Henry Wells and William Fargo founded Wells Fargo over 150 years ago. Its rich history includes transporting gold from the old west via the then top of the line Pony Express. Today, Wells Fargo & Company (NYSE-WFC) is a diversified financial services company with $308 billion in assets providing banking, insurance, wealth management, estate planning, investments, mortgages and consumer finance from more than 5,400 stores across the world. This paper seeks to analyze the 2001 Wells Fargo Annual Report.
Ratios play an important role in analyzing the financial health of a company. Wells Fargo's financial ratios tell the story of where the company stands today and provides insight into where it will be tomorrow. The following ratios were computed using information gathered from the 2001 Wells Fargo Annual Report as well as www.morningstar.com. .
Stockholder Profitability Ratios 2001 2000.
Earnings per Share (Earnings/Shares Outstanding) 1.99 2.36.
P/E Ratio (Price/Earnings) 22.1 15.7.
Profitability Ratios.
Gross Profit Margin (Revenue-Cost of Goods Sold/Sales) 12.7 14.5 .
Return on Assets (Earnings after Taxes/Total Assets) 1.52 1.94.
Profit Margin (Earnings After Taxes/Sales) 12.7 14.5.
Return on Equity (Earnings After Taxes/Total Assets) 25.31 30.89.
Liquidity.
Current Ratio (Current Assets/Current Liabilities) 1.19 1.19.
Quick Ratio (Current Assets-Inventory/Current Liabilities) .39 .35.
Stability.
Debt Ratio (Total Debt/Total Assets) .13 .14.
Book Value per Share (Book Value/Shares Outstanding) 2.8 12.
While they do show a downward trend over the past two years, these numbers stack up well against their competitors. The financial website www.morningstar.com ranks them better them the banking industry as a whole in the areas of growth and profitability, while worse than average in the area of financial health.
The primary reason for the disappointing returns in 2001 compared to 2000 was a $1.1 billion non-cash special charge in the second quarter of 2001.