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Wells Fargo & Company – Financial Ratios Analysis - Research Paper Example
Author : gracielaharris
Finance & Accounting
Pages 10 (2510 words)
Wells Fargo and Company undertakes the following activities; retail, consumer and corporate banking, insurance, leasing of equipment, investment management etc. its diversified business activities offers the bank a competitive advantage in the market (Chandler, 2006, 7)…
The bank has positioned itself with a niche in specialized lending activities. It is the nation’s largest consumer lending bank with profits as high as $4 billion for the third quarter of 2011.
Since 2008, Wells Fargo & Company has enjoyed increased revenue year by year until 2010. The three quarters for 2011 have however, experienced an increase in its earnings. The highest rise in its net income was attained from 2008 to 2009 of 362% increase i.e. from $ 2,655, 000 to $12,275,000. This has since then stabilized at the $12million range.
Financial ratios analysis
Return on assets
The ratio was 0.96% in 2008 and has risen to 5% in 2010. The return on assets has been increasing steadily from 2009 to date. It rose sharply in 2008/2009. Investment in bonds and notes, preferred and common stocks and other securities in its diversified portfolio of assets have seen a tremendous rise in its assets for the last three years. The ratio indicates that the returns from use of assets in the company are effectively invested in to generate high earnings for the bank. A comparison with the peer shows a big difference. The peer has ROA of 2.2% currently and the trend for the 4 years is an increase from 0.8%. ...