Question
Carefully read the following Balance Sheet. Balance Sheet of XYZ Bank Assets. 31/12/2009. % of Assets Cash. $100,00. 4% Securities. $580,00. 20% Loans. $1,800.00. 64%
Carefully read the following Balance Sheet.
Balance Sheet of XYZ Bank
Assets. 31/12/2009. % of Assets
Cash. $100,00. 4%
Securities. $580,00. 20%
Loans. $1,800.00. 64%
Other Assets. $350,00. 12%
Total Assets. $2.830,00. 100%
Liabilities and Equity:
Deposits. $1.720,00. 61%
Borrowings. $790,00. 28%
Shareholder's Equity $320,00. 11%
Total Liabilities and Equity $2.830.00 100%
- A bank balance sheet is different from a typical company. Explain the differences?
- Looking at the percentages, comment on the Assets and Liabilities of the above Balance Sheet. Why do bank managers prefer Loans over Securities? Why is cash only 4%?
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Introduction to Finance Markets, Investments and Financial Management
Authors: Ronald W. Melicher, Edgar A. Norton
16th edition
1119398282, 978-1-119-3211, 1119321115, 978-1119398288
