Description
This analysis is for J.P. Morgan Chase bank
Outline for your paper—less than 3 pages text.
Company overview (10%): Name, description of business, operating locations,
revenues, net income, EPS, stock price, number of employees and other relevant
information.
Balance Sheet (40%): Discuss significant accounting policies with an emphasis on
compliance with GAAP accounting (ignore insignificant items).
i. Revenue/Accounts Receivable: What are the revenue recognition and Bad debt
policies? Explain the reasons for unearned/deferred revenue balances.
Calculate the Collections and AR:Sales ratios.
ii. Inventory: Describe the inventory accounting methods. Calculate inventory
turnover ratios. Explain inventory write-downs/write-offs, if any.
iii. Tangible non-current assets: Describe the capitalization and depreciation
policies. What is the PPE: Sales ratio. Is this a capital intensive business?
iv.Intangible non-current assets: describe the capitalization and amortization
policies. What is the ratio of intangibles to total assets. Is management
philosophy to organically grow the business or to acquire other
companies/intellectual property?
v. Other: Highlight unusual items disclosed in the footnotes such as changes in
accounting, write-offs, gains or losses, contingencies.
Income statement (20%): Evaluate the income statement as well as non-financial
information to address the following items.
i. Income statement unusual items: Explain the nature of major restructuring,
impairments, discontinued operations. What is the impact from these items in
future periods?
ii. Ratios: Calculate gross profit/margin and net income:sales ratios
Analysis of statement of cash flows (20%)
i. Compare net income amount to the cash flow from operations amount—why
are they different?
ii. How does the company invest its cash?
Investment recommendations (10%)
i. Assume you are an investment analyst and are tasked to make a buy/sell
recommendation for your company given today’s stock price. What is your
recommendation and why?
