Ch 6 HW - 5 0.16 0.102 0.153 10.139 Some trends in this...

Info icon This preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 6: #10 Return on Equity Capital (ROE)= Net Income/ Total equity capital Profit Margin (Net operating Margin)= (Total Operating Revenues- Total Operating Expenses)/ Total Assets Asset Utilization (AU)= Total operating Revenues/ Total Assets Equity Multiplier (EM)= Total Assets/ Total Equity capital Year Net Income  Total Operating Total  Total  Liabilities Total Equity   After- Tax Revenues Assets    Capital             1 $2.70 $26.50 $300.00 $273.00 $27.00 2 3.5 30.1 315 288 $27.00 3 4.1 39.8 331 301 $30.00 4 4.8 47.5 347 314 $33.00 5 5.7 55.9 365 329 $36.00 Year ROE Profit Margin AU EM           1 0.1 0.102 0.088 11.111 2 0.13 0.116 0.096 11.667 3 0.14 0.103 0.120 11.033 4 0.15 0.101 0.137 10.515
Image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 5 0.16 0.102 0.153 10.139 Some trends in this table include the steady increase in Return on equity capital and asset utilization. It is shown that Equity Multiplier is steady decreasing. This becomes an adverse trend because the Equity Multiplier shows how the company is successfully leveraging or financing policies (how many dollars of assets must be supported by each dollar of equity). Recommendations to management in dealing with the bank’s decreasing EM is to look at their assets and see how well they are leveraged towards their total equity capital....
View Full Document

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern