Part 2
Profitability
The net income per employee of JP Morgan is considered to be having relative stability at the moment in comparison to the past year. The current value of the company of the net income per employee is considered to be estimated at 192,417. The average equity is considered to be expected for hiking to around 290 B in 2022, though the value of the assets in average shall most likely to be falling to around 3500 B. The historical analysis of the income statement accounts of the JP Morgan inclusive of the GDP as 125 B and the net income is 40B can help in showing the performance of JP Morgan in making profits (Chesnutt et al., 2021). Evaluation of the JP Morgan income statement over time for spotting the trends is considered to be a great complimentary tool to the technical analysis of the tradition and can also help in indicating the direction of the future profits and losses of JP Morgan. The analysis of the financial statement is considered to be much more than the review and the examination of the latest reports of accounting of JP Morgan.
Liquidity
Analysing the cash flow of JP Morgan over time is considered to be an outstanding tool for projecting the future capital expenditures of JP Morgan as well as for the prediction of the amount of cash required for covering the sales cost, expenses of the research and development and the expansions of the production. The investors should almost consistently be looking for the trends in the indicators of the cash flow inclusive of the net cash flow business acquisitions and disposals of 81.7 M and the issuance repayment of the debt securities of 16 B as it is considered to be a great indicator of the ability of the company for the for the facilitation of the growth of the future, repaying the debt on time along with paying out the dividends. The analysis of the financial statement is a specific way than just the review and the evaluation of the company that prevails the accounting reports for predicting the past.
Working Capital Management
The working capital management is a strategy of business designed for making sure that any organization operates with efficiency through the monitor and usage of the current assets and liabilities to the most effective usage. The efficiency of the working capital management can possibly be quantified with the usage of the ratio analysis. The management of the working capital can help in the improvement of the cash flow management of the company and the earnings of the quality through the usage with the efficient resources. The working capital index of 2020 rose to the highest level in around 10 years, as the broader spread lockdowns, which affected the supply chains as an outcome of the crisis of the pandemic, in combination with the stalling of the demand of the services and products across several industries as the worldwide economy seemed to have gone into recession leaving the corporates with the higher levels in terms of excess inventories.
| BALANCE SHEET RATIOS: Stability (Staying Power) | ||||
| 1 | Current | |||
| Current Assets | 2434.00 | 1.034424 | ||
| Current Liabilities | 2353.00 | |||
| 2 | Quick | |||
| Cash + Accts. Rec. | 2354.00 | 1.907618 | ||
| Current Liabilities | 1234.00 | |||
| 3 | Debt-to-Worth | |||
| Total Liabilities | 1243.00 | 0.100713 | ||
| Net Worth | 12342.00 | |||
| INCOME STATEMENT RATIOS: Profitability (Earning Power) | ||||
| 4 | Gross Margin | |||
| Gross Profit | 23.00 | 0.000353 | ||
| Sales | 65222.00 | |||
| 5 | Net Margin | |||
| Net Profit Before Tax | 15670.00 | 6.813043 | ||
| Sales | 2300.00 | |||
| ASSET MANAGEMENT RATIOS: Overall Efficiency Ratios | ||||
| 6 | Sales-to-Assets | |||
| Sales | 23900.00 | 0.746875 | ||
| Total Assets | 32000.00 | |||
| 7 | Return on Assets | |||
| Net Profit Before Tax | 23200.00 | 10.08696 | ||
| Total Assets | 2300.00 | |||
| 8 | Return on Investment | |||
| Net Profit Before Tax | 2300.00 | 0.184147 | ||
| Net Worth | 12490.00 | |||
| ASSET MANAGEMENT RATIOS: Working Capital Cycle Ratios | ||||
| 9 | Inventory Turnover | |||
| Cost of Goods Sold | 23200.00 | 1 | ||
| Inventory | 23200.00 | |||
| 10 | Inventory Turn-Days | |||
| 360 | 360.00 | 0.029268 | ||
| Inventory Turnover | 12300.00 | |||
| 11 | Accounts Receivable Turnover | |||
| Sales | 1290.00 | 0.403125 | ||
| Accounts Receivable | 3200.00 | |||
| 12 | Accounts Receivable Turn-Days | |||
| 360 | 360.00 | 0.029268 | ||
| Accts. Rec. Turnover | 12300.00 | |||
| 13 | Accounts Payable Turnover | |||
| Cost of Goods Sold | 12900.00 | 2.388889 | ||
| Accounts Payable | 5400.00 | |||
| 14 | Average Payment Period | |||
| 360 | 360.00 | 90 | ||
| Accts. Pay. Turnover | 4.00 | |||
Solvency & Risk
Insurers have been learning from experience not for underestimating the volatility of the ratio of solvency. The lesson is considered to be of crucial necessity as the credit cycle is being approached by them. The volatility of the ratio of solvency is considered to be entirely driven by the risk of the market in terms of the SCR (solvency capital requirement) a significant portion of the emanation from the spread risk that in turn happens to be a credit rating. The analysis is considered to be showing that in a specifically average recession, around 19% of the companies that are A rated seem to be falling to the BBB or below, while 15% of the companies rated BBB seem to be falling below the grade of investment causing around 25% of the decreased point within the ratio of solvency for the average insurance company of Europe taking the migration of credit into consideration (Zeidan 2022).
Shareholder return
The total shareholder return is considered to be a specific measure of the financial performance that indicates the total amount reaped by an investor from a specific investment, specifically both shares and equities of stock. For the total arrival, typically expressed as a specific percentage, the factors of the total shareholders returns in both the dividends and the capital gains from a specific stock, it might also be inclusive of the specific distributions, splits of the stock and the warrants as well. The way it seems to be calculated; the total shareholders return leads to the same thing.
Overall financial performance
JP Morgan seemed to have reported the results of earnings for the second quarter and the first half of the year seemed to have ended in June in 2022. For the second quarter, the organization seemed to have reported that the net income interest was $15,500 million in comparison with the $12,800 million just a year ago. The net income was considered to be $8,700 in comparison to $12,000 million (Musthaq 2021) The basic earnings per share from the consistent operations was considered to be $2.80 in comparison to the $3.80 just a year ago.
Part 3
Separate entity concept
The concept of a sperate entity seems to be stating that there should be separate record of the transactions of the businesses and the owners, The concept is considered to be mostly crucial in regard to the sole proprietorship, since the circumstance in which the affairs of the owner along with the business are most likely to be intermingled.
Example
The owner cannot remove any funding from a business without any records or any kind of loan, distribution of the equity and compensation. Otherwise, the owner might be purchasing something as well as leaving it on the business books when in fact the owner seems to be treating it as a personalized possession.
Accruals/matching concept
In terms of accrual accounting, the matching principle is considered to be instructing that a specific expense might be reported within the similar kind of period in which the revenue in correspondence is considered to be earned and is also in association with the accrual accounting and the principle of revenue recognition help in stating that the revenues should be recorded during the period in which they happen to be earned, no matter when there is occurrence of the cash transfer (Mami 2021).
Example
The estimated amount of the bad debt should be recorded when any customer is invoiced, instead of when it leads to the place where the customer might not make the payment. The depreciation of the record for a fixed asset over the useful life, instead of charging it for expending in the purchased period.
Going concern concept
The concept of going concern is among the principles of concern, which seems to be stating that the entity of the business shall be continuing in running the operations within the foreseeable future and shall not be liquidated as well as forced for the operations that are discontinued for specific reasons (Rzeszutek 2020).
Example
The company owned by the state is considered to be a tough situation of the finances and is also seems to be struggling for the payment of the debt. The government is considered to be providing the organization a bailout along with guaranteeing every payment to the creditors. The company owned by the state is a specific going concern in spite of the poor position in the finances.
Prudence concept
Under the specific concept, the amount of the recognized revenues should not be overestimated or underestimate in terms of the expense amount (Fernandez 2019). Moreover, there should be conservativeness in recording the assets amount and no underestimation of the liabilities. The outcome should be the financial statements that are stated conservatively.
Example
The company is considered to be having the policy of giving the cash against the utilization of the credit seems to be leaving the employees as at the end of the year. Hence, the organization is considered to be in requirement of estimating the number of the leaves paid by the company in the future.
Reference
Baber, H., 2018. How crisis-proof is Islamic finance?: A comparative study of Islamic finance and conventional finance during and post financial crisis. Qualitative Research in Financial Markets, 10(4), pp.415-426.
Chesnutt, T.W., Hollis, M., Mitchell, D.L., Kavanagh, S., Pekelney, D.M., Putt, B. and Savage, S., 2021. Probability Management for Water Finance and Resource Managers. Journal: American Water Works Association, 113(1).
Custodio, C., Mendes, D. and Metzger, D., 2020. The Impact of Financial Education of Managers on Medium and Large Enterprises-A Randomized Controlled Trial in Mozambique.
Fernandez, P., 2019. Finance for Managers. Available at SSRN 3396089.
Hofmann, E., 2021. Procurement Managers Must Adopt Supply Chain Finance as a Standard Practice [Interview]. Beroe-Advantage Procurement.
Mami, T., 2021. Difficulties of Academic Achievement in Finance for Managers Course from the Student Perspective: Evidence from Gulf College Oman.
Musthaq, F., 2021. Development finance or financial accumulation for asset managers?: The perils of the global shadow banking system in developing countries. New political economy, 26(4), pp.554-573.
Ross, T.K., 2022. Baker’s Health Care Finance: Basic Tools for Nonfinancial Managers. Jones & Bartlett Learning.
Rzeszutek, M. and Szyszka, A., 2020. Overconfidence and Initial Public Offering (IPO) decisions: a behavioural corporate finance survey among polish managers. Argumenta Oeconomica, 1.
Zeidan, R., 2022. Why don’t asset managers accelerate ESG investing? A sentiment analysis based on 13,000 messages from finance professionals. Business Strategy and the Environment.
