Financial Statement Analysis J P Morgan Essay

1937 Words Apr 18th, 2006 8 Pages
FINANCIAL STATEMENT ANALYSIS

2001 2002 2003 2004 2005
Current ratio Current 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
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Under the Debt to Assets , the total debt is .94 times larger than total assets in 2001. In the year 2002, the total debt is also .94 times larger than total assets. In the year 2003, It is still the same .94 ratio of total debt to total assets. In the year 2004, the debt is has now been reduced to .91 times as compared to total assets. Finally in 2005, the debt remains at .91 times as compared to the total assets. This is a good sign. Creditors and future investors prefer that there is a one to one ratio of total debt to total equity because it shows that the company will be able to pay its debt on time to creditors in case of bank closure due to bankruptcy or otherwise. 2001 2002 2003 2004 2005
Net profit ratio Net Profit before tax 1,628.00 1,612.00 6,668.00 4,414.00 8,470.00 Sales 32,181.00 25,284.00 23,444.00 30,595.00 45,200.00 0.05 0.06 0.28 0.14 0.19

NET PROFIT RATIO. Under the profit ratio, net profit before tax in 2001 is only five percent of the total interest income. In the year 2002, the net profit has increased to six percent of the total interest earned from bank services offered. The big surprise comes in the year 2003 because the net income has increased to twenty eight percent of interest income earned for that year. The net income has been reduced to a whopping

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