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A security analyst calculates the following ratios for two banks.How should the analyst evaluate the financial health of the twobanks. Bank A Bank B ROE

A security analyst calculates the following ratios for two banks.How should the analyst evaluate the financial health of the twobanks.

Bank A Bank B

ROE 22% 24%

ROA 2% 1.5%

Equity Multiplier 11X 16X

Profit Margin 15% 14%

Asset Utilization 13% 11%

Spread 3% 3%

Interest Exp. Ratio 35% 40%

Provision for loan loss ratio 1% 4%

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