Well, that might be a good point, since there are many ways to calculate efficiency ratios.
investopedia.com
As I say, for package deals I feel I shouldn't have to be so clever as to have to come up with measures by digging into balance sheets. (jmo, I could be wrong.) For any company, rather than calculate the number for one year and make a decision, you have to put that number context. Is it increasing or decreasing over time, how does it compare to benchmark or comparable banks? So some digging into the firm's history.
Anyway, for me, if I were to use efficiency ratios - and unless somebody like Spekulatius or Jim Clarke, or somebody else here tells me that I'm wrong, I would not use any of the four ways above, but rather
non interest expense divided by net income
This one's just more appealing to me because it's fast and easy to get and calculate. And over time, even if there's lots of garbage in net income, I suspect it ought to provide the same trending indication of how the particular bank's doing as the more sophisticated efficiency calculations. (Jmo, without any facts.) |
