Reference no: EM131723113

Question: Using the formulas developed in this chapter and in Chapter 6 and the information that follows, calculate the ratios of total capital to total assets for the banking firms listed below. What relationship among these banks return on assets, return on equity capital, and capital-to-assets ratios did you observe? What implications or recommendations would you draw for the management of each of these institutions?

                                                         Net Income +                  Net Income +
                                                                        Total Assets                    Total Equity
Name of Bank                                                 (or ROA)                     Capital (or ROE)

First National Bank of Hopkins                       1.6%                               15%

Safety National Bank                                   1.3%                               13%

IIsher State Bank                                      0.95%                               10%

Mercantile Bank and Trust Company              0.83%                                9%

Lakeside National Trust                             -0.43%                               -5%