Analysis of Jp Morgan

Topics: Financial ratios, Financial ratio, Subprime mortgage crisis Pages: 29 (8806 words) Published: February 28, 2013
1. Executive Summary ---------------------------------------------------------------------------------- Pg 3 2. Introduction
2.1. Company’s Profile -----------------------------------------------------------------------------5 2.2. Competitor’s Profile --------------------------------------------------------------------------6 3. Financial Overview

3.1. Analysis Operating Profit --------------------------------------------------------------------7 3.2. Earnings by Business Segment -------------------------------------------------------------8 4. Stock Analysis

4.1. Factors Affecting Stock Movement -------------------------------------------------------9 4.2. Stock Movement Analysis ------------------------------------------------------------------10 5. Financial Statement Analysis (Financial Ratios)

5.1. Current Ratio ----------------------------------------------------------------------------------15 5.2. Debt Ratio --------------------------------------------------------------------------------------16 5.3. Return on Assets Turnover ----------------------------------------------------------------17 5.4. Assets Turnover Ratio -----------------------------------------------------------------------18 5.5. Debt Equity Ratio ----------------------------------------------------------------------------20 5.6. Capital Adequacy Ratio ---------------------------------------------------------------------21 5.7. Loan to deposit ratio ------------------------------------------------------------------------22 5.8. Earnings per Share ---------------------------------------------------------------------------23 5.9. Payout Ratio -----------------------------------------------------------------------------------24 5.10. Interest Coverage Ratio -------------------------------------------------------------------25 5.11. Return on Equity Ratio --------------------------------------------------------------------26 5.12. Price to Earnings Ratio --------------------------------------------------------------------27 5.13. Dividend Yield Ratio -----------------------------------------------------------------------28 6. Cash Flow

6.1 Cash and Cash Equivalents -----------------------------------------------------------------30 6.2 Cash from Operating Activities (CFO) ----------------------------------------------------30 6.3 Cash from Investing Activities (CFI) -------------------------------------------------------31 6.4 Cash from Financing Activities (CFF) ------------------------------------------------------31 6.5 Operating Cash Flow to Debt Ratio -------------------------------------------------------32 6.6 Overview of JPMC’s Cash Flow ------------------------------------------------------------32 7. Conclusion -------------------------------------------------------------------------------------------------33

Executive Summary

In general, the Investment Banking (IB) division of JPMC forms the bulk of its earnings. In 2008, a $10 billion markdown on mortgage related positions and a mix of other factors like a decrease in total net revenue, a higher provision for credit losses and a higher total noninterest expense affected the IB division aversely and sent earnings plunging. However, JPM bounced back in 2009 to boast a remarkable increase of 8.08 billion in earnings within a mere span of a year. In the same vein, net revenue and income dipped from 2007 to 2008 as a result of the subprime mortgage crisis and the financial meltdown that gripped the US economy. Fortunately, both net revenue and income have been on a steady increase since 2008. This is predominantly due to JPMC’s financial discipline that ensured its speedy recovery as well as the acquisition of Washington Mutual (WaMU), which saw WaMu’s revenue being incorporated into the JPMC’s overall revenue.

Industry Outlook

Even as the industry outlook in 2010 continues to improve, with signs of growth and stability resurfacing in the global as well as U.S....
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