Here are two banks A and B: ROE (Net Income/Pre-tax net operating income) X (Pre-tax net...

 

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Here are two banks A and B: ROE (Net Income/Pre-tax net operating income) X (Pre-tax net operating income/Total operating revenue) X (Total Operating Revenue/Total Assets) X (Total Assets/Total Equity Capital) Suppose Bank A has the following ratio: equation (i) 0.10 0.68 X 0.033 X 0.316 X 14; where the ratio correspond to equation ---(i) and are in order. Bank B has the following ratios; 0.090 = 0.75 X 0.023 X 0.52 X 11 . Which bank is managing assets better? . Which bank is managing expense better? . Which bank is taking more risk? . Which bank is better protected from credit risk (i.e. risk of a loan being defaulted)? Edit View Insert Format Tools Table 12pt v Paragraph BIUAT² v Here are two banks A and B: ROE (Net Income/Pre-tax net operating income) X (Pre-tax net operating income/Total operating revenue) X (Total Operating Revenue/Total Assets) X (Total Assets/Total Equity Capital) Suppose Bank A has the following ratio: equation (i) 0.10 0.68 X 0.033 X 0.316 X 14; where the ratio correspond to equation ---(i) and are in order. Bank B has the following ratios; 0.090 = 0.75 X 0.023 X 0.52 X 11 . Which bank is managing assets better? . Which bank is managing expense better? . Which bank is taking more risk? . Which bank is better protected from credit risk (i.e. risk of a loan being defaulted)? Edit View Insert Format Tools Table 12pt v Paragraph BIUAT² v

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To analyze the performance of Bank A and Bank B based on the given ratios lets break down the calcul... View the full answer