A security analyst calculates the following ratios for two banks. How should the analyst evaluate the financial health of the two banks? (LG 12-5)

Bank A Bank B Return on equity 22% 24%

Return on assets 2% 1.5%

Equity multiplier 11× 16×

Profit margin 15% 14%

Asset utilization 13% 11%

Spread 3% 3%

Interest expense ratio 35% 40%

Provision for loan-loss ratio 1% 4%

 LO.1