This paper seeks to analyze the profitability and risk situation of UBS Investment Bank, particularly its liquidity, solvency and gearing risks by preparing a detailed report covering the qualitative and quantitative aspects affecting the company and by making the necessary recommendations to on its future strategies. For purposes of making recommendation to strategies this paper will therefore conduct a simple SWOT analysis for the company. 11. Brief Company Background The company claims to be a leading global wealth manager, top tier investment banking and securities firm and one of the largest asset global asset managers.
The company headquarters are located in Zurich and Basel, Switzerland where it claims to be the market leader in retain and commercial banking but the company claims to be operating in over 50 countries around the world and from major international centers. Taking from its claim of leadership and certain sections of the international financial services industry, it may not be surprising to hear its claims to be employing about more than 80,000 across the globe (UBS, 2008).
2. Analysis and Discussion 2. 1 Financial Analysis
The following financial information is necessary to evaluate the company’s profitability, liquidity and solvency. The company’s profitability is still evident although it exhibited a decline from 0. 14 in 2005 to 0. 10 in 2006 after an increase that was experience in 2005 compared with 2004. A higher than 10% net profit margin may still be considered high as far as net income is measured in relation to revenues. However the company’s management handling of its assets is far from desirable as it just remained at 0.
01 for the years 2004, 2005 and 2006. The low return of assets which could also be a way of measuring the company management’s efficiency may not be given much attention by the stockholders however, as the company’s return on equity for the three years under review are still very high. With already at a very high ratio at 0. 17 in 2004, it even further increased to 0. 27 in 2005 and which was almost maintained in 2006 at 0. 26. Return on equity of more than 12% may be said to be high in relation to other investment opportunities.
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