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Company of my choice: JPMorgan Chase
- Performance
JPMorgan Chase is a financial institution with a very long history. Being a publicly traded firm, it is easy to research the company’s strength and weaknesses. The net profit margin, is the net income divided by total revenue, and represents how much each dollar generates in profit. Net profit margin can be expressed as a percentage or even represented in decimal form. When looking at JPMorgan Chase, we will notice that the net profit margin is 29.46% compared to the industry average of 20.11%. This indicates that the company is operating at a great profit and is above average.
- Activity
The ability of a company to collect loans is measured by receivable turnover ratio. The higher s ratio is, the more it indicates that the company efficiently collects it outstanding receivables. Turnover ratio for JPM Chase was 3.83 which is again above industry average.
Total debt to equity in the second quarter of 2018 was below average in the banking industry, and it was 1.31 This number mean that JPMorgan Chase operates with 30% more revenue than it needs to cover the expenses.
- Liquidity
Quick ratio is the ability of the company to pay current liabilities with cash. In the banking industry, quick ratio of 0.32 is considered average, while 0.14 is dangerously low. JPMorgan Chase has a quick ratio of 0.19 which is below industry average. This numbers are not ideal and even if JPM Chase is in financial good health, the cash to pay current liabilities should be increased.
JPMorgan Chase, being part of the Financial Industry, which is highly regulated by the federal government, has the weakness of trying to make money fast, and by doing so, ends up paying enormous high penalties. Being part of a very competitive industry, JPM Chase realized that focusing on customers will yield to higher profits than focusing only on profit. By changing their ways of doing business, the number of customers increased and so did the performance of the company.
References:
JPMorgan Chase & Co. (JPM) Retrieved from: https://www.investing.com/equities/jp-morgan-chase-ratios
CSI Market. JPMorgan Chase & Co. (JPM). Retrieved from: https://csimarket.com/stocks/singleFinancialStrength.php?code=JPM&Qr
