Financial Management: JP Morgan Chase and Co.

FINANCIAL
MANAGEMENT
JP Morgan Chase and Co.

Contents
Introduction................................................................................................................................2
Background of the company and ratio analysis.........................................................................2
Glimpse of the CSR activities....................................................................................................4
Conclusion..................................................................................................................................5
References..................................................................................................................................6

Introduction
The enhancement in technological innovations and globalised business practices have
led to requirements of even more transparent reporting of the business activities, in the
interest of not only the shareholders, but also the various stakeholder groups. Further, the
success in today’s dynamic business environment is highly dependent upon the evaluation of
the said financial statements (Higgins, 2012). The following report is aimed at exploring the
financial statements of the organisation JP Morgan Chase and Co. with the aid of the key
financial ratios. The analysis would be based on the computation of the key financial ratios
over the period of five years, together with the comparison of the same. The report would
additionally shed light on the corporate social responsibility segment of the financial
statements.
Background of the company and ratio analysis
The organisation JP Morgan Chase and Co. is headquartered in New York City, and
was founded in the year following the acquisition of the J.P. Morgan and Co by the Chase
Manhattan Corporation and hence the name. The company is engaged in the provision of the
investment banking, commercial banking, private banking, securities services, treasury
services, asset management services, wealth management and brokerage services (JP Morgan
Chase and Co., 2019a).
Ratio analysis is a technique of the financial statements evaluation where the data
from a company's financial statements is compared to gain valuable insights regarding
various aspects of the business operations such as the profitability, liquidity, operational
efficiency, and solvency (Fridson & Alvarez, 2011). The interpretation of the ratios for the
chosen company is presented as follows.
Profitability Ratios: Profitability ratios are the indicators of the ability of the business to
generate earnings and are calculated on the lines of the revenue, balance sheet assets,
operating costs, and shareholders' equity (Velnampy & Niresh, 2012).
2014 2015 2016 2017 2018
PROFITABILITYRATIOS
Returnon total assets(Net Income/Sales) 0.23 0.26 0.26 0.25 0.30
Operatingprofit Margin(EBIT/SALES) 31.6% 32.8% 36.1% 36.0% 37.4%
Grossprofit margin(GrossProfit/Sales) 84.68% 85.36% 82.44% 77.82% 71.10%
Net profit margin(Net income/Sales) 23% 26% 26% 25% 30%
Returnon Equity(Net Income/ Shareholdersequity) 9% 10% 10% 10% 13%