JP Morgan Chase

Mathematics

fin 685

Southern New Hampshire University

Question Description

Assignment One- JP MORGAN CHASE

Prompt: Milestone Two should contain the following sections:

III. Projections: Based on the company’s financial statements, your analysis, and any additional evidence, project the company’s performance for the next three years. Are there any areas of concern? Is the company in good financial shape for moving forward? Discuss a best-case, worst-case, and most likely scenario, including a sustainable growth rate for sales based on existing financial statements and any macroeconomic and financial market conditions that might impact the firm’s strategic objectives. You must thoroughly address the assumptions behind your predictions, supported by spreadsheet calculations. At a minimum, your analysis must cover:

A. Weight of equity

B. Weight of debt

C. Cost of debt

D. Cost of equity

E. Tax rate

F. Value of the company’s stock compared to your forecasted value and free cash flow

Guidelines for Submission: Your draft must contain all of the elements listed above. It should be at least 5 pages in length (excluding the title page, references, supporting calculations, and appendices) and should follow APA guidelines. You must include calculations and appropriate graphs, tables, references, and other appendices as needed to support your written analysis. Cite your sources within the text of your paper and on the reference page.



Assignment Two- JP MORGAN CHASE-

Prompt: Milestone Three should contain the following critical elements:

IV. International Market Analysis: Analyze the market positioning of the firm in one foreign market. Examples of foreign markets can be found in the firm’s annual report. From secondary sources, pull the exchange rates between the U.S. dollar and the foreign market currency and use linear regression to predict the exchange rates for the next year. Lastly, analyze the different risk management tools used by the firm (for example, hedging, insurance, and so on).

Guidelines for Submission: Your draft must contain all of the elements listed above. It should be at least 5 pages in length (excluding the title page, references, supporting calculations, and appendices) and should follow APA guidelines. You must include calculations and appropriate graphs, tables, references, and other appendices as needed to support your written analysis. Cite your sources within the text of your paper and on the reference page.


I have attached resources for assistance.

Unformatted Attachment Preview

Running head: JP MORGAN CHASE CO. MILESTONE ONE JP Morgan Chase Co. Milestone One 1 JP MORGAN CHASE CO. MILESTONE ONE 2 Introduction Both investors and the management of any company strive to arrive at the right decision. The right decisions are of the essence to the management of a company because they determine whether the company will achieve its objectives and long-term goals, while to investors, they determine whether one will end up creating value for their money. It is for this reason that both management and investors usually analyze the available information to arrive at an informed decision. In this paper, the financial statement of JP Morgan Chase & Co. over the past three years will be analyzed to determine the company's financial health. Financial ratios that will be used to determine the bank's financial status over the past three years include profitability ratios, leverage ratios, liquidity ratios, efficiency ratios, as well as the bank’s market value. Company overview JP Morgan Chase & Co. is a multinational investment bank that is headquartered in New York City. The bank, which is ranked by the S & P Global as the largest bank in the U.S. by total assets, provides its customers with financial as well as banking services. As a brand, JP Morgan is used by private banking, investment banking, wealth management, as well as the treasury service divisions (JP Morgan Chase, 2020). Profitability ratios JP Morgan chase co.'s ability to generate income or earning relative to the bank's revenue, assets, operating costs as well as shareholder's equity over the past three years will be determined using profitability ratios. These ratios include net profit margin, return on asset, and return on equity (Schonfeld & Associates., 2015). Table 1: profitability ratios 2017 2018 2019 JP MORGAN CHASE CO. MILESTONE ONE Profit margin= (net profit/revenue) 3 0.245 0.298 0.315 Return on Asset= (Net income/average 0.010 0.013 0.014 0.127 0.139 total assets) Return on equity= (net 0.096 income/shareholder’s equity) Net profit margin JP Morgan chase’s net profit margin over the past three years increased year after year. In other words, the company’s net income as a percentage of its total revenue increased over the past three years. The increase in JP Morgan’s net profit margin indicates that the bank’s efficiency at converting revenue into actual profit improved year after year over the past three years. The increasing net profit margin implies that strategies the bank’s management adopted over the past three years were effective, and if they are maintained, then the company is bound to keep up with the same trend in the future (Schonfeld & Associates., 2015). Return on Asset Over the past three years, JP Morgan Chase managed to realize return on assets that increased year after year. The increasing return on assets indicates that JP Morgan's profitability relative to the bank's total assets improved every year since the year 2017. In particular, the increasing return on assets implies that over the past three years, the efficiency of the bank's management in using JP Morgan chase's assets to generate earnings improved year after year. The strategies that were adopted ended up being effective in ensuring that the bank’s assets would be used in an efficient manner to generate earnings (Schonfeld & Associates., 2015). Return on equity JP MORGAN CHASE CO. MILESTONE ONE 4 The same trend of increasing net profit margin and return on assets was experienced in JP Morgan’s return on equity over the past three years. In other words, the bank’s net income as a percentage of shareholder’s equity increased year after year over the past three years. The increasing return on equity indicate that JP Morgan’s management was effective in using shareholder’s equity to generate earnings. In summary, JP Morgan chase's profitability increased year after year as indicated by the bank's net profit margin, return on asset, and return on equity. The trend of increasing profitability indicates how effective the bank's management was in coming up with strategies that would enable the bank to perform well. Efficiency ratios Efficiency ratios are of the essence in determining how well JP Morgan's assets and liabilities were used internally over the past three years. They include the asset turnover ratio, receivable turnover, and fixed turnover ratio. Table 2: efficiency ratios 2017 2018 2019 Asset turnover= revenue/ total assets 0.040 0.042 0.044 Receivables turnover=Net credit 1.660 1.547 1.583 7.043 7.495 5.675 sales/average AR Fixed asset turnover= revenue /average fixed assets Asset turnover JP MORGAN CHASE CO. MILESTONE ONE 5 JP Morgan's asset turnover, which is a measure of how efficient the bank's assets were used to generate revenue over the past three years, increased year after year since 2017. The increasing asset turnover ratio indicates that the bank's management was efficient in using its assets to generate not only increasing earnings as indicated by the net profit margin but also increasing revenue over the past three years. Receivables turnover Another indicator of how efficient JP Morgan was over the past three years in using its assets and liabilities internal is the bank’s receivable turnover. JP Morgan’s receivable turnover over the past three years varied significantly by decreasing in the year 2018 as compared to 2017, and then increasing in 2019 in comparison to 2018. Overall, the company’s receivable turnover decreased in 2019 as compared to the bank’s receivable turnover in 2017. The decreasing receivable turnover is a cause for concern because it indicates that the bank’s effectiveness in collecting its money owed by its clients or receivables declined over the three years (Schonfeld & Associates., 2015). Fixed asset turnover JP Morgan’s fixed asset turnover varied significantly over the past three years. However, in general, the bank's fixed asset turnover decreased over the past three years. The decreasing fixed asset turnover implies that the efficiency at which the bank was using its fixed assets to generate revenue declined as well. Liability and leverage ratios JP Morgan’s financial health over the past three years was determined using liability and leverage ratios (Goel, n.d.). The two ratios that provided a picture of the bank’s financial health over the past three years include the debt-to-equity ratio and the debt/asset ratio. JP MORGAN CHASE CO. MILESTONE ONE 6 Debt to equity Over the past three years, JP Morgan had a high debt to equity ratio that was increasing year after year. The high debt to equity ratio indicates that over the past three years, JP Morgan has been aggressively financing its growth and everyday operations using debt rather than shareholder's equity. Additionally, the increasing debt to equity ratio year after year implies that the bank has been taking on more debt every year over the past three years. Table 3: debt to equity ratio Debt to equity ratio=total 2017 2018 2019 8.909 9.224 9.283 debt/shareholder’s equity Debt/asset JP Morgan's debt to asset ratio, which is an indicator of the bank's financial leverage increased year after year over the past three years. The increasing debt to asset ratio indicates that the percentage of the bank's total assets that were financed using debt increased year after year since 2017. In other words, JP Morgan was using debt instead of shareholder's equity to finance the acquisition of assets (Goel, n.d.). Table 4: debt/asset ratio debt/asset 2017 2018 2019 0.899 0.902 0.903 Market value Over the past three years, JP Morgan’s market value or its market capitalization increased despite dropping in 2018 as compared to 2017. The increasing market value implies that the JP MORGAN CHASE CO. MILESTONE ONE value that the investment community gave JP Morgan chase over the past three years increased as well. Also, the increasing market value of the bank implies that currently, it costs more to acquire the bank as compared to how much it would have cost to acquire it in 2017 (Goel, n.d.). Conclusion In summary, JP Morgan’s profitability ratios indicate that the company performed well financially over the past three years because of the increasing net margin, return on assets and return on equity. However, the bank's efficiency ratios indicate that it was not effective in using its assets and liabilities over the past three years. Lastly, the bank's leverage and liability ratios indicate that its growth over the past three years was financed mainly by using debt rather than shareholder's equity. 7 JP MORGAN CHASE CO. MILESTONE ONE 8 References Goel, S., n.d. Financial Ratios. JP Morgan Chase, 2020. JP Morgan Chase Annual Statement 2019. [online] Jpmorganchase.com. Available at: [Accessed 17 April 2020]. Schonfeld & Associates., 2015. IRS Corporate Financial Ratios. [Place of publication not identified]: Schonfeld & Associates. Running head: JP MORGAN CHASE CO. MILESTONE ONE JP Morgan Chase Co. Milestone One 1 JP MORGAN CHASE CO. MILESTONE ONE 2 Introduction Both investors and the management of any company strive to arrive at the right decision. The right decisions are of the essence to the management of a company because they determine whether the company will achieve its objectives and long-term goals, while to investors, they determine whether one will end up creating value for their money. It is for this reason that both management and investors usually analyze the available information to arrive at an informed decision. In this paper, the financial statement of JP Morgan Chase & Co. over the past three years will be analyzed to determine the company's financial health. Financial ratios that will be used to determine the bank's financial status over the past three years include profitability ratios, leverage ratios, liquidity ratios, efficiency ratios, as well as the bank’s market value. Company overview JP Morgan Chase & Co. is a multinational investment bank that is headquartered in New York City. The bank, which is ranked by the S & P Global as the largest bank in the U.S. by total assets, provides its customers with financial as well as banking services. As a brand, JP Morgan is used by private banking, investment banking, wealth management, as well as the treasury service divisions (JP Morgan Chase, 2020). Profitability ratios JP Morgan chase co.'s ability to generate income or earning relative to the bank's revenue, assets, operating costs as well as shareholder's equity over the past three years will be determined using profitability ratios. These ratios include net profit margin, return on asset, and return on equity (Schonfeld & Associates., 2015). Table 1: profitability ratios 2017 2018 2019 JP MORGAN CHASE CO. MILESTONE ONE Profit margin= (net profit/revenue) 3 0.245 0.298 0.315 Return on Asset= (Net income/average 0.010 0.013 0.014 0.127 0.139 total assets) Return on equity= (net 0.096 income/shareholder’s equity) Net profit margin JP Morgan chase’s net profit margin over the past three years increased year after year. In other words, the company’s net income as a percentage of its total revenue increased over the past three years. The increase in JP Morgan’s net profit margin indicates that the bank’s efficiency at converting revenue into actual profit improved year after year over the past three years. The increasing net profit margin implies that strategies the bank’s management adopted over the past three years were effective, and if they are maintained, then the company is bound to keep up with the same trend in the future (Schonfeld & Associates., 2015). Return on Asset Over the past three years, JP Morgan Chase managed to realize return on assets that increased year after year. The increasing return on assets indicates that JP Morgan's profitability relative to the bank's total assets improved every year since the year 2017. In particular, the increasing return on assets implies that over the past three years, the efficiency of the bank's management in using JP Morgan chase's assets to generate earnings improved year after year. The strategies that were adopted ended up being effective in ensuring that the bank’s assets would be used in an efficient manner to generate earnings (Schonfeld & Associates., 2015). Return on equity JP MORGAN CHASE CO. MILESTONE ONE 4 The same trend of increasing net profit margin and return on assets was experienced in JP Morgan’s return on equity over the past three years. In other words, the bank’s net income as a percentage of shareholder’s equity increased year after year over the past three years. The increasing return on equity indicate that JP Morgan’s management was effective in using shareholder’s equity to generate earnings. In summary, JP Morgan chase's profitability increased year after year as indicated by the bank's net profit margin, return on asset, and return on equity. The trend of increasing profitability indicates how effective the bank's management was in coming up with strategies that would enable the bank to perform well. Efficiency ratios Efficiency ratios are of the essence in determining how well JP Morgan's assets and liabilities were used internally over the past three years. They include the asset turnover ratio, receivable turnover, and fixed turnover ratio. Table 2: efficiency ratios 2017 2018 2019 Asset turnover= revenue/ total assets 0.040 0.042 0.044 Receivables turnover=Net credit 1.660 1.547 1.583 7.043 7.495 5.675 sales/average AR Fixed asset turnover= revenue /average fixed assets Asset turnover JP MORGAN CHASE CO. MILESTONE ONE 5 JP Morgan's asset turnover, which is a measure of how efficient the bank's assets were used to generate revenue over the past three years, increased year after year since 2017. The increasing asset turnover ratio indicates that the bank's management was efficient in using its assets to generate not only increasing earnings as indicated by the net profit margin but also increasing revenue over the past three years. Receivables turnover Another indicator of how efficient JP Morgan was over the past three years in using its assets and liabilities internal is the bank’s receivable turnover. JP Morgan’s receivable turnover over the past three years varied significantly by decreasing in the year 2018 as compared to 2017, and then increasing in 2019 in comparison to 2018. Overall, the company’s receivable turnover decreased in 2019 as compared to the bank’s receivable turnover in 2017. The decreasing receivable turnover is a cause for concern because it indicates that the bank’s effectiveness in collecting its money owed by its clients or receivables declined over the three years (Schonfeld & Associates., 2015). Fixed asset turnover JP Morgan’s fixed asset turnover varied significantly over the past three years. However, in general, the bank's fixed asset turnover decreased over the past three years. The decreasing fixed asset turnover implies that the efficiency at which the bank was using its fixed assets to generate revenue declined as well. Liability and leverage ratios JP Morgan’s financial health over the past three years was determined using liability and leverage ratios (Goel, n.d.). The two ratios that provided a picture of the bank’s financial health over the past three years include the debt-to-equity ratio and the debt/asset ratio. JP MORGAN CHASE CO. MILESTONE ONE 6 Debt to equity Over the past three years, JP Morgan had a high debt to equity ratio that was increasing year after year. The high debt to equity ratio indicates that over the past three years, JP Morgan has been aggressively financing its growth and everyday operations using debt rather than shareholder's equity. Additionally, the increasing debt to equity ratio year after year implies that the bank has been taking on more debt every year over the past three years. Table 3: debt to equity ratio Debt to equity ratio=total 2017 2018 2019 8.909 9.224 9.283 debt/shareholder’s equity Debt/asset JP Morgan's debt to asset ratio, which is an indicator of the bank's financial leverage increased year after year over the past three years. The increasing debt to asset ratio indicates that the percentage of the bank's total assets that were financed using debt increased year after year since 2017. In other words, JP Morgan was using debt instead of shareholder's equity to finance the acquisition of assets (Goel, n.d.). Table 4: debt/asset ratio debt/asset 2017 2018 2019 0.899 0.902 0.903 Market value Over the past three years, JP Morgan’s market value or its market capitalization increased despite dropping in 2018 as compared to 2017. The increasing market value implies that the JP MORGAN CHASE CO. MILESTONE ONE value that the investment community gave JP Morgan chase over the past three years increased as well. Also, the increasing market value of the bank implies that currently, it costs more to acquire the bank as compared to how much it would have cost to acquire it in 2017 (Goel, n.d.). Conclusion In summary, JP Morgan’s profitability ratios indicate that the company performed well financially over the past three years because of the increasing net margin, return on assets and return on equity. However, the bank's efficiency ratios indicate that it was not effective in using its assets and liabilities over the past three years. Lastly, the bank's leverage and liability ratios indicate that its growth over the past three years was financed mainly by using debt rather than shareholder's equity. 7 JP MORGAN CHASE CO. MILESTONE ONE 8 References Goel, S., n.d. Financial Ratios. JP Morgan Chase, 2020. JP Morgan Chase Annual Statement 2019. [online] Jpmorganchase.com. Available at: [Accessed 17 April 2020]. Schonfeld & Associates., 2015. IRS Corporate Financial Ratios. [Place of publication not identified]: Schonfeld & Associates. ...
Student has agreed that all tutoring, explanations, and answers provided by the tutor will be used to help in the learning process and in accordance with Studypool's honor code & terms of service.

This question has not been answered.

Create a free account to get help with this and any other question!