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Merrill Lynch Matt Western ACG2021 Section 002. Executive Summary Overall Merrill Lynch had a great year in 2004. They increased their revenues 11% from.

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Presentation on theme: "Merrill Lynch Matt Western ACG2021 Section 002. Executive Summary Overall Merrill Lynch had a great year in 2004. They increased their revenues 11% from."— Presentation transcript:

1 Merrill Lynch Matt Western ACG2021 Section 002

2 Executive Summary Overall Merrill Lynch had a great year in 2004. They increased their revenues 11% from 2003, generating over $22 billion in revenue. They hope to strengthen their businesses and enhance their ability to produce growing, sustainable earnings over the long run with the investments they continue to make. Merrill Lynch Financial Report Merrill Lynch Financial Report Financial Report 2 Financial Report 2

3 Part A. Introduction CEO Stan O’Neal CEO Stan O’Neal Home Office: New York, New York Home Office: New York, New York Ending date of latest fiscal year: December 30, 2004 Ending date of latest fiscal year: December 30, 2004 As an investment bank, the company is a leading global underwriter of debt and equity securities and strategic advisor to corporations, governments, institutions and individuals worldwide. As an investment bank, the company is a leading global underwriter of debt and equity securities and strategic advisor to corporations, governments, institutions and individuals worldwide. Main Geographic Area: North America, Europe, Japan, and China Main Geographic Area: North America, Europe, Japan, and China

4 Part A. Audit Report Merrill Lynch Independent Auditors are Deloitte Merrill Lynch Independent Auditors are Deloitte The auditors said that Merrill Lynch had effective internal control over the financial reporting as of December 31, 2004. The auditors said that Merrill Lynch had effective internal control over the financial reporting as of December 31, 2004.

5 Part A. Stock Market Information Most recent price of Merrill Lynch stock: $72.79 Most recent price of Merrill Lynch stock: $72.79 Twelve month trading range: $52.00 - $75.34 Twelve month trading range: $52.00 - $75.34 Dividend per share: $1.37 Dividend per share: $1.37 Date of the above information: February 10, 2006 Date of the above information: February 10, 2006 In my opinion I would invest in Merrill Lynch because according to their current and past financial statements In my opinion I would invest in Merrill Lynch because according to their current and past financial statements

6 Part B. Industry Situation and Company Plans Merrill Lynch is an investment bank, the company is a leading global underwriter of debt and equity securities and strategic advisor to corporations, governments, institutions and individuals worldwide. In the future the company looks to improve client services, building the business, and managing capital efficiently. http://www.ml.com/annualmeetingmaterials/2004/ar/letter.asp Company News | Reuters.com Company News | Reuters.com

7 Part C. Income Statement Merrill Lynch uses a Multi-step income statement. Merrill Lynch uses a Multi-step income statement. 20042003 Gross Margin 26.5%26.3% Operating Income $4,425,000,000$3,743,000,000 Net Income $4,436,000,000$3,386,000,000

8 Part C. Balance Sheet Assets = Liabilities + SHE Assets = Liabilities + SHE 2004: 648,059,000,000 = 616,689,000,000 + 31,370,000,000 2004: 648,059,000,000 = 616,689,000,000 + 31,370,000,000 2003: 469,143,000,000 = 467,259,000,000 + 28,884,000,000 2003: 469,143,000,000 = 467,259,000,000 + 28,884,000,000 In Merrill Lynch’s annual report all accounts increased from 2003 to 2004. One of the accounts that increased the most was Cash. In Merrill Lynch’s annual report all accounts increased from 2003 to 2004. One of the accounts that increased the most was Cash.

9 Part C. Statement of Cash Flows In 2004 the cash flow was significantly less than net income, but in 2003 the cash flow was more than net income. In 2004 the cash flow was significantly less than net income, but in 2003 the cash flow was more than net income. The company is growing through investments. The company is growing through investments. The primary source of financing is stock sales. The primary source of financing is stock sales. In the past two years cash has increased significantly. In the past two years cash has increased significantly.

10 Part D. Accounting Policies When presenting financial statements, management uses estimates regarding tax reserves, carrying amount of goodwill, insurance reserves, etc. When presenting financial statements, management uses estimates regarding tax reserves, carrying amount of goodwill, insurance reserves, etc. Some notes are: Significant account policies, geographic information, Securities Financing Transactions, Investment Securities, Trading Assets and Liabilities, Securitization Transactions and Transactions with Special Purpose Entities, Loans, Notes, and Mortgages and Related Commitments to Extend Credit, Commercial Paper and Short- and Long-Term Borrowings, Deposits, Stockholders’ Equity and Earnings Per Share, Commitments, Contingencies and Guarantees, Employee Benefit Plans, Employee Incentive Plans, Income Taxes, Regulatory Requirements and Dividend Restrictions. Some notes are: Significant account policies, geographic information, Securities Financing Transactions, Investment Securities, Trading Assets and Liabilities, Securitization Transactions and Transactions with Special Purpose Entities, Loans, Notes, and Mortgages and Related Commitments to Extend Credit, Commercial Paper and Short- and Long-Term Borrowings, Deposits, Stockholders’ Equity and Earnings Per Share, Commitments, Contingencies and Guarantees, Employee Benefit Plans, Employee Incentive Plans, Income Taxes, Regulatory Requirements and Dividend Restrictions.

11 Part E. Financial Analysis Liquidity Ratios 20042003 Working Capital $31,370,000,000$1,884,000,000 Current Ratio 1.051.00 Receivable Turnover 9.710.7 Avg. days’ sales uncollected 37 days 34 days Inventory Turnover ??

12 Part E. Financial Analysis Profitability Ratios 20042003 Profit Margin.137.138 Asset Turnover.057.058 Return on Assets.008.008 Return on Equity.149.148

13 Part E. Financial Analysis Solvency Ratio 20042003 Debt to Equity 19.6616.18

14 Part E. Financial Analysis Market Strength Ratios 20042003 Price/Earnings Ratio 6.867.09 Dividends Yield.019.021


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