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Running head: FINANCIAL ANALYSIS JPMORGAN CHASE

Financial Analysis JPMorgan Chase


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Institution

Financial Analysis JPMorgan Chase

Financial Analysis JPMorgan Chase


In the income statement of the major items for the financial analysis are the net revenues,
operating expenses and the net income. The net revenues connote the sales volume for the
company that would help in understanding the wholesome growth of the company economically
(JPMorgan Chase & Co., 2015). The net operating expenses provides the information of how the
management has been controlling the cost to enhance economic growth for JPMorgan chase. The
net income reveals how the JPMorgan chase management maximizes the wealth of the
shareholder each year. The statistics on these three performance since 2011 to 2015 has been
summarized on the below graph.
Graph 1.0: Performance Metrics from Income Statement.

Performance metrics Income statement


$120,000.00
$100,000.00
$80,000.00
Millions ($)

$60,000.00
$40,000.00
$20,000.00
$-

2011

2012

2013

2014

2015

Year
Total Net Revenue

Net Income

Total Non Interest Expense

From the above graph, there has been a steady flow in net revenues which ranges from
$80 billion to $ 100 billion. This means the management has been on the forefront in ensuring
stability in the sales volume. The operating expenses have been on the decline since year 2011.
The net income on the other, has been increasing since 2011. From this analysis, it is evident that

Financial Analysis JPMorgan Chase

JPMorgan chase has had higher economic growth over the years which has culminated into the
growth in its net profits (Beutler, 2014).
On the balance sheet, the three main items used in this analysis are the total assets, long
term debt and common shareholders capital. These three items are quite vital in understanding
the net worth of the company. The long terms debt shows leverage that the company has and how
best the investors can rely on it for more profitability (Healy, & Palepu, 2012). The shareholder
equity shows how their wealth has grown over the years and the control the shareholders have on
the firms management for Chase Company. The following chart provide an insightful
information about the trends brought on board by the company through three performance
metrics (JPMorgan Chase & Co., 2015).

Balance Sheet Performance Metrics


$3,000,000.00
$2,500,000.00
$2,000,000.00
Millions

$1,500,000.00
$1,000,000.00
$500,000.00
$-

2011

2012

2013

2014

2015

Year
Total Assets

Long term Debt

Shareholders Equity

From the above chart, it is evident that the firm has high amounts of assets from the year
2011 which has been increasing until the year 2014. The firm has also increased in terms of the
shareholders equity. The debts have been reducing since the year 2011 but at a slow rate. So far

Financial Analysis JPMorgan Chase

there are no fluctuation in the amounts of debt of the company meaning the firm management is
conservative in terms of debt management (JPMorgan Chase & Co., 2015).
There are three major sources of funds according to the Company Cash flow statement.
There sources of funds entail the retained earnings, the long terms debt and the shareholders
common equity (Healy, & Palepu, 2012). The retained The company has assumed a conservative
dividend policy which allows for the inception of low amount dividends which increasing the
amounts that are ploughed into the company. Most of the sources of funds come from the
common shareholders. The debt capital is lower than the common shareholder capital (JPMorgan
Chase & Co., 2015).
The company that is responsible for the issuance and the content of Chase financial
statements is PWC which is an independent auditing firm. The firm is known worldwide for its
integrity in the analysis and the preparation of the financial statement. To this end, the financial
statements are deemed to be quite authentic. The notes on the balance sheet shows how the PPE
has been treated in terms of allocation of the depreciation shows that the statements have been
structured in accordance with the GAAP (Healy, & Palepu, 2012).
From the management discussion and analysis section, I learnt that the company has been
on the upward trend in terms of increasing its profits. Additionally, I realized that it has invested
much in technology to enhance its operations. One thing I learnt about the form 10k is that the
company has been quite compliant in terms of paying the taxes and hence it has not had any legal
issues in the recent past (Beutler, 2014). Additionally, I realized that the firm has a net worth of
over $100 billion which makes it to be one of the biggest in the United States.
In conclusion, JPMorgan Chase & Co has a good financial base. its performance in terms
of sales is not affected by the notion of high price volatility of stock in the market. Again the firm

Financial Analysis JPMorgan Chase

has managed its long terms debt in the most effective way possible and this has helped it provide
a good financial base for its economic growth. The general health of the company is good for a
potential investor.

Financial Analysis JPMorgan Chase

References
Beutler, I. F. (2014). What makes wealth grow? A wealth sensitive financial statement analysis.
Journal of Financial Counseling and Planning, 25(1).
Healy, P. M., & Palepu, K. G. (2012). Business Analysis Valuation: Using Financial Statements.
Cengage Learning.
JPMorgan Chase & Co., C. (2015, August 12). Annual Report and Proxy | JPMorgan Chase &
Co. Retrieved October 15, 2016, from
https://www.jpmorganchase.com/corporate/investor-relations/annual-report-proxy.htm