business game:
banks in action
creator = bill glass, usa
owner = junior achievment
Youth Business Center:
about banks...
INCOME STATEMENT
Interest Received on Credit Lines Interest paid to the bank by bank customers on
money they borrow as they like, up to the limit of their line of credit.
Loan Interest Received Interest paid to the bank by bank customers on money they
borrow for one year. Interest is received quarterly by the bank.
Settlement Interest Received Interest paid to the bank by the government Central
Bank. Banks deposit funds with the Central Bank that they are unable to loan to
customers.
Interest Paid on Savings Interest paid by the bank to customers who have money
in savings accounts. Customers can withdraw money from their savings accounts
when they wish.
Certificate Interest Paid Interest paid by the bank to customers who have
Certificates of Deposit. Certificates of Deposit are valid for one year. Interest is paid quarterly by the bank.
Settlement Interest Paid Interest paid to the government Central Bank on funds
borrowed from the Central Bank. A bank borrows from the Central Bank when deposits in savings accounts and Certificates of Deposit are less than the
amount the bank has loaned in credit lines and loans.
Q1 - Q4 Quarter 1 through Quarter 4. Each period in Banks in Action represents
one calendar quarter or three months. Quarter 1 is the current quarter. Quarter
2 is the next quarter. Quarter 3 is the quarter after that and Quarter 4 is
three quarters in the future.
Net Interest Net interest is the difference between interest paid by the bank to
customers with deposits in savings account and certificates and interest received by the bank from customers with credit lines and loans.
Operations This is the amount spent by the bank to conduct its banking
operations. It includes the cost of wages and salaries for employees; the cost
of buildings, equipment, and furniture for bank offices and ATMs; and the cost
of computers and other equipment for processing checks and other documents.
Marketing Marketing is the amount spent by the bank to attract customers for
both deposits and loans.
R&D Research and Development is the amount spent by the bank to improve its
technology and reduce the cost of operations.
Operating Income Net interest minus the amount spend on Operations, Marketing,
and R&D. Operating Income is the same as profit before tax.
Taxes The amount paid to the government on bank profits. Taxes are equal to the
Tax Rate times Operating Income if Operating Income is positive. No taxes are
paid by banks that do not make a profit.
Net Income Operating Income minus Taxes. Net Income is the same as profit after
tax.
BALANCE SHEET
Assets Everything of value owned by the bank. This includes money owed to the
bank by customers, money on deposit with the Central Bank, buildings, furniture
and equipment, and money set aside as a reserve.
Credit Lines Money borrowed from the bank by customers as they need it.
Loans Money borrowed from the bank by customers for a fixed period.
Settlement Deposit Money deposited by customers that the bank has not loaned to
other customers. This money is kept on deposit at the government Central Bank.
Outstanding Credit The sum of Credit Lines, Loans, and Settlement Deposit.
Other Assets All non-financial possessions of the bank, including buildings,
furniture, and equipment.
Reserve The amount of money set aside for repayment of depositors as required by
law.
Liabilities Money owed by the bank to customers.
Savings Deposits Money deposited in the bank by customers who can withdraw it at
will.
Certificates Money deposited in the bank by customers for a fixed period.
Settlement Borrowing Money borrowed from the government Central Bank when the
bank has more loans than deposits.
Retained Earnings The profit made by the bank since Period 0.
Equity The initial amount put in by the shareholders to start the bank.
Industry Report
Credit Requested The total amount of credit and loans requested by customers
from all banks.
Credit Outstanding The total amount of money loaned to customers to be paid back
as they wish by all banks in the industry.
Loans Outstanding The total amount of money loaned to customers to be paid back
on a fixed schedule by all banks in the industry.
Savings Deposits The total amount of money deposited by customers in savings
accounts in all banks in the industry.
Certs Outstanding Certificates Outstanding The total amount of money deposited
by customers in certificates of deposit in all banks in the industry.
Bank Reserves The total amount of money held as reserve in all banks in the
industry.
Credit Capacity The amount of money that all banks can loan based on their
reserves.
Res Deposit Rate Reserve Deposit Rate The interest rate paid by the government
Central Bank on deposits by banks.
Res Loan Rate Reserve Loan Rate The interest rate charged by the government
Central Bank on loans to banks.
Avg Credit Rate Average Credit Rate The average interest rate charged by banks
for money borrowed through a Line of Credit. This average is calculated by
multiplying each bank's rate by the total amount loaned through Lines of Credit
by the bank.
Avg Loan Rate Average Loan Rate The average interest rate charged by banks for
money borrowed through annual Loans. This average is calculated by multiplying
each bank's rate by the total amount loaned through annual Loans by the bank.
Avg Savings Rate Average Savings Rate The average interest rate paid by banks
for money on deposit in savings accounts. This average is calculated by multiplying each bank's rate by the total amount in savings accounts at the
bank.
Avg Cert Rate Average Certificate Rate The average interest rate paid by banks
for money on deposit in annual certificates of deposit. This average is calculated by multiplying each bank's rate by the total amount in certificate
accounts at the bank.
COMPETITIVE REPORT
Credit Rate The interest rate charged by the bank on money borrowed on Lines of
Credit.
Savings Rate The interest rate paid by the bank on money deposited in savings
accounts.
Loan Rate The interest rate charged by the bank on money borrowed on annual
loans.
Cert Rate Certificate Rate The interest rate paid by the bank on money deposited
in annual certificates of deposit.
Net Profit Net Income for the bank consisting of Net Interest less Operations
costs and Taxes.
Ret Earnings The Net Profit for the bank since the beginning of Banks in Action.
