This website uses cookies to ensure you have the best experience. Learn more

Financial Analysis

2378 words - 10 pages

Financial Analysis

Chad Burrell

Dr. William Cheng

Financial Management

June 14, 2013

Company Overview
The company I choose to research is American Express CO., AXP, A.E. American Express strives to make it easier for consumers and businesses to purchase the things that they need for goods and services. Their vision is to make their brand the most respected card in the world. They have been able to accomplish this by allowing $888 billion in annual purchase volume, having 102.4 million cards in circulation, achieved $31.6 billion in annual revenue, and operate in over 130 countries. They operate with the following principles:
* Offer superior value to customers-by ...view middle of the document...

E. name. Again, every transaction that is processed through this program, A.E. gets a percentage of the charge.

Vulnerability of American Express
Like most credit card companies, the financial crash in 2008 did affected A.E, but not nearly as bad as competitors. One of the main reasons for this is because they are more stable financially. Half of A.E. card holders are small business owners and while they decreased their spending through this crisis, their risk level never increased. Once these small businesses felt comfortable spending again, the amount of purchases increased. This is significant because A.E. receives a certain percentage from every purchased through A.E. card. It is estimated that over 200 billion is charged through these small business owners (American Express website, 2013).
President Obama signed the Credit Card Responsibility and Disclosure Act. This law affects some of the following: age of card holders, restrictions on rate increases, what fees can be charged, more disclosure rules(Prater, 2009). Even though this law does affect A.E., most of these items will not affect the way they do business. A.E. already has a credit score rule that excludes low credit score consumers. Most of those under the age in the law are already excluded due to the credit score anyways. Credit card companies would usually be affected by the type of fees that they can charge, but A.E. doesn’t make much money from fees. Due to their restricted wealthier demographics, these fees are not a big source of income for A.E. The biggest source of income for A.E. comes through the discount revenues. This is a small fee for merchants as well as card holders on every purchase.

American Express Strength
Over the past five years A.E. debt to income ratio has been decreasing. The debt to income ratio has decreased by 38% since 2008 financial crisis (MorningStar, 2013). This shows that A.E. has kept their debt low as their income has increased. This has allowed the company to increase capital and use to strengthen the company, rather than pay off incurred debt.
Another ratio that is tied to the ability to pay off debt is the acid or quick ratio. The industry average for the credit card companies is 2.24, while A.E. is at .44(CSIMarket, 2013). Most times this low ration means a company cannot generate enough income to pay their liabilities, but for A.E. it is so low because the debts are paid off very quickly. A.E. has developed rules and regulations on how quick card holder’s debt is paid in full. As a result this number is low and speaks to how quickly they pay off their liabilities.
Since the acid ratio is extremely low it is good to look at their revenue and working capital for A.E. The working capital ratio is low and matches pretty closely to the acid ratio. A.E. has such a quick turn around on turning to cash this ratio would be expected to be low. The working capital for A.E. is 2.15 while the industry is at 24.7. ...

Other Essays Like Financial Analysis

Financial Analysis

1412 words - 6 pages 1, 2012, Middleton became a wholly-owned subsidiary of PM USA. As of December 31, 2012, Altria Group, Inc.’s segments included smokeable products, smokeless products, wine and financial services. In April 2014, the Company;s subsidiary Nu Mark LLC completed acquisition of e-vapor business of Green Smoke, Inc and its affiliates. Key statistics Caterpillar (stock code: CAT) Caterpillar Inc. (Caterpillar), incorporated on March 12, 1986

Financial Analysis

2148 words - 9 pages , Tennessee, Oklahoma City, Oklahoma; Peoria, Illinois, Winston-Salem. Dell has other outlets located abroad which include Penang, Malaysia; Xiamen, China; Bracknell, Slovakia; Lods, Poland and Limerick, Ireland. The US and India are the only countries which have all of Dell's business functions and provide support globally, Research and Development, manufacturing, finance, analysis and customer care. Here are some of the financial statements for Dell

Amazon.Com Financial Analysis

1199 words - 5 pages financial standing and efficiency of a business during the particular period. In order to make the purposeful decisions about the profitability and financial soundness of the business it is essential to consider analysis and interpretation of financial statements. Financial statement analysis and interpretation refer to the process of establishing meaningful relationship between the items of the two financial statements with the objective of

Financial Statement Analysis

793 words - 4 pages Financial Statement Analysis ACC 561/PR May 24, 2014 Financial Statement Analysis A company owner or manager requires financial statements to improve their business or to make any important decision regarding their operations. Puerto Rico is a land that has many companies doing business, some are local or international. CVS Caremark Corporation is one of the main traded companies doing business here. This Corporation provides integrated

Financial Statement Analysis

871 words - 4 pages Course Goals and Learning Objectives: The goal of this course is to provide students a practitioner’s perspective on financial statement analysis. The course will emphasize thinking beyond the text and will focus to how to critically examine financial statement information and management representations. The course will primarily focus on financial statements prepared in accordance with US GAAP, however differences between US GAAP and IFRS will

Financial Data Analysis

1377 words - 6 pages Financial Data Analysis HCS/577 July 14, 2014 Financial Data Analysis Patton - Fuller Community Hospital | Balance Sheet as of December 31 | 2009 and 2008 | (In thousands) | (Audited) | 2009 | 2008 | Assets | Current Assets | Cash and Cash Equivalents | $22,995 | $41,851 | Assets of Limited Use | $27,594 | $41,851 | Patient Accounts Receivable (1) | $58,787 | $37,666 | (net of Allowance for

cango financial analysis report

673 words - 3 pages BUSN460 Individual Financial Analysis Project Student Name: Instructions: Go to the CanGo intranet found in the Report Guide tab under Course Home Use the financial statements from the most recent year to fill in the table below. You may find some formulae calling for an average, e.g., average inventory, average receivables. Because we only have the Balance sheet for one year, you can only use the one

Financial Statement Analysis

2810 words - 12 pages ANALYSIS OF FIANANCIAL STATEMENT MUSTEHKAM CEMENT LIMITED PRESENTED TO: TAHSEEN MOHSIN PRESENTED BY: MUHAMMAD USMAN GHANI 105221003 (03454657966) PREFACE This is the project of financial statement analysis in which

Financial Analysis Paper

1676 words - 7 pages …………………………………………………………………………………………………5 Liquidity…………………………………………………………………………………………………5 Leverage………………………………………………………………………………………………...5 Profitability…………………………………………………………………………………………….6 Efficiency………………………………………………………………………………………………..6 Financial Ratios Data Assessment/Interpretation Summary……………………..6 3-year Trend Analysis………………………………………………………………………………………..6 Comparison with at least 2 major competitors………………………………………6-7 Comparison with

Financial Ratio Analysis

1582 words - 7 pages Griffith University, Gold Coast | Group Assignment for 2204AFE Financial Institutions Management | Comparative Analysis of ANZ and Westpac | | s2758329, s2762895, s2773847, s2784238Diamond, E., Dong, G., Huang, Y. & Lin, B.Due: 5th April 2012Tutor: Sonja Kobinger | | | The following report is a brief comparative analysis of two of Australia’s largest deposit-taking financial institutions (FI), Australia and New Zealand

Financial Statement Analysis - 1882 words

1882 words - 8 pages and investment advisers to ensure compliance with the law; oversee conduct of private regulatory organizations in the financial sector; and coordinate federal, state and foreign securities activities to ensure market stability and continuity. To fulfill these obligations, the SEC organizes itself into several divisions: Corporate Finance, Trading and Markets, Investment Management, Economic and Risk Analysis, and Enforcement. SEC has formed

Related Papers

Financial Analysis

793 words - 4 pages The three tools of the financial statement analysis are as follows: Vertical or Common Size Analysis, Horizontal or Trend Analysis, and Ratio Analysis. Each of the analysis functions is different from each other; however each of them serves to analyze pertinent data found on the financial statement. The Vertical Analysis functions to evaluate financial statement data by expressing each item in a financial statement as a percent of the base

Financial Analysis 1983 Words

1983 words - 8 pages that the company is valuing these accounts in a proper way. Thirdly, a financial analysis was also undertaken. It has been understood that the company, though there was a merger, is managing their resources well that resulted to positive book and cash returns. Lastly, the forecasts of the said company, where the analyst has determined the company’s value and the full set of financial statement for 2012, were estimated and calculated intelligently

Financial Analysis 3281 Words

3281 words - 14 pages the market along with the share in the market is a crucial aspect to analyze. In the long run company with good financial health and competitive advantage over its competitors can ensure the long future growth of the company. This study is an analysis of one of the local whiskey manufacturing company of the country. The analysis tries to acquire information of the company strength and weakness, opportunities and threats so as to know the

Financial Analysis 716 Words

716 words - 3 pages The Income Statement analysis of the company S.C. TEVI SRL for years 2006,2007,2008 A company's income statement is a record of its earnings or losses for a given period. It shows all of the money a company earned (revenues) and all of the money a company spent (expenses) during this period. It also accounts for the effects of some basic accounting principles such as depreciation. The income statement is important for investors because it's