Castle State Bank has the following financial information.

Balance Sheet Income Statement

Cash $100

Interest Income $400

Securities Investments $600

Interest Expenses ($150)

Net Loans$1200

Non-Interest Income$50

Net Premises and Equip.$300

Non-Interest Expenses ($100)

Total Assets$2200

Provision for Loan Losses ($60)

Deposits $1100

Pre Tax Net Operating Income$140

Non-Deposit Borrowings * $800

Securities Gains (Losses) ($40)

Equity Capital$300

Taxes ($45)

Total Liabilities and Equity$2200

Net Income$55*

Use this information to calculate Castle State Bank's equity multiplier

Question

Business

Griffin Larson

2 December, 04:47

Castle State Bank has the following financial information.

Balance Sheet Income Statement

Cash $100

Interest Income $400

Securities Investments $600

Interest Expenses ($150)

Net Loans$1200

Non-Interest Income$50

Net Premises and Equip.$300

Non-Interest Expenses ($100)

Total Assets$2200

Provision for Loan Losses ($60)

Deposits $1100

Pre Tax Net Operating Income$140

Non-Deposit Borrowings * $800

Securities Gains (Losses) ($40)

Equity Capital$300

Taxes ($45)

Total Liabilities and Equity$2200

Net Income$55*

Use this information to calculate Castle State Bank's equity multiplier

+2

Answers (1)

Know the Answer?

Sherlyn Simmons · Answer 1

Castle State Bank's equity multiplier is 2.2

Explanation:

Total Assets = $2,200

Total Liabilities and Equity = $2200

Net Loans = $1,200

Total Equity = $2,200 - $1,200 = $1,000

Equity multiplier = Total Assets / Total Shareholders Equity

Equity multiplier = 2,200 / $1,000

Equity multiplier = 2.2

Total Assets is equal to Total equity and Liabilities. Total equity and Liabilities includes the balance of Both equity and liabilities. Total equity is calculated by subtracting Total Loans from Total equity and Liabilities.