Financial Operations of American Express - Example

October 24, American Express Introduction The financial situation discussion delves on the financial operations of American Express Company. The paper discusses the income statement performance for the 2013 and 2012 accounting period. The paper scrutinizes the balance sheet outputs for the same two years. American Express Company’s financial operations are profitably viable. American Express American Express engages in the credit card business segment. The company was formally established in 1850. The company initially ventured into the transfer business segment. The company transferred diverse goods and high value items from New York and Buffalo between 1818 and 1881 (Literati, 2009). The company’s marketing strategy prior to 2014 accounting period is grounded on offering quality card-based services. The marketing strategy includes offering trusted and reliable cards to the current and future American Express customers. With just the click of a mouse, the online customer can select and acquire an economically affordable American Express card. American Express is one of the United States’ credit card giants in the financial world. Its New York stock market symbol is AXP (American Express). The research delves on the financial situation of American Express prior to the current 2014 marketing strategy. American Express’ financial situation prior to the 2014 marketing strategy generated the favorable financial operating outputs. Financial Situation The American Express Company’s financial situation shows the company performed financial well during both 2013 and 2012. The company generates revenues from the sale of its card services. The customers use the card to pay for their purchases. Grocery and other business establishments honor the American Express cards as replacement for the store customers’ cash payments. The company pays operating expenses to continue its card operations. The company generates net income. The net income is generated by deducting the total operating expenses from the total card revenues. The Financial situation delves on the financial report outputs of American Express prior to the current 2014 year marketing strategy. The financial reports include the balance sheet. The balance sheet shows the company’s total assets, total liabilities and shareholders’ equity amounts. Another financial report is the income statement. The income statement shows the company’s revenues, expenses, and net income figures (Vogel, 2014). To achieve its current 2014 marketing strategy to increase revenues, the company increased the number of Florida regional office employees. With more employees, more clients felt the company’s better and faster card membership and other related financial services. Specifically, the company hired an additional 100 more employees in its Florida offices. In addition, the company transferred 1,700 employees from Florida to the very lucrative Sunrise regional office (Vogel, 2014). Further, the American Express company’s financial operations generated favorable outcomes during 2013. According to the company’s website, http://www.americanexpress.com, the main sources of revenue are personal cards, corporate cards, small business cards, and prepaid cards (Glick, 2013). Income Statement The American Express company’s 2013 annual income statement shows the company performed better during 2013. The income statement contains three important parts. The first part is the revenue part. The revenue part includes all amounts generated from the sale of the company’s card-based products. Next, the company’s income statement includes operating expenses. Further, the company’s revenue during 2013 was favorably higher than the 2012 annual revenue. In terms of expenses, the company’s 2013 total operating expenses were favorably lower than the 2012 year’s operating expenses. In addition, the company’s 2013 year’s net income is unfavorably lower than the 2012 net income performance. Using the net income alone, the generated a better net income than the company’s 2013 operating (Glick, 2013). Further, the best gauge to determine whether the company is performing financially better is to determine whether the company is able to generate a net profit during one financial accounting period. An increase in the revenues will contribute to a possible higher net income figure. A decline in the revenue will normally lead to a decline in the net income, possibly generating a net loss outcome. If the revenue between two financial accounting remains the same, an increase in the overall expenses will lead to the decline in the net income. Similarly, the similar revenue between two financial accounting and a decrease in the overall expenses will lead to the net income increase. The company’s 2013 $ 5,360 million net income was unfavorably higher than the 2012 $5,580.00 million net income result. During the 2013 financial year, the 2012 net income figure declined by $ 220 million. Using the net income gauge alone, American Express performed financially better in 2012 than 2013 (Glick, 2013). Sources of Revenue Based on the American Express Company’s revenue sources, the company has several sources of income. The company will continue to survive if it generates viable revenues. One of the sources of the company’s 2013 revenue is discount revenue. The 2013 year discount revenue favorably higher than the company’s 2012 discount revenue amount. Another source of revenue is net card fees. The company’s 2013 net card fees amount is favorably better than the 2012 net card fees figure. A third source of revenue is travel fees and commissions. The company’s 2013 travel fees/commissions are unfavorably lower than the 2012 travel fees/commissions amount. Another source of revenue is other fees/ commissions amount. The company’s 2013 other fees/commissions amount is favorably better than the company’s 2012 other fees and amount figure. Another source is the interest/dividends amount. The 2013 interest/dividends amount is unfavorably lower than the prior 2012 year’s interest/dividends amount. Surely, the above financial operations figure proves American Express generated higher revenue sources during 2013 financial accounting period than the prior 2012 financial accounting year (Glick, 2013). Operating Expenses Additionally, the company generated different operating expenses during both 2013 and 2012 (Glick, 2013). The operating expenses include amounts needed to ensure the company continues to operate and generate revenues. The 2013 financial period generated marketing expenses. The 2013 marketing expenses amount is unfavorably higher than the marketing expenses paid during the 2012 accounting period. The company paid the salaries and wages of its global employees. The company’s 2013 salaries and expenses amount is favorably lower than the 2012 annual amount. Undoubtedly, the discussion affirms the company’s 2013 financial accounting period generated lower overall operating expenses than the amount paid during the 2012 accounting period. The reduction in salaries is triggered by the company’s cutting down on some redundant jobs within the American financial environment. Specifically, the company deleted 5,400 nationwide jobs (Broder-Singer, 2013). Balance Sheet The company’s balance sheet shows the financial operating outcome during the 2013 and 2012 accounting period (Glick, 2013). The balance Sheet contains three different account groups. The three groups are total asset group, total liabilities group, and shareholders equity group. The company’s total assets figure for 2013 is favorably better than the total assets amount during the prior 2012 accounting period. The company’s owed money during the two accounting periods. The total liabilities amount for 2013 is favorably lower than the total liabilities amount for 2012 total liabilities figure. The company’s balance sheet contains amounts invested by the shareholders. The shareholders’ equity for 2013 financial period is unfavorably higher than the $19,500 million. The shareholders’ equity amount is favorably higher than the 2012 financial period’s shareholders equity amount. Lastly, the company declared cash dividends to its registered shareholders. The company’s declared dividend in 2013 is favorably higher than the declared dividends amount during the prior 2012 financial period. Without a doubt, the American Express Company’s 2013 financial report is favorably better than the 2012 financial report. Total Assets The company’s financial operations included a report on its total assets (Glick, 2013). Assets represent all properties that are owned by American Express Company. The company’s Cash and others due from banks figure for 2013 is favorably higher than the prior 2012 financial accounting period amount. The company’s interest bearing deposits figure for 2013 is unfavorably lower than the prior 2012 financial accounting period amount. The company’s short-term investment securities amount for 2013 favorably higher than the prior 2012 financial accounting period figure. Further, the other parts of the company’s financial report show the company’s other asset amounts (Glick, 2013). The company’s Accounts receivable from card membership and others amount for 2013 is favorably higher than the prior 2012 financial accounting period figure. The company’s loans amount for 2013 is favorably higher than the prior 2012 financial accounting period figure. The company’s investment in securities amount for 2013 is unfavorably lower than the prior 2012 financial accounting period figure. The company’s premises and equipment amount for 2013 is favorably higher than the prior 2012 financial accounting period figure. Conclusion Based on the above discussion, American Express is one of our nation’s financial world credit card giants. The company’s 2013 revenue less interest expense figure was favorably higher than the 2012 figure. The company’s 2013 net income is unfavorably lower than the 2012 amount. The company’s total assets The American Express entity’s 2013 shareholders’ equity is favorably higher than the 2012 figure. Evidently, American Express’ financial situation before the implementation of the 2014 marketing strategy produced favorable financial operating profits. References: AmericanExpress. (2011, July 1). American Express. Investors Daily , p. 1. < http://login.ezproxy1.lib.asu.edu/login?url=http://search.proquest.com.ezproxy1.lib.asu.edu/docview/1000454308?accountid=4485 " http://login.ezproxy1.lib.asu.edu/login?url=http://search.proquest.com.ezproxy1.lib.asu.edu/docview/1000454308?accountid=4485 Broder-Singer, R. (2013, April 1). Economic Yearbook . Florida Trend , p. 1. Glick, R. (2013, April 1). American Express Reports Record Net Income. Business Wire , p. 1. < > Literati. (2014, October 24). Retrieved October 24, 2014, from Literati: . Vogel, M. (2014, July 1). American Express. Florida Trend , p. 1. < http://pl8cg5fc8w.search.serialssolutions.com/ > Read More