A bank's assets consist of:
Cash: $1.5 million
Loans: $10 million
Securities: $4.5 million
Fixed assets: $2 million
In addition, the bank's owners' capital is $1.5 million
a. Calculate the equity capital ratio.
b. If $2 million in bad loans were removed from the bank's assets, show how the equity capital ratio would change.
The capital would be $1.5
but would the assets be cash+securites+fixed assets
and liabilieties be loans?