Math  /  Data & Statistics

Question\begin{tabular}{|c|c|c|c|} \hline Cash Balance Sheet & & Income Statement & \\ \hline Securities Investments & $100\$ 100 & Interest Income & \400 \\ \hline NetLoans & \600 600 & Interest Expenses & (\150) \\ \hline & \$1200 & Non-Interest Income & \$50 \\ \hline Net Premises and Equip. & \300 300 & Non-Interest Expenses & (\100) \\ \hline & \$2200 & Provision for Loan Losses & (\$60) \\ \hline Deposits & \$1100 & Pre Tax NetOperating Income & \$140 \\ \hline Non-Deposit Borrowings * & \$800 & Securities Gains (Losses) & (\$40) \\ \hline Equity Capital & \300 300 & Taxes & (\$45) \\ \hline \begin{tabular}{l} Total Liabilities and Equity \\ * All Purchased Funds \end{tabular} & \$2200 & Net Income & \$55 \\ \hline Hudgins、B & & & 95 \\ \hline \end{tabular}

Studdy Solution

STEP 1

What is this asking? We need to calculate the **net profit margin** for Castle State Bank using the provided balance sheet and income statement. Watch out! Don't confuse **net income** with **total revenue** when calculating the net profit margin!

STEP 2

1. Identify Total Revenue
2. Identify Net Income
3. Calculate Net Profit Margin

STEP 3

Alright, let's start by figuring out the **total revenue** for Castle State Bank.
From the income statement, we have two main sources of revenue: **Interest Income** and **Non-Interest Income**.

STEP 4

The **Interest Income** is given as $400\$400 and the **Non-Interest Income** is $50\$50.
So, to find the total revenue, we simply add these two amounts together:
Total Revenue=Interest Income+Non-Interest Income=400+50=$450\text{Total Revenue} = \text{Interest Income} + \text{Non-Interest Income} = 400 + 50 = \text{\$450}

STEP 5

Next, let's identify the **Net Income**.
Luckily, the income statement already gives us this value directly.
The **Net Income** is $55\$55.

STEP 6

Now, it's time to calculate the **Net Profit Margin**.
This is a measure of profitability and is calculated as the **Net Income** divided by the **Total Revenue**, then multiplied by 100 to get a percentage.

STEP 7

Let's plug in the numbers:
Net Profit Margin=(Net IncomeTotal Revenue)100=(55450)100\text{Net Profit Margin} = \left( \frac{\text{Net Income}}{\text{Total Revenue}} \right) \cdot 100 = \left( \frac{55}{450} \right) \cdot 100

STEP 8

Perform the division and multiplication:
Net Profit Margin=(55450)10012.22%\text{Net Profit Margin} = \left( \frac{55}{450} \right) \cdot 100 \approx 12.22\%

STEP 9

The **Net Profit Margin** for Castle State Bank is approximately **12.22\%**.

Was this helpful?

Studdy solves anything!

banner

Start learning now

Download Studdy AI Tutor now. Learn with ease and get all help you need to be successful at school.

ParentsInfluencer programContactPolicyTerms
TwitterInstagramFacebookTikTokDiscord