Basic Ratios

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Author:
Heatherc
ID:
279503
Filename:
Basic Ratios
Updated:
2014-07-23 22:08:30
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Ratio CMS
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Description:
Basic Ratio Study Guide
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  1. Review and draw the bathtub flow model as it relates to:  Provision for Loan Losses - Allowance for Loan Loss Account - Loan charge-offs
    • The faucet is the Provision for loan losses
    • The bath tub is the allowance for loan loss account
    • Loan Charge offs is the drain

    the water stays in the tub by adequately allowing for charge offs in your provision for Loan Loss - the water becomes the net difference between the 2 (Your ALL)
  2. Compare and Contrast a balance sheet versus an income statement
    Balance sheet shows where you are for the year - running total

    Income statement shows the quarter total - a snapshot of information for the particular point in time
  3. Required ROA ratio definition
    Capital Ratio x Asset Growth Rate = * Required ROA

    (current/constant) x (choice / Variable) = dependent / variable - to keep CR constant
  4. Basis Point - Percentage Points - Decimal Format
    100 basis points = 1% = .01

    30 basis points = .3% = .003
  5. Required ROA ratio definition
    Capital Ratio x Asset Growth Rate = * Required ROA

    (current/constant) x (choice / Variable) = dependent / variable - to keep CR constant
  6. Compare and Contrast a balance sheet versus an income statement
    Balance sheet shows where you are for the year - running total

    Income statement shows the quarter total - a snapshot of information for the particular point in time
  7. Define Income Statement
    shows financial flows over time.
  8. Define Balance sheet
    Shows the credit union's accounts at a point in time and the sources and uses of funds
  9. Profit Margin Ratio
    Q2 NI / Q2 Gross operating income
  10. Asset Utilization Ratio
    (Q2 gross operating income) * 4 / Q1 total assets
  11. Return on assets ratio
    (Q2 NI) *4 / Q1 Total Assets
  12. Denominator
    On bottom......numerator / denominator
  13. Numerator
    On top......numerator / denominator
  14. Another name for leverage ratio
    Equity multiplier
  15. Equity multiplier ratio
    EM = Assets / Equity
  16. Return on Equity
    ROE = (Q2 NI)*4 / Q1 Equity
  17. Return on Equity
    ROE = (Q2 NI)*4 / Q1 Equity
  18. GAP Analysis Ratio Equation
    ^NII = $GAP * ^i
  19. Ratio that measures a credit union's liquidity position
    CASH + INVESTMENTS < YEAR / ASSETS
  20. Return on Equity Decomposition
    • R=Ax|R|=Ax|GRXR|=Ax|GRX|NII+NET NON II|
    • E  E    A    E    A   GR  E    A    GR        GR
  21. Define when a credit union is "insolvent"
    Assets are worth less than the liabilities

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