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Interpret the financial statements ratios for WELLS FARGO & COMPANY and compare it to its peer.
Finance & Accounting
Pages 10 (2510 words)
WELLS FARGO & COMPANY – FINANCIAL RATIOS ANALYSIS NAME: INSTITUTION: SUBJECT: DATE: WELLS FARGO & COMPANY ANALYSIS Overview In 1852, Henry Wells and Henry Fargo founded the institution, and it has since then been expanding its operations. Wells Fargo and Company is one of the largest banks in the United States with 6,600 bank branches in 50 nations and a further 4000 mortgages and consumer finance offices.
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 Profitability ratios 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%. ...
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