Asset Management

Next, the efficiency or the asset management ratios have also been computed for Morgan Stanley. If we look at the asset management ratios of the bank then the fixed assets and the total assets turnover ratios for Morgan Stanley are fluctuating up and down. The fixed assets turnover is high in 2016 at 5.34, which shows that the fixed assets of the company are efficiently utilized by the employees(Nissim, 2001).

However, the total assets turnover is on average equal to 0.044 in all the years but it is too low as compared to the industry average of 0.05. We have also computed the free cash flow over net income ratio. The highest ratio had been seen in 2015 of 38% however, it has declined to 20% in 2016. The asset management ratios show that the performance of the investment bank has declined in 2016. The asset management ratios are shown below:

Asset Management Ratios 2013 2014 2015 2016
Days Sales Outstanding
Inventory Turnover Ratio
Free Cash Flow/ NI 11.68% 4.00% 38.00% 20.00%
FA Turnover Ratio 5.743 5.694 5.756 5.434
Total Asset Turnover Ratio 0.044 0.041 0.044 0.044


Debt Management

Although, we are dealing with the financial statement analysis of an investment bank, we have also calculated one ratio related to the debt of the company. We have computed the debt ratio to analyze the level of debt on the balance sheet of the investment bank. Over the past three years, the debt within the capital structure of the bank has been around 28% approximately(Kumbirai, 2010). This has declined in 2016 as compared to 2015, 2014 and 2013. This shows that the investment bank is not highly levered and its debt capacity is in control by its management. The ratios are shown in the table below:

Debt Management Ratios 2013 2014 2015 2016
Debt Ratio 34.01% 29.41% 29.50% 28.14%
Time interest earned

Human Capital Ratios

In the end, we have computed a range of human capital ratios to analyze the returns that are generated by the investment bank on a per employee basis. These ratios would help us to make a recommendation that whether an employee should invest his/her human and intellectual capital in Morgan Stanley. A number of human capital ratios have been calculated such as revenue per employee.

The revenue per employee has grown from 2014 to 2015 but it has declined in 2016 to 0.12%, which is quite low. Next, we have calculated profit per employee. This ratio had increased significantly in 2015 to 82.46% but then declined to the lowest of all years of -1.83% in 2016. Both the revenue per employee and profit per employee ratios are significantly lower than the industry average figures.

Similarly, the growth in the assets per employee is also negative in 2015 and 2016. Lastly, the number of employees of the investment bank have increased in 2014 and 2015 but declined in 2016. This might be due to lay off some of the employees due to the poor performance of the investment bank or more competitive salaries(Nissim, 2001)………………………..

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