accounts receivable = $1,380,000; inventory = $2,280,000; accrued wages and taxes = $590,000; accounts payable = $890,000; and notes payable = $780,000. What is the quick ratio (round your answer to 2 decimal placesarrow_forwardAccording to the information given in the table below, which of the following is cash flow from financing? Net income 52,000 Decrease in Bank Loan 39,000 Increase in Bonds Depreciation Increase in Common stock 21,000 19,000 14,000 Select one: O a. 32000 O b. 67000 O C. - 4000 O d. 38000arrow_forward
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