· Describe the specific areas that indicate a need for change. · Determine what
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Question
· Describe the specific areas that indicate a need for change.
· Determine what changed objectives, or newly implemented interventions, are required to improve the company’s position within its market.
American Express Company GlobalData» American Express Company - Financial and Strategic Analysis Review Publication Date: Nov-2017 Reference Code: GDFS34527FSA Company Snapshot Company Overview Key Information American Express Company, Key Information Web Address Financial year-end Number of Em NYSE Source: GlobalData www.americanexpress.com December 56,400 AXP American Express Company (Amex or 'the company') is a leading global provider of travel related services, payment services, financial advisory services and banking services. Amex operates in North America, Europe and Asia Pacifio region and its products are offered in more than 140 countries. It is headquartered in New York City, New York. ees SWOT Analysis American Express Company, SWOT Analysis Key Ratios American Express Company, Key Ratios Strengths Weaknesses 17.06Ability to forge partnerships Lack of point-of-sale debit across the world card services EVIEBITDA Return on Equity (%) Debt/Equity Operating profit margin (%) Dividend Yield Note: Above ratios are based on share price as of 10-Nov-2017 Source : GlobalData Diversified revenue streams Weak profit management 5.26 Spend-centric model in credit cards business Opportunities Threats Growing e-commerce sales Competitors' converging business practices Huge opportunity in global small business spending Increasing penetration of alternative payment platforms Share Data American Express Company, Share Data Price (USD) as on 10-Nov-2017 EPS (USD) Book value per share (USD) Shares Outstanding (in million) Source: GlobalData 93.52 Dodd-Frank regulation Source: GlobalData 22.68 935 Financial Performance The company reported revenues of (US Dollars) US$32,717 million for the fiscal year ended December 2016 (FY2016), a decrease of 1.7% over FY2015. In FY2016, the company's operating margin was 24.7% compared to an operating margin of 23.8% in FY2015 In FY2016, the company recorded a net margin of 16.5%, compared to a net margin of 15.5% in FY2015 The company reported revenues of US$8,038 million for the first quarter ended March 2017, a decrease of 1.6% over the previous quarter Performance Chart American Express Company, Performance Chart (2012- 40,000.0 5,000.0 5 30,000.0 25,000.0 20,000.o e 15,000.0 10,000.0 5,000.0 o.0 2012 2013 2015 2016 Revenue Net Income Source : GlobalDataExplanation / Answer
The American Express Company, also known as Amex, is an American multinational financial services corporation headquartered in Three World Financial Center in New York City. The company was founded in 1850 and is one of the 30 components of the Dow Jones Industrial Average. The company is best known for its charge card, credit card, and traveler's cheque businesses.
In 2016, credit cards using the American Express network accounted for 22.9% of the total dollar volume of credit card transactions in the US. As of December 31, 2017, the company had 112.8 million cards in force, including 50 million cards in force in the United States, each with an average annual spending of $18,519.
If you see the Financial Statement of AMEX you will find that it have been inconsistent in terms of sales revenue In Dec 2017 Company had a loss of $1 billion approx. which clearly show that there are few thing which company should change and you can get an idea if you see the AMEX weaknesses It clearly says that AMEX card is not acceptable at all POS- Point of Sales machine with merchants. So it means company should develop a card which should be accepted as any outlet with any POS. This can help company to improve their market share worldwide also they should come up with payment wallet etc a more digital mode to generate more sales revenue.
In terms of capital structure of the company also I find debt equity ratio is quite high and company should look in to it.
In a competitive market company is competing with leading top banks in the world in such case with unique USP may help you to get more no. of customers however if company will not able to provide POS at every door steps it will be slightly challenge for company to meet the expectation. Also company has weak profit management which is again a change to convert revenue into profit.
Company should also revised their capital structure show that they can reduce debt liabilities as cost od debt is looking bit high. Company should also look for expansion globally so that they can tap the major market of the world.
Apart from their marketing strategy company should also work on their Financial strategy as company is looking not in good condition where there is slightly improvement of revenue however Net Income and EPS is drastically Falling. There will be a possibility of high cost of debt which is pulling EBIT to down and which is directly impacting Company shareholder return so in such case company should revised their capital structure.
Also company should compete with VISA and Master who have improved their reachability to each merchant.
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