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Running Header: FINANCIAL ANALYSIS OF AMER

Financial Analysis of Ame Tim Wenger University of West F FIN6406 – Financial M Professor Ron B

FINANCIAL ANALYSIS OF AMERIPRISE FINANC

Table of Con Executive Summary ........................................................ Introduction ...................................................................... Company History ......................................................... Current Position ........................................................... Investment Advice Industry ............................................ Financial Statement Analysis .......................................... Debt-to-Equity vs. Return on Equity .......................... Profit Margin vs. Price-to-Earnings ............................ Stock Price vs. Dividend Yield ................................... DuPont ......................................................................... Beta Calculation and Risk Assessment ........................... Weighted Average Cost of Capital ................................. Overall Evaluation ........................................................... References ........................................................................

FINANCIAL ANALYSIS OF AMERIPRISE FINANC

Executive Summ This financial analysis report brings to life the p Ameriprise Financial along with the Investment Advice picture of where the company came from, its current po The report drives deep the company’s overall financial Ameriprise deploys correlate. The report will conclude has a bright future or if it will be eaten by the other wol paper, the goal is to have the audience be able to explai Ameriprise operates and acts different than other major and understand complex financial ratios, trends and num the Investment Advice Industry within our society. Ameriprise Financial continue to grow and oper founded on “To Help Ordinary American Achieve their h

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FINANCIAL ANALYSIS OF AMERIPRISE FINANC DuPont formula, and benchmarked against industry ave information about trends, relationships, future projectio each company’s financial position. Ameriprise has transformed itself from a lagging with around $900 billion in total assets under managem strengths and weaknesses of the firm and how to impro bullish outlook for Ameriprise’s future.

FINANCIAL ANALYSIS OF AMERIPRISE FINANC

Introduction Company History Ameriprise Financial was founded in 1894 by Jo Help Ordinary Americans Achieve their Goals” (Am began with 1,000 people investing $5 each. This financ and succeeded through recessions, booms, the Great De Ameriprise Financial is the longstanding leader and adv assets under management and administration (Ameripri Ameriprise operates in the diversified financial business through its subsidiaries providing financial pla wealth management, asset management, insurance, ann 10K, 2017). The firm’s primary subsidiaries include Am Life Insurance Company, Columbia Management and T

FINANCIAL ANALYSIS OF AMERIPRISE FINANC The firm takes into consideration client’s holistic situati retirement, investments and insurance (Ameriprise 10K

Figure 1

(D’Costa, 2018)

Ameriprise’s financial statements, strategic and succeed during the short and long-term time frames. By firm has become very attractive for transferring financia 2017). The firm explains and understands client’s holist individual needs. Each advisor attempts to help clients l

FINANCIAL ANALYSIS OF AMERIPRISE FINANC

Investment Advice I “There are people who have money, and there a With decreased pension amounts, increased retirement percent of US debt, planning for the future has never be Financial advisors and financial planners all over the w life by decreasing financial stress through personalized Ramsey, a world renown financial advisor said, “I belie discipline, financial peace is possible for all of us” (Salm

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FINANCIAL ANALYSIS OF AMERIPRISE FINANC Investment advice is an exciting industry, and every day personal finances and plan for the future can make a ful The purpose of this paper is to do a financial ana competitors and the overall Investment Advice Industry have the audience be able to explain three different fact and acts different than other major companies within th complex financial ratios, trends and numbers and under Advice Industry within our society. This paper will ana its closest competitors being Morgan Stanley and Bank These three companies will also be compared to the ent paper will progress in the following order: an introducti general facts, history, operations, services and products the firm operates; the basic facts, statics and purpose in I d t

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FINANCIAL ANALYSIS OF AMERIPRISE FINANC Figure 4

(D’Costa, 2018)

Financial Statement The purpose of a financial analysis is to evaluate order to determine a company’s or industries’ performa Financial, Morgan Stanley and Bank of America are thr Advice Industry that will be analyzed. These firm’s fina

FINANCIAL ANALYSIS OF AMERIPRISE FINANC are much more common in capital-intensive industries ( argument regarding to opportunity cost when not utilizi utilizing leverage a firm has increased resources to mak Essentially the argument is stating, “The more risk, the Ameriprise Financial outperforms its competitor Reminder, these financial ratios are results from 2017 o accurate holistic picture, a ten-year time horizon should how effective each company is at turning invested cash 2018). An advantage of Ameriprise is the fact that the f America and Morgan Stanley have been in business sin and flexibility equal to Ameriprise (10K, 2017). Figure 5 Company Ameriprise Financial Bank of America M S l

D/E 0.85% 0.85% 2 45%

FINANCIAL ANALYSIS OF AMERIPRISE FINANC consideration all company-wide expenses (Investopedia ratio is considered by many the most important ratio for these ratios, Ameriprise has a superior gross margin due As talked about earlier in this paper, Ameriprise only h low overhead cost (10K, 2017). Franchisees pay a fee to utilize its operating systems (10K, 2017). Both bank of firms who have a banking side. Both have higher costs expenses (D’Costa, 2018). Bank of America and Morga Ameriprise due to a greater capacity for operations. The average P/E ratio in the Investment Advice Given that information, all three-company’s stock price industry average. In breaking the ratio down further, the investor will pay for every dollar of earnings. In buying i

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FINANCIAL ANALYSIS OF AMERIPRISE FINANC

Stock Price vs. Dividend Yield Dividend yields are a secret indicator to predict performing (Macrotrends, 2018). The three figures belo time frame from Ameriprise Financial, Bank of Americ tracks the stock price over the ten-year horizon from 20 dividend payout over the ten-year horizon from 2007-2 yield over the ten-year horizon from 2007-2017. Ameriprise outperformed both Bank of America price and dividend yield over the ten-year horizon. Ame dip during the Global Financial Crisis of 2008 and expe through 2016. Ameriprise’s dividend yield has been vo horizon. There are two ways stock creates value for inv (Lindzon, 2016). Second, through dividends (Lindzon, h

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FINANCIAL ANALYSIS OF AMERIPRISE FINANC Figure 7 - Ameriprise Financial

Figure 8 - Bank of America

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FINANCIAL ANALYSIS OF AMERIPRISE FINANC Morgan Stanley’s ROE has steadily increased b five years. The increase has resulted from a fast-growin of 7.38 percent per year over the past five years. The in the growth. Asset turnover and equity multiplier have re Bank of America has the lowest ROE out of the 2017. The firm’s ROE decreased by 7.93 percent in 201 increase per year over the past five years. Bank of Ame multiplier. The firm is risk adverse and prefers to keep of debt (Bank of America 10K, 2017). The firm’s profit increase of 2.86 percent per year over the past five year

Beta Calculation and Ris Beta is the measure of volatility of a security or market or benchmark (Y-Charts, 2018). Beta is also com

FINANCIAL ANALYSIS OF AMERIPRISE FINANC Ameriprise’s past closing prices. The average beta resu resulted in 1.03. This result signifies that by investing in similar risks that are equal to the market. Whatever dire Ameriprise’s stock will follow. Figure 10

Beta Char 2.50 2.00 1.50 1.00 0.50 0.00 2017

2016

2015 AMP

MS

FINANCIAL ANALYSIS OF AMERIPRISE FINANC

Weighted Average Cos The firms weighted average cost of capital (WA capital in which each category pf capital is proportional calculation includes common stock, preferred stock, bo (Investopedia, 2018). The ratio is important due to the e relation to their investment. Companies leverage its ass WACC explains the average of the costs of these types specific situation (Investopedia, 2018). The method for calculating the WACC in which cost of debt before taxes, cost of equity, tax rate, weight debt before taxes was the weighted coupon weight of ou tax rate calculated by averaging the tax returns from the other variables used in this formulation are intuitive. Fi

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FINANCIAL ANALYSIS OF AMERIPRISE FINANC future. This report concludes an overall BULLISH attitu long-term future. The current company stock price is un Figure 12

(Morningstar, 2018) Like all major firms, Ameriprise has strengths a

FINANCIAL ANALYSIS OF AMERIPRISE FINANC Figure 13

(Morningstar, 2018) Ameriprise has position itself strongly by relyin was founded on. However, there are three major weakn Ameriprise to reach its highest potential. The first weak commodity business that suffers from poor industry dyn the company’s investment portfolio has a larger than th mortgage backed and asset backed securities Third Am

FINANCIAL ANALYSIS OF AMERIPRISE FINANC

References “Ameriprise Difference.” Ameriprise Financial Presenta 2018. “Ameriprise Financial 10k.” Ameriprise Financial 10k, http://ir.ameriprise.com/interactive/LookAndFe 2017.pdf“IBISWorld US FINANCIAL. “Financial Planning Advice and Financial Advisors.” A www.ameriprise.com/. “Morgan Stanley 10K.” Morgan Stanley 10k, 15 Oct. 2 “Bank of America 10K.” Bank of America 10k, 8 Dec. “Personal Financial Advisors Summary.” U.S. Bureau o Statistics, 13 July 2018, www.bls.gov/ooh/busin advisors.htm. “Th M d

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FINANCIAL ANALYSIS OF AMERIPRISE FINANC Craig and J. H. (2004, Dec 29). Regulators find prob acknowledges to government that it failed to dis shake-up. Wall Street Journal Retrieved from Croonenbroeck, C., & Matkovskyy, R. (2014). Dem disposition effect revisited. Applied Financial E doi:10.1080/09603107.2013.875107 D’Costa, V. (2018, January). Financial Planning & A Industry Report. Retrieved July 12, 2018 from I Durkin, Keith. "The 20% Tax Deduction for Pass-Th Cassel. Accessed April 18, 2018. http://www.broadandcassel.com/resources/publica through-entities-explained/ https://www.kitces.com/blog/tax-deduction-financ t

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FINANCIAL ANALYSIS OF AMERIPRISE FINANC Kitches, Michael. "The Deductibility Of Financial A TCJA." Nerd's Eye View | Kitces.com. April 13 https://www.kitces.com/blog/tax-deduction-fina taxable-section-212-expense-tcja/. Krajewski, L. J., Ritman L. P., & Malhotra, M. K, (2 and supply chains. Upper Saddle River, NJ: Pea Lebel , Amber, and Leo Stewart. “Robo-Advisors: N Innovation, vol. 20, no. 11, 2016, pp. 19–38., do Lindzon, J. (2016). 15 Quotes About Money from Pe Fortune.Com, 251. Long, Heather. "Analysis | The Final GOP Tax Bill I Washington Post. December 15, 2017. Accessed A https://www.washingtonpost.com/news/wonk/wp/ l t h

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FINANCIAL ANALYSIS OF AMERIPRISE FINANC Olstein, D. C. (2015). Department of Labor Propose Prohibited Transaction Exemption Relief for Inv Relations Law Journal, 41(2), 4-22. Salmon, f., & Poppick, s. (2013). save like dave just Vincent, G., Goldstein, J., & Cunniff, S. (2017, Marc management - Deloitte US. Retrieved May/June https://www2.deloitte.com/content/dam/Deloitte disruptors-in-wealth-mgmt-final.pdf&p=DevEx Wilkonson, Brodeski. "Why the Tax Law Is Very Ba December 18, 2017. Accessed April 24, 2018. http planning.com/opinion/rias-say-new-tax-reform-bi...