Wells Fargo & Company Analysis

Good Essays
Wells Fargo & Company was incorporated on the 24th of January, 1929 a bank holding company. Its main purpose is to serve as a holding company for its subsidiaries. It has three segments of operation: Community Banking, Wholesale Banking and Wealth, and Brokerage and Retirement. The Company provides all sort of banking services in the area of retail, commercial and corporate purposes through their numerous banking stores and offices, the worldwide web, and other channels to cater for the needs individuals, businesses and institutions. Their services are available in all the fifty states, the District of Columbia and in other countries. It operates in the Money Center Banking industry (SIC Code 6021). Companies in this industry provides…show more content…
These practices such as good customer service, adopting to technology, effective management and the like have caused the decrease in operating costs which overshadowed the fall in revenue. Wells Fargo’s liquidity ratios are better than J.P. Morgan’s and but not impressive compared to the industry’s average. The debt to equity ratio for Wells Fargo stood at 1.13 compared to J.P. Morgan’s and the industry’s average of 1.42 and 1.09 respectively. This shows that Wells Fargo has been financing their growth with debts but not as aggressive as J.P. This shows that they are putting themselves at undue financial risk if the unexpected occurs. Morgan. A current ratio of 1.1 for Wells Fargo means that they can barely be able to cover their short term debts. J.P. Morgan on the will not be able to meet their short-term debt as they have a current ratio of 0.4. However, investing in Wells Fargo is risky because of its high debt to equity ratio which is greater than 1. This is bad as interest rates rise, additional interest must be paid out of another debt. Wells Fargo’s activity ratios such as the accounts receivable turnover (115 days) are in the same in J.P. Morgan’s and the industry’s average. What stands out is that, Wells Fargo is also efficiently using their assets to generate revenue than J.P. Morgan and the industry’s average. The assets turnover ratio for Well Fargo over the five-year period ending 2013 shows 0.70. On the other hand, JPMorgan and the
Get Access