Suppose Bank a Has Assets of 100,liabilities of 80,and Capital

question 78

Multiple Choice

Suppose bank A has assets of 100,liabilities of 80,and capital of 20.Its leverage ratio is

• A)4.
• B)5.
• C)10.
• D)9.

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Definitions:

Retained Earnings

The portion of a company's profits not distributed as dividends to shareholders but retained by the company for reinvestment in its operations or to pay debt.

FIFO System

First-In, First-Out, an inventory valuation method where goods first added to inventory are the first ones to be sold.

Impairment

Impairment occurs when the carrying amount of an asset exceeds its recoverable amount, leading to a reduction in the asset's value on the balance sheet.

Intangible Assets

Non-physical assets such as patents, copyrights, trademarks, software, and goodwill that have value to a business.