Let’s assume that you have been asked to calculate risk-based capital ratios for

Question

Let’s assume that you have been asked to calculate risk-based
capital ratios for a bank with the following accounts:
Cash $5 million
Government securities $7 million
Mortgage loans $30 million
Other loans $50 million
Fixed assets $10 million
Intangible assets $4 million
Loan-loss reserves $5 million
Owners’ equity $5 million
Trust-preferred securities $3 million
Cash assets and government securities are not considered risky.
Loans secured by real estate have a 50 percent weighting factor.
All other loans have a 100 percent weighting factor in terms of
riskiness.
a. Calculate the equity capital ratio.
b. Calculate the Tier 1 Ratio using risk-adjusted assets.
c. Calculate the Total Capital (Tier 1 plus Tier 2) Ratio using
risk-adjusted assets.

Explanation / Answer

actually could you mention the net profit tax and the preference dividend so that i can calculate the equity capital ratio for u.........or u can do that your self by following a simple formulae Equity=Net profit tax-preference dividend/Equity share capital X 100

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