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Q for financial analysts. - Page 2

post #16 of 21
7/7/09 at 10:40am
Thread Starter 
Quote:
Originally Posted by gnatty8 View Post
I would not use ratios like that to analyze banks at all. First off, the MBS that are causing so much collateral damage in the sector would not even show up as current assets since they are not, well, current assets. They would show up as non-current assets, not receivables. Anyway, be careful applying rules of thumb from other sectors to banking, entirely different business obviously.

Agreed, banking is a bit beyond my abilities at this point, i think I'll start with insurance as matt suggested and move on from there.

Are you familiar with another set of ratios that would apply well to banking? I'm sure each sector has there own specialized ratios that works specifically for that particular sector. Unfortunately when it comes to schooling they're still teaching ratios that work for manufacturing, which can be applied to alot of service type businesses.
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post #17 of 21
7/7/09 at 4:22pm
Quote:
Originally Posted by mintyfresh View Post
Quick ratio incorporates inventory. What inventory does a bank own?

Money. And toasters.
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post #18 of 21
7/7/09 at 4:27pm
Quote:
Originally Posted by mintyfresh View Post
Quick ratio incorporates inventory. What inventory does a bank own?

No. You are thinking current ratio. Still, quick is useless for banks as well.

Quote:
Originally Posted by Concordia View Post
Money. And toasters.

Wells Fargo used to give away sweet western belts for opening an account. When throwing some stuff away for my father a few years back, we found a pristine white tooled cowboy belt with brass buckle that he had received in the middle 70s. Good stuff.
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post #19 of 21
7/7/09 at 5:20pm
Quote:
Originally Posted by iammatt View Post
When throwing some stuff away for my father a few years back, we found a pristine white tooled cowboy belt with brass buckle that he had received in the middle 70s. Good stuff.

White, eh?

Now if he were a real high roller, they would have given him the Full Cleveland.
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post #20 of 21
7/7/09 at 9:24pm
Quote:
Originally Posted by SkinnyGoomba View Post
Agreed, banking is a bit beyond my abilities at this point, i think I'll start with insurance as matt suggested and move on from there.

Are you familiar with another set of ratios that would apply well to banking? I'm sure each sector has there own specialized ratios that works specifically for that particular sector. Unfortunately when it comes to schooling they're still teaching ratios that work for manufacturing, which can be applied to alot of service type businesses.

Sorry, no, I don't tend to invest in banks so don't know much about the evaluation of them from an investment perspective. Since you seem to be more interested in their solvency, at least by your comments on current and quick ratios, I would suggest looking at things like their capital adequacy, Tier 1 capital, VaR of any of their trading books, net interest margins, trends in loan losses and provisions as well as trends in noncurrent loans, and that sort of thing, but again, I put about 30 seconds of thought into this to give you a place to start..
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post #21 of 21
7/8/09 at 2:28am
Thread Starter 
thanks for the commentary Gnatty, sounds like a good place to start at forming a reasonable comparison.
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