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Let's assume that you have been asked to calculate risk-based capital ratios fro a bank with the following accounts: Cash =5million Government Securities = 7 million Mortgage Loan =30 million Other loan = 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-adjusting assets.

C. Calculate the Total Capital (Tier 1 plus Tier 2) Ratio Using risk-adjusted assets.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9977454

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