Question 6.P.9: Watson County National Bank presents us with these figures f...

Net income = $25

Total operating revenues = $135

Total assets = $1,700

Total equity capital accounts = $160

a. \text { Net Profit Margin }=\frac{\text { Net Income }}{\text { Total Operating Revenue }}=\frac{\$ 25 \text { mill. }}{\$ 135 \text { mill. }}=0.1852 \text { or } 18.52 \%

b. \text { Asset Utilization }=\frac{\text { Total Operating Revenues }}{\text { Total Assets }}=\frac{\$ 135 \text { mill. }}{\$ 1700 \text { mill. }}=0.0794 \text { or } 7.94 \%

c. \text { Equity Multiplier }=\frac{\text { Total Assets }}{\text{Total Equity Capital}}=\frac{\$ 1700 \text { mill. }}{\$ 160 \text { mill. }}=10.63 \text { times }

d. \text { ROE }=\frac{\text { Net Income }}{\text { Total Equity Capital }}=\frac{\$ 25 \text { mill. }}{\$ 160 \text { mill. }}=0.1563 \text { or } 15.63 \%