Key Relationships Between Bank of America and Wells Fargo

The banking industry is highly competitive. The financial services industry has been around for hundreds of years. Wells Fargo has many competitors itself. In this paper, I will be doing a comparison of Wells Fargo & Company (WFC) and one of its biggest competitors, Bank of America Corporation (BAC). By analyzing looking at the financial ratios, one can see whether the company is successful or not. In the following, I will try to analyze and make a comparison of Wells Fargo’s and Bank of America’s recent performance in growth, income, and efficiency. Using a these criteria, I will determine which bank is the better buy according my analysis. My analysis of WFC & BAC’s performances

A balance sheet gives an overall picture of a company's financial situation by showing the total assets of a business, including liabilities plus equity. Current assets can include cash, accounts receivable, inventory and prepayments for insurance. The balance sheet is used by investors to get an idea of what the shareholders have invested, including

When you’re looking at the income statement, you can get information about profitability for a particular period. This is also called the profit and loss statement. The income statement is composed of both income and expenses. This statement can be used to deduct expenses from income and report either a net profit or net loss for that period. This statement will deduct all expenses from income and then report your net profit or net loss for that period. This will allow the business owner to determine if the business is bringing in a good amount of revenue to make a profit. The cash flow statement shows the movement in cash and balance over period. The cash flow can vary depending on the operating activities, investing and financing activities. This statement provides one business owner with insight to the company’s liquidity which is vital to the growth of the business. Reinvesting in business is very important, looking at the statement of retained earnings will tell a business owner how much were reinvested in the company. After profitable period, every big business has to give some of its profits to stockholders, and keep the rest amount as retained earnings. Out of all statements, retaining statement is important to companies that sells stocks to the public. This statement can also provide you with assets and liabilities information. These informations can be used to assess the financial health of your business. The results of a balance sheet will help the business owners to show the risk of liquidity and credit. Looking at these information you can measure trends and relationships to show where in the areas you can improve. These can also be compared to similar companies to show how the business measures up to leading competitors (Ali, 2010). In summary, the financial statements can provide a business owner

Understanding the finances of a company is important but knowing the significance of the financial statements is crucial to the operations as well. Reviewing the statement of financial position, operating statement and statement of cash flows serve as a guidance to management and executives on the day-to-day activities of an organization (Finkler et al., 2013). For example, the statement of financial position (balance sheet) shows the assets and

Separately, the balance sheet reports a company’s financial position while the income statement reports a company’s fiscal year profits and losses. The balance sheet measures a company’s financial position by reporting its assets, liabilities, and owner’s (shareholder’s) equity. The income statement measures a company’s financial performance by reporting its revenues, expenses, and net income/loss. When combined, they serve two vital purposes: (1) expand the accounting equation and (2) enable analysis using ratios to determine industry position or potential material misstatements. The increase or decrease in owner’s (shareholder’s) equity on the balance sheet is a direct result of the net

The Balance Sheet is another type of financial statement used by a company to see a snapshot of the company's financial position at a particular point in time. It lists the value of the company's assets followed by its liabilities. A balance sheet can be summed up by a simple equation:

Wells Fargo is a multinational financial institution, according to their website, it was founded on March 18, 1852. Wells Fargo has been around for a full history, in the financial services industry for over 160 years. This puts Wells Fargo in a place where they have built a reputation with their customers that has earned their trust in all of their financial needs over the 160 years. According to the Wells Fargo website, their “ their name is forever linked to the image of six horses stagecoach thundering across the American West, loaded with gold. This image puts Wells Fargo in the history of memories of Americans as well as part of their journey throughout American History. Wells Fargo & Company is a financial institution that offers financial

Wells Fargo is known to be a very strong financial lending company. Their strengths is the high cash volume of over $500 billion in assets as well as being a powerful distribution in the banking industry. Another strength is that they have relationships to serval different industries such as real estate, technology, media, financial services, retail, and many others. Since the 1800’s they have main their roots into the mind of individuals of being a strong and trustworthy company. Wells Fargo is a well-known name and so is their marketing strategy. The company is fundamentally base on hardworking and smart employees from all over types of diverse lifestyles. Being considered America largest bank ranking at number twelve in the most admired companies worldwide. A strategy that I believe Wells Fargo should take maximum advantage of its strength will be there market strategy. Wells Fargo is well recognize for their marketing strategy in the banking industry, so by marketing well their services is a way of building strategy like a bridge. It help deliver these services nationwide and reach the company goals by using various means available. Overall Wells Fargo strengths is the reason why they are top competitors. Now like any other company Wells Fargo has their weaknesses, these weaknesses include confusion or large scale activity. Being such a large company it is hard to personally know all individuals within the community. By being so large they become targets of fraud and

The banking industry and Wells Fargo must use analytics to better understand market segments to allow them to correctly identity which markets to enter. Without the correct capital allocation within certain markets, any financial institution can see their revenue shares dwindle thus creating a direct need for market forecasting.

“Explain the role of Wells Fargo in the financial system. Assess its exposure and performance from 2009-2016, after the global financial crisis, including a comparison with peers. Did it do well or badly?”

A Balance Sheet is a snapshot of an organization’s assets, liabilities, and owners’ equity at any given time. It allows the stakeholder’s to see the company's financial condition, as well as, presenting what is owned and owed. Assets are the things that are owned, and are referred to as capital. Liabilities are the amounts owed to others. In order to get an accurate picture, one must look at the whole document, and make comparisons amongst different line items.

Financial accounting statements can help a user to make future decisions by showing the concerned business’s health. It shows where money is being generated, spent and lost, depicting the financial performance and financial position. The statements can also help in situations such as raising fresh capital in the form of a loan, e.g. a bank will most likely require these statements to show the business’s credibility or worthiness. The statements help influence managerial decisions on which direction the business needs to head, and how to best maximize profit.

The “financial statements are formal reports providing information on a company's financial position, cash inflows and outflows, and the results of operations” (Hermanson, p.22). There are four main components that make up a financial statement. The four parts are, balance sheet, income statements, cash flow and, statement of owner’s equity. The balance sheets role is to define the company’s assets liabilities and revenue of the business. The income statement shows the income within the company. Cash flow reviews the position of the company by cash payments and receipts. Lastly, the statement of owner’s equity shows the amount of earnings, stock and other capitals of people in the company. (Hermanson, p.34-35).

Financial statements are a very useful tool for individuals interested in the organization. Investors use the information to determine if it a wise decision to put their money into the organization. Investors need to determine if the organization has been successful and profitable and will continue to be successful and profitable. Creditors use the financial statements to determine the amount of credit that should be advanced to the organization. Employees generally do not look at the financial statements, but if a new executive was thinking of joining the organization, he or she may want to see the potential of the organization to make sure the investors are becoming a part of a successful organization. Management uses the financial statements on a monthly basis to determine which areas of the organization are profitable and which areas of the organization that needs to be discontinued or restructure to become more profitable.

The article I chose this week relates to this week’s topic of organizational structure as it discusses the authority of the decision making process and where the ultimate decision of setting layers of accountability within the board structure of Bank of America. On September 18, 2015 Gretchen Morgenson reported that Bank of America is holding a special meeting on Tuesday, September 22 to gather shareholders to the company headquarters to vote on a restructuring of the organizational structure that would overturn a bylaw requiring that the board be overseen by an independent “chairman” which had been voted and approved at the 2009 annual meeting. Last fall the bylaw was overturned when the board elected its chief executive officer to also serve