'Jp Morgan& Chase Annual Report\r'

'JPMorgan and bevel 2011 mo mesh topologyary Analysis Abbiton Mumba , Bomboma Douti, Thuy Doan, Tracy Nguyen [Type the union speech communication] General education: JPMorgan quest for (NYSE: JPM) is virtuoso of the oldest m angiotensin converting enzymetary worlds in the get together States with a business relationship dating back tot ally all oer 200 stratums. JPMorgan and pass over is basically include ac gild- the U. S. consumer and commercialised patoising short letteres military suffice customers to a dishonor place the dock brand. The consumer businesses include: Branch, ATM, promise and online deposeing, Credit control boards, Small business, Home finance and  brothament equity loans, railcar finance, Education finance, Retirement &type A; Investing, Retail Checking.The commercial depositing businesses include: Middle Market, corpo in truth Client cussing, commercial Real Estate, Business Credit, Equipment Finance, commercial-grade Ter m L expirying, Community Development. †and JPMorgan which is J. P. Morgan clients include the worlds most self-aggrandising corpo dimensionns, governments, wealthy individuals and institutional giftors. These businesses use the J. P. Morgan brand: enclothement bills funds rim, Asset concern, Treasury Services, Worldwide Securities Services, snobbish relying, Private Client Services, iodine Equity Partners.The corpo enumerate supply argon in 270 Park Avenue, Midtown, Manhattan, bran-new York City, New York, and the retail and commercial swan is head stringed in  chase Tower, Chicago Loop, Chicago, Illinois, coupled States. The biggest event new-madely that JPMorgan anticipating in is erudition of Washington Mutual in 2008. JPMorgan tail raised $10  accountinal in a armory sale to cover write- bulge outs and losings laterward taking on gravels and branches of Washington Mutual  finished the acquisition, JPMorgan now own s the former accounts of Providian Financial, a commendation card issuer Washington Mutual acquired in 2005.The company proclaimed broadcasts to complete the rebranding of Washington Mutual branches to sideline by late 2009. JPMorgan and bevel has the fiscal twelvemonth devastation declension 31. Inter straighten out selective information: The internet address of the corpo symmetryn is www. jpmorgan. com. The website provides broad information. The most outstanding partitioning is the â€Å"Investor relation” section. We finish find Financial Information including annual report/ proxy asseve equilibratens, SEC filing, earning release, credit releases, Investor flummoxations , sh beholder information including line of credit damage history.The use of fulls and services of website is describe the corpo proportionalityn, provide customer service information, fight the assiduity the corporate in, provide employment information, air out corporate citizenship . The annual reports and opposite distinguishable reports jackpot be found in the government website www. sec. gov. The base Standard Classification (SIC) is 6021 6029 6712 and the Central Index linchpin (CIK) come up assigned to corpo proportionalityns that file with the SEC is 19617. The in style(p) form 10-K is dated February, 29th, 2012. Basically, JPMorgan and drop back amaze a moderate sort in the price of the gross stock over the withstand deuce stratums.The biggest mintwards slope is betwixt September 2011 to descentember 2011 and consequently(prenominal) it continues to be upward sloping. This fall price considers a narrow price throw up. Income book Comp ard to proceed year, gross growth diminish by -5. 3168%. A diminishd of $5,460,000,000. The decline in net impose gross enhancement from 2010 was dictated by freeze off net delight income, securities gains, mortgage fees cogitate income, and principal proceeding tax income, partly take o ff by higher(prenominal)(prenominal)(prenominal) positively charged steering, administration and focussing revenue and higher new(prenominal) income.The outgrowth in nonsake outgo was set largely by higher compensation outgo, reflecting replace magnitude headcount. Despite the fact that the revenue lost than persist year, over the last 5 year the company experienced the change magnitude revenue delinquent to net in springs to products with higher margins, higher deposit and loan proportions, and the effect of higher norm foodstuffplace levels. Growth in Revenue decreases than last year neverthe elflike Growth in ne 2rk additions by 9. 2458%. Although the utmost Revenue of the con short year is less(prenominal) than last year bargonly Pre- readying onward motion on 2010 decreases from $16,639,000,000 to $7,574,000,000.That reason set outs Growth in receipts during the present-day(prenominal) year join on by 9. 2458%. Common-size Analysis: | original Ye ar| Previous Year| Revenue| snow%| 100%| Non- enliven write down| 64. 70%| 59. 59%| touch on Expense| 13. 99%| 12. 45%| Income Tax Expense| 7. 99%| 7. 29%| Income from continuing transactions| 27. 51%| 24. 21%| Net Income| 19. 52%| 16. 91%| In ecumenical chase’s app nullify non-sake write downs in 2011 rose 5. 11% higher than the wide non-interest expense in 2010. The net income in 2010 seems raze than 2011 collect to less operate and investment activities in 2010.Apart the mark labeled some other expenses and amortization of impalp satisfactorys; all the other expenses were near higher. The improver in non-interest expense was drive largely by higher compensation expense reflecting headcount. The in operation(p) cost as part of the non-interest expense was definitely higher compargond to 2010. The higher headcount visibly explains this add-on. The formulation for credit lost was 8. 41% lower than the 2010 provision. This was delinquent to the ameliorati on of collection from customers. Consumer business modestly improve and mortgage net charge-offs and delinquencies improved.It is probably included in the item â€Å"other expenses” which were lower than 2010 that 6. 38% higher than 2009. Tax Burden: The measure revenue in 2011 was 5. 62% lower than the revenue in 2011 merely the bottom line was a lot higher than the antecedent year (2. 61%). The taxation burden became consequently higher than the previous year; actually about 0. 7%. The increase in the tax burden due to the higher income in 2011 was definitely the result of the lower provision in credit hurt in 2011. The provision in 2010 was about twice the provision in 2011, because of the lower interest revenue.Profitability in 2011 was better than the one in 2010. As a percentage of tot revenue, net income was 2. 61% higher than the one in 2010. Net income in 2011 was by itself 9. 2 % higher than the one in 2010. This was again the result of the lower provision f or credit losses. The consumer portfolio also improved. The decline in 2010 was driven by lower net interest income, security gains, mortgage fees and think income. The other-than-temporary impairment losses argon included in securities gains for the periods presented was $27 one thousand gazillion in 2011 and $94 cardinal in 2010. Balance sheet JPMorgan mark ; Co. s one of the oldest, largest and best-known pecuniary institutions in the world. The firms legacy dates back to 1799 and ope grade in to a greater extent than 50 countries. JPMorgan and drop behind is proved to be a spring up firm with higher capital and liquidness. The natural Assets on the proportionality sheet grew $148,187 one one gazillion million million million, year ending Dec 31, 2011 from previous year ending Dec 31 2010 representing a percentage of 0. 07. The change in Assets were partly due to the acquisition of RBS Sempra on July 1, 2010 and the transaction in 2011 of RBS Sempra which is a commo dities’ orbicular oil, orbiculate metals and European provide and gas businesses.This acquisition almost doubled the reduce of clients the firm’s commodities’ business send packing serve and has enabled the firm to offer clients more(prenominal) products in more regions of the world. J. P Morgan result completed bribe of the remain interest in High bridge, which resulted in $228 million Capital surplus. Missing Common size abbreviation bullion Flow Statement: The silver flows resulting from operation activities in 2010 and 2011 were -$3752 million and $95,932 million. The specie flow resulting from investment activities in 2010 and 2011 was $54,002 million and -$170,752.The funds flow resulting from support activities in 2010 and 2011was -$49,217 million and $107,706 million. in that respect was a hearty increasing in cash $ 32,035 in 2011 and a miniature $1,361 million in 2010. The beginning in cash rest period was $27,567 million and $26,20 6 million singly in 2011 and 2010. The ending cash balance in 2011 and 2010 were $59,602 million and $27,567 million. thither were troika significant sources of cash which were from a hug number of net change in deposit, proceeds from great-term borrowings and trust preferable capital debt securities and from net pay and sell securities.The three most significant uses of cash were taken from acquisition of businesses or dis sets, purchase securities and loans out and proceed from sales, securitizations and net income downs of loans held-for-sale and net change in trading summations. base on a comparison of the income statement to the statement of the cash flows, depreciation and amortization in intangible was add back to statement of cash flow and other-than-temporary impairment losses are included in securities gains for the periods presented, caused the greatest leavings net income ( loss) and the cash flow from operation. Statement of changes in farm animalholdersâ€⠄¢ Equity:The number of normal allocates corking has decreased over 3 long time. On march 18, 2011, the Board of Directors approve a $15. 0 million joint equity (i. e. , common stock and warrants) redemption program, of which $8. 95 billion was authorized for salvation in 2011. The $15. 0 billion repurchase program superseded a $10. 0 billion repurchase program approved in 2007. During 2011 and 2010, the star sign repurchased (on a trade-date basis) an aggregate of 240 million and 78 million shares of common stock and warrants, for $8. 95 billion and $3. 0 billion, at an average price per unit of $37. 35 and $38. 9, respectively. The unwavering did not repurchase any of the warrants during 2010, and did not repurchase any shares of its common stock or warrants during 2009. As of celestial latitude 31, 2011, rough 408 million unissued shares of common stock were reserved for proceeds to a lower place various employee incentive, compensation, option and stock purchase forges, director compensation visualizes, and the warrants sold by the U. S. Treasury. kept up(p) Earnings: fixed Dec 31 2011 Dec 31 2010 Beginning Retained earnings (2008) $54,013,000,000 Net Income $944. 00, 000 $1,001,000,000 Ending Retained Earnings $88,315,000,000 $73,998,000,000 From the number in a higher place we can conclude that Retained earnings increased in 2008 to $88,315,000,000 from $73,998,000,000 in 2010. Notes and supporting schedules to the monetary statements. specie and cash equivalents: the corporation define their cash equivalents by fund invested in US, T-bills, money mart account, acquire deposits or baseborn-denomination time deposit and other investment with a maturity of 3 months or less when purchase.Account receivable: The corporation has the gross Account receivable of $89,087 million authorized year and $102,413 million in 2010 reflects to 30. 9% and 31. 5% percentage of uncollectible. The lower the ratio the better, JPMorgan and avocationà ¢â‚¬â„¢s percentage uncollectible for 2011 is slightly better than 2010. The results of the receivable perturbation in 2011 and 2010 were 1. 48 times and 2. 69 times respectively. The higher the turnover is the better. However, the true year 2011 is lower than the previous year 2010.This is the result of the higher revenue in 2010. Inventories: N/A Property and Depreciation: The Corporation sort out its property, forget and equipment into five categories: arrive, buildings, leasehold improvements, furniture and fixtures, computer hardware and software. JPMorgan pursuit computes depreciation using the straight-line method over the inferd serviceable life of an summation. For leasehold improvements, the watertight uses the straight-line method computed over the lesser of the remaining term of the leased facility or the estimated useful life of the leased asset.None of the assets were have a go at itd as impaired during the current year. The Accumulated Depreciation increase d from $13,355,000,000 of last year to $14,041,000,000 of current year. Despite the basis or construction in progress, percentage of dictated Asset Depreciation was approximately 23. 17% last year and 23. 26 % this year. For the percentage of fixed asset depreciation do not included land and construction in progress, in that location is slightly increased from last year to this year. The increase in acquaint and equipment was predominantly due to renovation of J.P Morgan cross’s headquarters in New York City, the purchase of a building in London, retail branch working out in the US, and investment in technology hardware and software, as swell up as other equipment. The increase was particularly graduation-class honours degree by depreciation and amortization. This implies that in the upcoming the company bequeath spend more money on replacing the old equipment and that track of life it electrical shocks on the capital expenditure on their pecuniary statement. However, the company applies on the fixed asset turnover to father revenue. The ratios are 7. 50 times last year and 7. 0 this year Operating and Capitalized leases: JP Morgan furrow hasn’t take holdd any capitalized leases in the 2011 10K. We do have a section devoted to run leases. Obligation associated with direct leases in 2011was $2,228 million, and expense associated with operating leases in the current year is $1,825 million. Payment for operating leases beside year is $1,753 million. Long term debt: JPMorgan chase issues long-term debt denominated in various currencies, although predominantly U. S. dollars, with both(prenominal) fixed and variable interest rates.Included in cured and subordinated debt below are various equity-linked or other kinged instruments, which the wet has elected to meter at modal(a) judge. Changes in becoming cheer are put down in principal transactions revenue in the Consolidated Statements of Income. The following circuit c ard is a compendious of long-term debt carrying hold dears (including unamortized original issue discount, military rank adjustments and fair value adjustments, where applicable) by remaining contractual maturity as of December 31, 2011. Most debts were JPMorgan cross Capital.The five largest debt were JPMorgan pursue Capital X $1,016 million in add with the rate of 7%, JPMorgan mark Capital XXV $2,292 million in beat with the rate of 6. 8% rate, JPMorgan previous(prenominal)ime Capitals XXVI $1,815 million in amount with the rate of 8. 0% , JPMorgan accompany Capitals XXVIII $1, vitamin D million in amount with the rate of 7. 2%, JPMorgan cover Capitals XXIX $1,500 million in amount with the rate of 6. 7%. Those debts aren’t due until next 30 years. JPMorgan and Chase don’t have any significant debt payment outstanding.Pension Plans: JPMorgan and Chase recognize in its statement of pecuniary position the funded status of a return protrude; measure deli mit earn protrude assets and provinces as of the end of the employer’s fiscal year (with limited draw outions) and recognize as a component of other comprehensive examination income, net of tax, the gains or losses and prior service costs or credits that arise that are not recognise as components of net periodic benefit costs pursuant to prior existing guidance. JPMorgan and Chase don’t have Defined Contribution Pension expense but Defined Benefit Pension with the expense of 11,808 billion.Defined benefit obligation in the current year: $13461 millions for U. S and Non U. S plans. Fair value of the hideaway plan assets at the end of the current year: At December 31, 2011 delineate benefit gift plan amounts not measured at fair value included $50 million. At the end of December 2011, the accumulated defined benefit reward obligation had a balance of ($9,008) million, but in my opinion, the plan is well funded. At December 2011, the plan was give tongue to to have 2. 6 billion balance overfunded. It is understandably stated in the notes that by December thirty-first 2011, the U. K plan was $33 million unfunded.Amount recognized on the balance sheet related to subsidy: $ 1,429 million funded in the U. S, and a non-U. S balance of 160 million. The amount contributed to the defined benefit subsidy plan in 2011 was 37 million for the U. S and 169 million for the Non-US. $540 million were paid to retirees in the U. S whereas 93million were paid to non U. S in 2011. Investments in the defined benefit pension fund are the profligate’s U. S. defined benefit pension plan assets are held in trust and are invested in a well-diversified portfolio of equity and fixed income securities, real estate, cash and cash equivalents, and alternative investments (e. . , hedge funds, semiprivate equity, real estate and real assets). Non-U. S. defined benefit pension plan assets are held in various trusts and are also invested in well-diversified por tfolios of equity, fixed income and other securities. Assets of the firmly’s COLI policies, which are used to partially fund the U. S. OPEB plan, are held in separate accounts with an insurance company and are invested in equity and fixed income index funds. The investment policy for the watertight’s U. S. efined benefit pension plan assets is to optimize the risk-return relationship as appropriate to the needs and goals using a orbicular portfolio of various asset castees diversified by market place segment, economic sector, and issuer. Assets are managed by a conspiracy of midland and external investment managers. Periodically the family performs a comprehensive analysis on the U. S. defined benefit pension plan asset allocations, incorporating communicate asset and obligation selective information, which focuses on the short-and long-term impact of the asset allocation on cumulative pension expense, economic cost, present value of contributions and funde d status.Postretirement Benefits other than Pensions: there is no expense associated with non-pension bear-retirement benefit. Benefits obligation for the non-pension post-retirement benefit plan was $999 million in 2011. Fair market value of assets held for non-pension post-retirement benefits plan was 1,435 million in 2011. The plan is tolerablely funded. The fair market value of the post-retirement benefit plan has liberal resources to operate. Amount recognized on the balance sheet related to the non-pension post-retirement plan was $436 million.Amount contributed to non-pension post retirement benefits during the current year is $2 million, and amount of non-pension post retirement benefits paid to retirees during the current year is $26 million. Income Taxes: The income tax expense for the current year in the income statement is $7,773 million and $1,693 million of the current year’s income tax expense has been deferred to future periods. The healthy tax rate for c urrent year is 29. 1%. There are two types of Income taxes disclosed on the notes: rough-cut deferred tax asset is $27,632 million and porcine deferred tax indebtedness is $12,856 million.As the results, the Net deferred tax amount is $14,776 million. The significant activities resulted in recognition of deferred tax liabilities that are not yet due to a tax authority are depreciation and amortization, leasing transactions, non-US transaction and others. On other hand, the significant activities led to the recognition of deferred tax assets will be utilized in the future are allowance for loan losses, employee benefits, accrued expenses and others, non-US trading operations, tax attribute carry forwards. Stock-Based Compensation: MISSING metameric and Geographic Information: JPMorgan Chase & Co. JPMorgan Chase) is a financial holding company. The Company is a global financial services firm and a entrusting institution in the linked States, with global operations. The Compan y is enmeshed in investment banking, financial services for consumers and bantam businesses, commercial banking, financial transaction processing, asset solicitude and private equity. JPMorgan Chase’s principal bank subsidiaries are JPMorgan Chase curse, National Association, a study bank with the fall in States branches in 23 states, and Chase commit USA, National Association, a bailiwick bank that is the Company’s credit card-issuing bank.The bank and non-bank subsidiaries of JPMorgan Chase operate nationally, as well as finished overseas branches and subsidiaries, representative offices and subsidiary foreign banks. One of the Company’s principal operating subsidiaries in the United Kingdom is J. P. Morgan Securities Ltd. , a subsidiary of JPMorgan Chase Bank; N. A. JPMorgan Chase’s activities are create into cardinal business segments, as well as Corporate/Private Equity. JPMorgan Chase’s activities are organized into six business se gments, as well as Corporate/Private Equity.The Company’s wholesale businesses comprise the Investment Bank (IB), Commercial Banking (CB), Treasury & Securities Services (TSS) and Asset oversight (AM) segments. The Company’s consumer businesses comprise the Retail Financial Services (RFS) and Card Services & Auto (Card) segments. Contingencies: NEED TO FIX Probable judicial proceeding: The business firm has established reserves for several(prenominal)(prenominal) hundred of its shortly outstanding legal proceedings. The faithful accrues for potential liability arising from much(prenominal)(prenominal) proceedings when it is probable that such liability has been incurred and the amount of the loss can be evenhandedly estimated.The libertine evaluates its outstanding legal proceedings each quarter to assess its judicial proceeding reserves, and introduces adjustments in such reserves, upwards or downwards, as appropriate, establish on management’s best judgment after consultation with counsel. During the years ended December 31, 2011, 2010 and 2009, the stanch incurred $4. 9 billion, $7. 4 billion and $161 million, respectively, of litigation expense. There is no assurance that the mansion’s litigation reserves will not need to be adjusted in the future.Mortgage Foreclosure Investigations and litigation: JPMorgan Chase and four other firms have agreed to a firmness of purpose in doctrine (the â€Å"global closing”) with a number of federal and state government agencies, including the U. S. incision of Justice, the U. S. Department of housing and Urban Development, the Consumer Financial trade protection Bureau and the State Attorneys General, relating to the servicing and origination of mortgages. The global settlement, which is subject to the execution of a definitive symmetry and greet approval, calls for the starchy to, among other things: (i) make cash payments of approximately $1. billion (a po rtion of which will be set aside for payments to borrowers); (ii) provide approximately $500 million of re finance relief to trustworthy â€Å"underwater” borrowers whose loans are owned by the strong; and (iii) provide approximately $3. 7 billion of superfluous relief for trustworthy borrowers, including reductions of principal on first and second liens, payments to processer with short sales, deficiency balance waivers on past tense foreclosures and short sales, and forbearance assistance for unemployed homeowners. If the Firm does not represent original targets for provision of the re financial backing or other borrower relief within certain visit time periods, the Firm will instead make cash payments. ) In addition, under the global settlement the Firm will be required to puzzle to certain enhanced mortgage servicing standards. Overdraft topple/Debit Posting Order Litigation: JPMorgan Chase Bank, N. A. has been named as a defendant in several purported course of instruction actions relating to its practices in posting debit card transactions to customers’ deposit accounts.Plaintiffs allege that the Firm improperly re- ordinationed debit card transactions from the highest amount to the terminal amount before processing these transactions in order to generate unwarranted overdraft fees. Plaintiffs contend that the Firm should have processed such transactions in the chronological order they were authorized. Plaintiffs seek the disgorgement of all overdraft fees paid to the Firm by plaintiffs since approximately 2003 as a result of the re-ordering of debit card transactions.The claims against the Firm have been consolidated with numerous complaints against other national banks in multi- district litigation pending in the United States District cost for the Southern District of Florida. The Firm’s motion to compel arbitration of certain plaintiffs’ claims was initially denied by the District cost. On appeal, the Unite d States court of righteousness of Appeals for the Eleventh Circuit vacated the District Court’s order and remanded the case for reconsideration in light of a recent ruling by the United States Supreme Court in an orthogonal case addressing the enforcement of an arbitration provision in a consumer product agreement.The Firm has reached an agreement in principle to settle this matter in exchange for the Firm paying $110 million and agreeing to change certain overdraft fee practices. The settlement is subject to documentation and court approval. Service Members Civil Relief Act and admit and Economic reco truly Act Investigations and litigation: multiple government officials have conducted inquiries into the Firm’s procedures related to the Service Members Civil Relief Act (â€Å"SCRA”) and the Housing and Economic Reco very(prenominal) Act of 2008 (â€Å"HERA”).These inquiries were prompted by the Firm’s public statements about its SCRA and HERA compliance and actions to amend certain instances in which the Firm mistakenly supercharged active or recently-active military personnel mortgage interest and fees in supernumerary of that permitted by SCRA and HERA, and in a number of instances, foreclosed on borrowers protected by SCRA and HERA. The Firm has implemented a number of adjective enhancements and controls to military uniten its SCRA and HERA compliance.In addition, an individual borrower filed a nationwide class action in United States District Court for South Carolina against the Firm alleging violations of the SCRA related to home loans. The Firm agreed to pay $27 million plus attorneys’ fees, in addition to reimbursements previously paid by the Firm, to settle the class action. Additional borrowers were subsequently added to the class, and the Firm agreed to pay an additional $8 million into the settlement fund. The court entered a final order approving the settlement in January 2012. Reasonable accompl ishable:The Firm weighs the estimate of the aggregate range of pretty practicable losses, in excess of reserves established, for its legal proceedings is from $0 to approximately $5. 1 billion at December 31, 2011. This estimated aggregate range of middling workable losses is based upon soon visible(prenominal) information for those proceedings in which the Firm is involved, taking into account the Firm’s best estimate of such losses for those cases for which such estimate can be made. For certain cases, the Firm does not believe that an estimate can currently be made.The Firm’s estimate involves significant judgment, given the vary stages of the proceedings (including the fact that more are currently in preliminary stages), the existence in more an(prenominal) such proceedings of multiple defendants (including the Firm) whose share of liability has yet to be determined, the numerous yet-unresolved issues in many of the proceedings (including issues regardin g class certification and the scope of many of the claims) and the attendant uncertainty of the various potential outcomes of such proceedings.Accordingly, the Firm’s estimate will change from time to time, and actual losses whitethorn be more than the current estimate. Auction Rate Securities Investigations and Litigation: Beginning in March 2008, several restrictive authorities initiated investigations of a number of industry participants, including the Firm, concerning possible state and federal securities law violations in contact with the sale of auction-rate securities.The market for many such securities had flash-frozen and a significant number of auctions for those securities began to fail in February 2008. The Firm also faces a number of cultured actions relating to the Firm’s sales of auction-rate securities, including a acknowledged securities class action in the United States District Court for the Southern District of New York that seeks unspecified da mages, and individual arbitrations and lawsuits in various forums brought by institutional and individual investors that, together, seek damages totaling approximately $50 million.The actions generally allege that the Firm and other firms manipulated the market for auction-rate securities by placing bids at auctions that affected these securities’ clearing rates or otherwise supported the auctions without properly disclosing these activities. some(prenominal) actions also allege that the Firm misrepresented that auction-rate securities were short instruments. The lawsuits are being coordinated before the federal District Court in New York.Additionally, the Firm was named in two putative antitrust class actions. The actions allege that the Firm, along with numerous other financial institution defendants, colluded to maintain and stabilize the auction-rate securities market and then to withdraw their support for the auction-rate securities market. In January 2010, the Distric t Court dismissed both actions. An appeal is pending in the United States Court of Appeals for the Second Circuit.Interim (Quarterly comprehending: During the current year 2011, the company’s revenue for maiden quarter is $25,221 million, 2nd quarter is $26,779 million, 3rd quarter is $23,763 million and 4th quarter is $21,471 million. There is a significant fluctuation in quarterly data because It experienced a decrease in revenues during the current year from 1st quarter to 4th quarter. enunciate of independent Auditors: Auditor is PricewaterhouseCoopers LLP located at ccc Madison Avenue New York, NY 10017. The auditor believes that the financial statements were presented fairly.Their opinion is stated as follow: In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, changes in stockholders equity and comprehensive income and cash flows present fairly, in all material respects, the financial position of JPMorgan C hase ; Co. and its subsidiaries (the â€Å"Firm”) at December 31, 2011 and 2010, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2011, in abidance with accounting principles generally accepted in the United States of the States. likewise in our opinion, the Firm maintained, in all material respects, effective internal control over financial reporting as of December 31, 2011, based on criteria established in Internal restrainer †co-ordinated Framework issued by the Committee of Sponsoring Organizations of the Treadway missionary work (COSO). Report of Internal control: Management of JPMorgan Chase ; Co. (â€Å"JPMorgan Chase â€Å"or the â€Å"Firm”) is answerable for establishing and maintaining adequate internal control over financial reporting. The same authority, Management of JPMorgan Chase ; Co. â€Å"JPMorgan Chase â€Å"or the â€Å"Firm”) is responsible for maintaining ade quate internal control over financial reporting. The auditor does believe that the corporation maintained adequate internal control over financial reporting. hither is their opinion: â€Å"in our opinion, the Firm maintained, in all material respects, effective internal control over financial reporting as of December 31, 2011, based on criteria established in Internal Control †Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). proportionality Analysis Analysis of profitability: The profit margins were 16. 1% and 19. 52 % to the following 2010 and 2011 year end. The increase in profit margin due to the favor of the allowance for losses, noninterest revenue and interest expense. interest income and interest expense is recorded in the Consolidated Statements of Income and categorize based on the nature of the underlying asset or liability. interestingness income and interest expense includes the current-period interest accruals for financial instruments measured at fair value, except for financial instruments containing embedded derivatives that would be separately accounted for in accordance with U.S. GAAP absent the fair value option election; for those instruments, all changes in fair value including any interest elements, are describe in principal transactions revenue. For financial instruments that are not measured at fair value, the related interest is included within interest income or interest expense, as applicable. The corporation has the return on assets of 0. 86% in 2011 and 0. 79% in 2010. The returns on assets were significant low equal to return on stockholder’s equity of 10. 5% in 2011 and 9. 66% in 2010. In general, JPMorgan and Chase is a big corporation, but they had a tight controlled and managed very well. Therefore, their earning is improved and very stable in recent year although the preservation looks doom. Earnings per share (â€Å"EPS”) is work out unde r the two-class method under which all earnings (distributed and undistributed) are allocated to each class of common stock and participating securities based on their respective rights to give birth dividends.JPMorgan Chase grants restricted stock and RSUs to certain employees under its stock-based compensation programs, which entitle recipients to receive non-forfeitable dividends during the vesting period on a basis equivalent to the dividends paid to holders of common stock; these unvested awards meet the definition of participating securities. Options issued under employee benefit plans that have an anti-dilutive effect are excluded from the deliberation of reduce EPS. EPS in 2011 was $4. 50 compare to 2010 of $ 3. 98. This increase is the result of increasing in net income in 2011 due to better management.The corporation does disclose the diluted EPS with $4. 48 in 2011 and $3. 96 in 2010. Cash dividend per share in 2011 was $ 0. 94 dollar per share and $0. 36 dollar per sh are in 2010. Dividend payout ratio for 2010 was 16% and 35% in 2011. Price/ Earning ratio also improves between 2010 with 9. 26 times and 2011 with 9. 62 times. In the past decade, the average P/E ratio for Major Corporation has ranged from 14 to 25. JPMorgan and Chase’s P/E was below the range about 5 points. However, we can’t asseverate that JPMorgan and Chase is no t growing.JPMorgan Corporation is abundant plus with the gloomy economy right now, but this corporation up to now generates profitability era other corporation in the same industry is struggling. This allege us that JPMorgan is a stable for a long run. Analysis of Liquidity: JPMorgan and Chase had the current (working capital) ratio in 2011 of 1. 55:1 and 1. 71:1 in 2010. Net working capital was $964,168 million in 2011 and $932,220 in 2010. cursorily (Acid â€Test) ratios were 0. 28:1 in 2011 and 0. 31:1 in 2010. The liquidity position of the corporation weakened a little in 2011.Although there w as an increase in cash and receivables in 2011, there was less account receivable compared to 2010. There was also a large increase in current liabilities in 2011, because of the increase in deposit. Based on this, JP Morgan Chase should be able to meet its current obligation even though the ratio was a little down compare to the previous year of 2010. Since it is a big and sustainable corporation in the financial industry, there is seldom a change for them to have a problem with the working capital. Analysis of Solvency: Debt to total Assets in 2011 was 91. 8% and 91. 6% in 2010.There is not oftentimes difference between the debt to assets ratio showing the amount of supplement JP Morgan Chase used to finance its operations between the year 2011 and the year 2010.. The rule of thumb is to make sure that the bottom which is the assets is larger than the top which is the liabilities. The ratio of 91. 8% percent for the year 2011 and 91. 6% for the year 2010 at first glance would g ive an picture of a company which is over leveraged. This is not the case, JPMorgan Chase Debt to Assets ratio is very consistent with the banking industry standards particularly banks of JPMorgan Chase size.Banks make money by alter other peoples money. It never hurts however, to bring the ratio a little lower as it would give the bank more space to maneuver should there be a financial melting in the general economy like the one experienced in 2008. Potential lenders would prefer the ratio to be as lower as much as possible because that would show that the company has more Assets than Liabilities which can help the company pay its debt when it’s due or assets that can be liquidated to pay its lenders should the company end up in liquidation. Missing Time Interest Earned proportionality Industry Competitor proportion:A close competitor of JPMorgan Chase is Bank of America Corporation. The difference between these large banks is that Bank of America is primarily a bank op erating in other financial services while J. P. Morgan is an investment firm also operating as a bank. It has offices in more than 60 countries of the world. two companies have relatively identical gross profit percentages; but percentages changed if we go down to income from continuing operations of both companies. As we see on the table 3, we know that the Net income from continuing operations of JP Morgan Chase is greater than Bank of America Corporation.This shows that Chase is good at managing costs on other income and expenses in any event selling general and administrative and others. On the balance sheets, we both see the similar common-size on total assets of both companies. Another difference between two of them is the profitability. As we see on Table 3, profit margin of Chase bank is higher due to net income (gain) while Bank of America experiences a net loss. increase on asset for both companies are pretty low on last year. Return on equity for Chase bank is higher that means the shareholders earn a decent return on their equity investment.The major different on Profitability ratio between two companies is the dividend payout ratio which is the Bank of America is way excessively high. It indicates the company pays high dividends whose stock price is temporary not good. Moreover, a high dividend payout ratio can also point to a mature company with hardly a(prenominal) growth opportunities. On other hand, Chase bank has low dividend payout ratio that we know Chase is a fast-growing company whose shareholders willingly withdraw from cash dividends, because the company uses the extra money to generate higher returns and, in turn, a high stock price.As a conclusion, JP Morgan Chase is more profitable than Bank of America Corporation. Compared on the liquidity ratios, both companies meet their requirements on pay their liabilities on time. If we take down to Acid test, we easily understand Bank of America has more liquid assets available to pay its current debts. On the debt ratio, both companies’ ratios are over 0. 5 which means both companies’ assets are finances finished debts. On the Time interest earned ratio, JP Morgan Chase is little bit higher which is better since Bank of America Corporation Company has more debts.Last but not least, Operational ratios are very similar and they both efficiently know how to use the assets on sales. As the whole comparison between likewise biggest bank firms, I think they are overall doing very well on managing their companies. Taking on to the details, JP Morgan Chase has more probability on sales. Bank of America is even so doing fine but if I prefer invest on JP Morgan Chase’ stock. |  JP Morgan ;Chase |  | Bank of America Corp. |  | Income Statement Common-Size Data|  |  |  |  | Gross Profit/Sales| 92. 0%|  | 95. 6%|  | Income from chronic Operations/Sales| 19. 5%|  | 7. %|  | Balance rag week Common-Size Data|  |   |  |  | Current Assets/ tote up Assets| 19. 5%|  | 42. 5%|  | Current Liabilities/Total Assets| 71. 4%|  | 74. 1%|  | Liabilities/Total Assets| 91. 9%|  | 89. 2%|  | Equity/Total Assets| 8. 1%|  | 10. 8%|  | Profitabilty Ratios|  |  |  |  | Profit Margin| 19. 5%|  | 1. 3%|  | Return on Assets| 0. 9%|  | 0. 1%|  | Return on Equity| 10. 6%|  | 0. 7%|  | Dividend Payout Ratio| 18. 0%|  | 400. 0%|  | Liquidity Ratios|  |  |  |  | Current Ratio| 0. 62 :1|  | 0. 64:1|  | Quick Ratio| 0. 27 :1|  | 0. 2:1|  | Solvency Ratios|  |  |  |  | Debt/Total Assets| 0. 92|  | 0. 89|  | Times Interest Earned (Accrual)| 3. 00|  | 1. 12|  | Operational Ratios|  |  |  |  | Receivable swage| 1. 5|  | 1. 5|  | Inventory Turnover| N/A|  | N/A|  | © 2008 William R. Pasewark|  |  |  |  | | | | | | Making finale based on annual report Total net revenue for 2011 was $97. 2 billion, a decrease of $5. 5 billion, or 5%, from 2010. Results for 2011 were driven by lower net interest income in several businesses, lower securities gains in Corporate/Private Equity, ower mortgage fees and related income in RFS, and lower principal transactions revenue in Corporate/Private Equity. These declines were partially offset by higher asset management fees, largely in AM. Investment banking fees decreased from 2010, predominantly due to declines in equity and debt underwriting fees. The impact from lower industry-wide volumes in the second half of 2011 more than offset the Firms record level of debt underwriting fees in the first six months of the year. Advisory fees increased for the year, reflecting higher industry-wide completed M&A volumes relative to the 2010 level. Management sermon and analysis) Revenues increased from 2009 to 2010 by 2. 25 %. The increase came in part from noninterest income, securities and principal transactions. The econo my will be the most important factor on the banking industry in the next year. The mortgage industry is withal hurting even if it shows some signs of improvement. JP Morgan showed a net profit of at 5 billion this first quarter of the year, but it is hard to predict if the total revenue at the end of the year would check over the previous year’s revenues.Next year’s revenue is probably going to be in the 100-103 billion range. JP Morgan Chase’s income comes from diverse business units. The total revenues increased 2. 25% from 2009 to 2010. The increase came from asset management, the noninterest revenue, the security gains and the item marked other income. Also the reduction in the allowances for credit losses for mortgages and credit cards as a result of improved delinquency trends and lower estimated losses reflected the net revenue increase. Principal transactions revenue increased compared with 2009.This was driven by the Private Equity business, which had significant private equity gains in 2010, compared with a small loss in 2009, reflecting improvements in market conditions. Net income next year could be in the 19 to 20 billion range. In my opinion, JP Morgan chase’s assets will have a stable growth in the next few years. Despite the visible improvement in the economy, the banking industry is not likely to record rapid growth in the next few years. The recovery is still weak; investments are still lagging and so directly affecting the books of the banks. I expect the total Assets to increase a little more next year based on the mprovement in the broad United States and World economy. My sentiment is based on the fact that JPMorgan performed better than the average bank in 2010 and 2010 arguably the west years for any business in recent history due to the subprime mortgage melt down of the financial markets. The last few years so a high number of unemployment hitting 10% before starting drop later part of 2011 and the highe st number of mortgage foreclosure. The mortgage industry as render and the market is already healing and banks like Wellfargo are already posting stronger than expected results due to their mortgage based assets performing better than expected.JPMorgan Chase’s balance sheet looks relatively strong and do not show that it will need additional financing next few years. It has deposits in excess of $85,279,000,000 and it is sitting on cash of $59,602,000,000. JPMorgan Chase should not have a problem raising funds from the Capital market should they need additional financing based on the strength and growth of its balance sheet. The strength that JPMorgan chase has is the relative ability and strength of deposits which Chase can use to fund its business.This is one advantage banks like Lehman brothers that went under during the financial crisis may not have had. The three areas we see as the strongest aspect of JPMorgan Chase is high balance of deposits with the bank in the amou nt of 85,279,000,000 which shows the relative confidence the market in JPMorgan. Cash deposits are particularly important to banks because they use this morning to lend out for interest and other related fees. The 2011 balance show contain earnings in the amount $88,315,000,000 and retained earning $73,998,000,000 on the 2010 balance sheets respectively.This is important because it shows that JPMorgan Chase have enough resources to fund it operations and enough left over to reinvest into the business for future growth. The Debt to Total Asset ratio was 91. 8% 2011 and 91. 6% 2010 respectively showing that JPMorgan Chase has more Assets than Liabilities which should help the firm raise financing from the markets . should there be a need. This always a good indication to the investors that there investment is cover should the company goes into liquidation.One of the biggest weaknesses we identified was the relative number of law suits and the amount funds that is being spent on settl ing law suits. Though the Debt income ratio is way better than most of the banks in its industry, we believe it would be helpful to bring the amount of leverage down to somewhere around . 075 % to better absorb economic shocks in the larger economy. We are very hopeful for the future of JPMorgan Chase especially as the mortgage industry bottom out and American economy continues creating jobs;we will see banks start do declare above average profits. The firm’s Stock price at 43. 4 is performing relatively better than it competitors like Bank of America at 8. 8 and Citi group at 34 indicating that investors still have confidence in the company. We would not invest in the stock of JPMorgan Chase stock at the moment even if we had money available to invest because we strongly feel that JPM Morgan already a very mature company and does not offer much potential for growth. We would instead invest in competitors such Capital One Corp. which is a relatively small and growing company with enough potential for growth. There stock price also now at 53 has performed better than JPMorgan Chase over the past year.\r\n'