Mgt 411 MONEY & BANKING (MGT411) ASSIGNMENT NO. 01

  MONEY & BANKING (MGT411)

 ASSIGNMENT NO. 01

 

 Question: (2*5=10 marks)

 

On the basis of information provided below in a bank’s balance sheet; you are required to calculate following ratios:

 

 Net Profit after Tax

 Return on Equity (ROE)

 Leverage Ratio

 Debt to Equity ratio

 Advances to Deposits ratio

Bank XYZ                                                          Balance Sheet                                                                As at ---------                                                                                                                                                     (Amount in Rs.)       Assets Liabilities     Securities                                     100,000 Deposits                                           450,000     Loans                                           500,000 Borrowings                                      150,000   Reserves                                       50,000                                                       Capital                                          50,000 Total=                                          =650,000 Total=                                           =650,000

 

 Additional Information:

Return on Assets (ROA) ratio of the bank is 4%.

 

 

 

A   A)  Net profit after tax:

ROA=  Net profit after tax/ Bank Total Assets

Net profit after tax = ROA* Bank Total Assets

ROA= 4% =4/100=0.04

Net profit after tax= 0.04*650000=26000

Net profit after tax= 26000

 

     B)  Return on Equity ratio ROE:

ROE= Net profit after tax/ Bank Capital

 ROE = 26000/50000

=0.52

 

      c) Leverage Ratio:

Leverage ratio = Bank Total Assets/Bank capital

 Leverage Ratio = 650000/50000

Leverage Ratio= 13

 

       D) Debt To Equity Ratio:

Debt To Equity Ratio = Total Debts/Bank Capital

Debt To Equity Ratio= 150000/50000

Debt to Equity Ratio =3

 

      v)  Advance to Deposit Ratio:

 Advance to deposit ratio = Total Advances/Total Deposits

Advance to deposit ratio = 500000/450000

Advance to Deposit ratio = 1.1

                                         Best Wishes