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    Bank Valuation - FE FIG Tryout

    Uploaded by

    charlotte.zibaut
    The document contains 5 questions about calculating financial metrics such as equity value, return on equity, price to tangible book value, and PE ratio. The questions provide financial information such as share price, number of shares, net income, assets, and liabilities. Respondents are asked to use the data to calculate the requested metrics through a defined set of calculations.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    Bank Valuation - FE FIG Tryout

    Uploaded by

    charlotte.zibaut
    26 views5 pages
    The document contains 5 questions about calculating financial metrics such as equity value, return on equity, price to tangible book value, and PE ratio. The questions provide financial information such as share price, number of shares, net income, assets, and liabilities. Respondents are asked to use the data to calculate the requested metrics through a defined set of calculations.

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    © © All Rights Reserved

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    The document contains 5 questions about calculating financial metrics such as equity value, return on equity, price to tangible book value, and PE ratio. The questions provide financial information such as share price, number of shares, net income, assets, and liabilities. Respondents are asked to use the data to calculate the requested metrics through a defined set of calculations.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    26 views5 pages

    Bank Valuation - FE FIG Tryout

    Uploaded by

    charlotte.zibaut
    The document contains 5 questions about calculating financial metrics such as equity value, return on equity, price to tangible book value, and PE ratio. The questions provide financial information such as share price, number of shares, net income, assets, and liabilities. Respondents are asked to use the data to calculate the requested metrics through a defined set of calculations.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 5

    Question 1

    1/1

    Using the following information about Bank A, calculate equity value.

    Share price - common 20.00

    Share price - preferred 5.00

    Shares outstanding 20,000.0

    Weighted average common shares outstanding 17,000.0

    Weighted average diluted shares outstanding 17,500.0

    Preferred shares outstanding (treated as equity) 2,000.0

    Responses
    •

    400,000.0
    •

    360,000.0
    •

    410,000.0
    •

    350,000.0
    350,000.0
    Equity is calculated taking the product of the common share price and the number of shares
    outstanding plus the product of the preferred share price and the preferred shares outstanding.
    Question 2

    1/1

    Calculate the Price / Tangible Net Asset Value (P/TNAV) for Bank Inc.

    Share price ($) 50.0

    Number of shares outstanding (m) 4,000.0

    Weighted average shares outstanding (m) 3,500.0

    2018 2017

    Net income ($m) 21,000.0 22,000.0

    Intangible assets ($m) 80,000.0 82,000.0

    Tangible and other assets ($m) 1,800,000.0 2,000,000.0

    Total liabilities ($m) 1,500,000.0 1,600,000.0

    Shareholders' equity ($m) 200,000.0 210,000.0

    Responses
    •

    1.7
    •

    0.7
    •

    1.0
    •

    1.5
    Price / Tangible Net Asset Value (P/TNAV) is calculated by takin the product of the share price
    and the number of shares outstanding and dividing that number by the shareholders' equity less
    intangible assets.
    Question 3

    1/1

    Calculate return on equity.

    Challenger Bank

    Net income 100.0

    Dividends 70.0

    Opening shareholders' equity 1,100.0

    Closing shareholders' equity 1,130.0

    Responses
    •

    9.1%
    •

    2.7%
    •

    6.4%
    •

    8.8%
    Return on equity is calculated by dividing net income by opening shareholders' equity.
    Question 4

    1/1

    Calculate the equity value.

    FY1 net income 1,000.0

    FY1 beginning shareholders' equity 10,000.0

    Cost of equity 8.0%

    Equity growth rate 3.0%

    Responses
    •

    10,300.0
    •

    14,000.0
    •

    125,000.0
    •

    333,333.3
    1. Calculate ending shareholders equity: (1 + equity growth rate) * beginning shareholders'
    equity.

    2. Calculate FY1 dividend: Beginning shareholders' equity + FY1 net income -


    ending shareholders' equity.

    3. Calculate equity value: FY1 dividend / (cost of equity - equity growth rate).
    Question 5

    1/1

    Calculate the P/E ratio.

    FY1 net income 2,000.0

    FY1 beginning shareholders' equity 18,000.0

    Cost of equity 7.0%

    Equity growth rate 2.0%

    Responses
    •

    128.6
    •

    9.2
    •

    450.0
    •

    16.4
    1. Calculate ending shareholders equity: (1 + equity growth rate) * beginning shareholders'
    equity.

    2. Calculate FY1 dividend: Beginning shareholders' equity + FY1 net income -


    ending shareholders' equity.

    3. Calculate equity value: FY1 dividend / (cost of equity - equity growth rate).

    4. Calculate P/E: Equity value / FY1 net income.

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