Financial Statement Analysis for Bank of America Merrill Lynch

4149 Words17 Pages
Objective This objective of this report is to analyse and evaluate the financial data of Merrill Lynch through 2006, 2007 and 2008. It also looks at the developments in the financial markets during these years and its impact on Merrill Lynch, a what-if analysis of the possible financial performance that might have existed had the economic downturn not occurred and in the end summary and conclusions based on the findings. Introduction to Merrill Lynch Merrill Lynch is one of the world’s premier providers of wealth management, securities trading and sales, corporate finance and investment banking services. With over 15,000 financial advisors and $2.2 trillion in client assets it is the world's largest brokerage. Formerly known as Merrill…show more content…
Dividend per share (DPS) is the total dividends paid out over an entire year (including interim dividends but not including special dividends) divided by the number of outstanding ordinary shares issued. As per a Reuter’s article in April 2007, Merrill Lynch had announced that it would buy back as much as $6 billion of its common stock over time, as it looked to return capital building up on its balance sheet to investors. This meant less shares outstanding or in other words lower denominator in the calculation of Dividends per share thus increasing the overall value of the fraction which meant a higher amount in Dividends per share. The company suffered the worst performance in its history as per the annual report of 2007. They reported a net loss from continuing operations for the full year of $8.6 billion, or $10.73 per fully diluted share, following write-downs resulting from their exposures to the U.S. mortgage market in U.S. ABS (Asset Backed Securities) CDOs (Collateralized Debt Obligations) and sub-prime residential mortgages and securities. Out of the reported losses, $7.9 billion were solely those resulting from Collateralized Debt Obligations. Performance in 2008 The balance sheet of Merrill Lynch for Dec 2008 shows the Interest income under Mortgage backed securities and Asset backed securities as $ 107.8 billion. The net earnings before taxes show a loss of $633.03
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