Financial Statement Analysis J P Morgan

Only available on StudyMode
  • Download(s) : 291
  • Published : May 2, 2006
Open Document
Text Preview
FINANCIAL STATEMENT ANALYSIS

20012002200320042005
Current ratioCurrent Asset 471,282.00 552,006.00 535,360.00 785,855.00 764,409.00
Current Liability 146,955.00 186,074.00 127,750.00 140,392.00 139,788.00

3.21 2.97 4.19 5.60 5.47

CURRENT RATIO. The current ratio (Sannella, 1991) above shows that in the year 2001 the current assets of J P Morgan (MIkdashi, 2001) are 3.21 times larger than the current liabilities. The current ratio went down to 2.97 times in the year 2002. The current assets were 4.19 times larger than the current liabilities during the year 2003. The current ratio went up further to 5.60 times in the year 2004. The current assets finally went up to 5.47 times the current liabilities in the year 2005. The current ratio is very important because the creditors prefer that the current assets must be larger than the current liabilities. 2001 2002 2003 2004 2005 Quick RatioCurrent Assets – Inventory 471,282.00 552,006.00 535,360.00 785,855.00 764,409.00

Current liability 146,955.00 186,074.00 127,750.00 140,392.00 139,788.00

3.21 2.97 4.19 5.60 5.47

QUICK RATIO. Under the quick ratio method, the current ratio of J P Morgan (Laulajaine, 2003)for the year 2001 is 3.21. Also, in the year 2002, the current assets is 2.97 times larger than current liabilities. In the year 2003, the current assets increased to 4.19 times higher than current liabilities. Again, in 2004, the current assets increased to 5.60 times larger than current liabilities. In the year 2005, the current ratio has gone done a little bit. Current assets are now 5.47 times larger than current liabilities. The results using the current ratio and quick ratio are the same because the banks are offering services and they do not sell inventory. Only merchandising or buy and sell businesses buy items that we call inventory or purchases and then sell the items bought.

2001 2002 2003 2004 2005 Debt to Equity ratioTotal debt 651,926.00 716,494.00 724,758.00 1,051,595.00 1,091,731.00

Stockholders equity 41,099.00 42,306.00 46,154.00 105,653.00 107,211.00

15.86 16.94 15.70 9.95 10.18

DEBT TO EQUITY RATIO. Under the debt to equity ratio, the debt is 15.86 times higher than total stockholders equity in the year 2001. In the year 2002, the total debt is has increased to 16.94 times higher than total stockholders' equity. In the year 2003, the total debt decreased a bit to only 15.70 times the total stockholders' equity. In the year 2004, the debt to equity ratio had improved to 9.95 this means that the company had decreased its outstanding debt to total stockholders equity ratio by increasing by a big amount total stockholders' equity. Again, in the year 2005, the total debt has increased to 10.18 times higher than total stockholders equity. It is preferable, on the side of the creditors of J P Morgan, that the total debt is almost equal to or lower than the total stockholders equity. A negative debt to equity ratio shows that the total stockholders' equity is higher than the total debt. This situation means that the company owners will be able to pay all bills due. 2001 2002 2003 2004 2005 Debt to AssetsTotal Debt 651,926.00 716,494.00 724,758.00 1,051,595.00 1,091,731.00

Total Assets 693,575.00 758,800.00 770,912.00 1,157,248.00 1,198,942.00...
tracking img