Free About Wells Fargo Case Study Sample
This assignment requires analyzing the financial and strategic position of a chosen organization. The company that has been selected for this analysis is Wells Fargo. The shares of the company are currently trading in the New York Stock Exchange (NYSE) with the symbol of “WFC”.
Business and Product Line
Wells Fargo & Company is basically an American based multinational banking and financial services holding company that has its headquartering in California, the United States (US). Wells Fargo is known as the fourth (4th) largest bank operating in the United States in terms of Operational Assets and Market Capitalization. As per the analysis of Standard & Poor (S&P), it is the only bank of the United States that has AAA ratings.
The product line, which has been selected for this particular analysis is “Wealth Management”, which is one of the most important products line for the company. The product is designed by the investment banker of the company with the collaboration of the upper management with them.
Revenue of the whole company and product line
It is one of those banks of the United States that affected a lot during the current economic downturn, but still the company showed its resiliency power accordingly. In terms of revenue and net income generation, Wells Fargo is very effective and generated US$ 84.3 billion and US$ 23 billion respectively in the year 2014 (Financials.morningstar.com, 2015).
The company earned 10% of the total revenue through their wealth management function. The assets of Clients for Management of Wealth were amounted to US$ 219 billion which was 7% higher as compared to the last year.
Profitability Ratio Analysis
There are two different ratios which will be used in this particular part of the analysis, known as Net Profit Margin (NPM) and Gross Profit Margin (GPM).
Net Profit Margin (NPM)
A profitability ratio that uses to assess the profit margin of an organization is known as Net Profit Margin (NPM). The NPM for Wells Fargo for these four years are as follows (Financials.morningstar.com, 2015)
Gross Profit Margin
A ratio that analyzes the cost efficiency stance of a company is known as Gross Profit Margin (GPM). The GPM of Wells Fargo is as follows
It is clear from the aforementioned table and graph that Wells Fargo is one of those organizations that have a powerful management in terms of their operational cost. The Gross Profit Margin (GPM) of the company in the year 2011 was 22.29% that increased positively for three consecutive years by 6.92%, 3.85% and 5.87%. It is again lies in the favor of the company (Finance.yahoo.com, 2015). The average GPM of Wells Fargo is 30.88%, showing that the company is able to generate Gross profit of $30.88 from their net sales of $ 100.
Efficiency Ratio Analysis
Efficiency ratios are the ratios that used to assess the operational effectiveness of an organization. Return on asset is the ratio that will be used here to analyze the level of efficiency of Wells Fargo.
Return on Assets (ROA)
An efficiency ratio that used exclusively for analyzing the operational asset’s effectiveness of a company is known as Return on Assets (ROA). The computed ROA of the company is as follows
It is important for a highly effective and powerful company to have a strong significance over the operational asset’s efficiency. The efficiency power of Wells Fargo is not very effective and powerful. Though, the ROA of the company increased with a regular percentage, however the intensity of the ROA is very low. The mean ROA of the company is 1.238%, showing that the company is able to generate $ 1.238 through their operational assets which have power of $ 100.
The real consumers who are having the product description of wealth management of the company are financial institutions and corporate clients, who want to maintain their security portfolio accordingly
Wells Fargo’s Wealth Management operations are extremely powerful that induce the consumers to pay higher price for their products. The tendency of the company in terms of providing lots of differentiation among their existing product line to make it in a customized way is the main aspect that creates value in their execution and effectiveness.
The revenue steam of the company lies with their different products like General Banking, Investment Banking, Wealth management and other important aspects
The company is complying with Ethics and the initiate every trade and investment stance with zeal and ethical standards. Therefore the key inputs of the company in their entire value chain process is their ethical capabilities to give confidence to their shareholders and customers
The company has a clear cut formula in terms of managing and increasing their revenue and profit which is to make the pricing structure competitive and keep the level of operational cost on a lower level to have a direct impact over the financial position of the company.
Mission and Vision Analysis
The mission statement of Wells Fargo is as follows
“To provide competitive banking and financial services to the people with ethics and integrity”
The vision statement of the company is as follows
“To satisfy all the needs of our customers, predominantly all the financial needs and assistance”
Two Strategic Goals
Specific: The management has to become effective in terms of maintain ethical standards with the products and services of the company
Measureable: The goals are practical and it can be measured through powerful and effective decision making stance
Accessible: Both management and employees have to play their part to access the well being within their operations
Realistic: The goals are realistic; the only need is stiff implementation
Timely: Both of the tasks required time to implement fully on the company, however it will be extremely powerful for them once applied exclusively.
They all are concerned with the long run effectiveness of the company, and very much concerned with the decision making, because their effectiveness associated with them
Conclusion & Recommendation
Finance.yahoo.com,. (2015). WFC Income Statement | Wells Fargo & Company Common St Stock - Yahoo! Finance. Retrieved 2 February 2015, from http://finance.yahoo.com/q/is?s=WFC+Income+Statement&annual
Financials.morningstar.com,. (2015). Income Statement for Wells Fargo & Co (WFC) from Morningstar.com. Retrieved 2 February 2015, from http://financials.morningstar.com/income-statement/is.html?t=WFC®ion=usa&culture=en-US
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