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Brian_1234
WellsFargoWFResearchAnalysis.pptxWells Fargo (WF) Research Analysis
James O’neil
17 Feb 2022
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Common Size Analysis
For the past three years, the income statement for WF's revenue has been at 100%, with a Cost of Services growing in the computation.
The total cash has fluctuated over the years, with a gain of—twelve percent from 2019 to 2020 and a large reduction of Seventy-seven percent from 2020 to 2021.
The total stockholder's Equity has also increased over the last three years.
Trend Analysis
Trend analysis is used to examine the relationship between change's cause and effect.
Over the last five years, net income has declined by 39.23 percent, sales have decreased by 7.88 percent, total current assets have decreased by 47.23 percent, and shareholder equity has reduced by 9.76 percent.
This bear market trend analysis is defined as a market that is declining due to its inability to generate large profits.
When there is a net loss, it signifies that the stockholders' Equity will be reduced as a result of expenses incurred as a result of decreased assets or higher liabilities.
Financial Ratio Analysis
This study of the ratio results will determine how liquid the company is, whether management is profiting significantly from the WF's assets, and whether or not the company's financial performance needs to be improved.
Even though there were fluctuations over the years, WF remained a liquid firm. Liquidity is showing a declining trend in percentage rate, which could be attributed to the increase in interest rates.
From 2019 to 2021, the networking capital-to-sale ratio decreased by.44 percent. The networking capital-to-sale ratio is less than one, indicating that WF has little working capital and is properly spending its extra cash.
Evaluating Return
The Return on Equity is a tool for determining the worth of a company.
After all expenses have been met, the profit margin shows how much money is leftover. The net margin has fallen in percentage over the last three years.
The asset turnover ratio displays how much money was spent on each amount of assets. Over the last three years, there has been an increase, indicating they are more efficient with the available assets.
Recommendations
The present financial performance patterns and results for WF show that the company has adequate financial power and will be financially sustainable in the next 2 - to 3 years. WF's revenue and debt-to-equity ratio are two measures of its strong financial position.
The primary goal of financial leverage is to demonstrate how much of a business's assets are backed by Equity and how long the company can continue to grow profitably without a major debt burden.
When financial leverage's equity value drops, the company's value drops as well.
Year 2021 2020 2019
Net profit margin 0.18 0.19 0.1
Asset turnover 0.75 0.61 0.56
Financial leverage 1.48 1.77 1.49
ROE 21.14 18.75 15.7
Debt 0.17 0.18 0.22
