Report on Ratio Analysis of Bank of New York Mellon and Bank of America Corporation

Ratio Analysis

·         Asset Management Ratio of Bank of New York Mellon and Bank of America Corporation

Asset management ratios of Bank of New York Mellon and Bank of America Corporation are presented below for two-year performances (2016 and 2017). Inventory turnover ratio of Bank of New York Mellon (12.81% and 13.23%) is greater than Bank of America Corporation (6.17% and 5.53%) in both years 2016 and 2017 which indicate that Bank of New York Mellon has sold more inventory as compared to Bank of America Corporation.

Day’s sales outstanding ratio of Bank of New York Mellon is 14.32 and 13.60 for 2017 and 2016 respectively. Fixed asset turnover ratio of Bank of New York Mellon greater than Bank of America Corporation is an indicator of asset utilization efficiency. Bank of New York Mellon is earning more revenue from fixed assets as compared to its spending. Similar to the fixed asset turnover ratio, total asset turnover ratio of Bank of New York Mellon is also higher than the ratio of Bank of America Corporation. A greater ratio of total asset turnover show capabilities of managerial staff in asset utilization planning to generate revenue. Comparing these asset utilization ratios it can be concluded that Bank of New York Mellon asset utilization strategies is better as compared to competitor Bank of America Corporation (Finance.yahoo.com, 2019).

·         Solvency Ratio of Bank of New York Mellon and Bank of America Corporation

Debt and solvency ratios are based on debt to assets and time interest earned ratios of Bank of New York Mellon and Bank of America Corporation. See the presented below table for Bank of New York Mellon.

The presented below table contains debt ratio analysis results of Bank of America Corporation.

The debt to asset ratio less than 1 shows Bank of New York Mellon and Bank of America Corporation both has liabilities less than assets. However, times interest earned ratio shows that Bank of New York Mellon is capable to meet its interest obligation easily as compared to Bank of America Corporation. Thus, the financial leverage of the Bank of New York Mellon is better than competitor Bank of America Corporation.

·         Profitability Ratio of Bank of New York Mellon and Bank of America Corporation

Profitability ratios include profit margin ratio, return on assets and return on equity ratios.  

According to the above mentioned tables profit margin ratio of Bank of New York Mellon and Bank of America Corporation, it is clear that Bank of America Corporation is generating more income on each dollar of sales as compared to Bank of New York Mellon. While return on assets and equity ratios for Bank of New York Mellon are greater than Bank of America Corporation (Annualreports.com, 2017).

·         Market Ratio of Bank of New York Mellon and Bank of America Corporation

Market ratio results presented in the above tables indicate that market values of Bank of New York Mellon are decreasing as it moved to 14.40 from 14.99 in one year duration. However, inclining price-earnings ratio of Bank of America Corporation shows that the bank is managing its shares better than Bank of New York Mellon. Although, earning per share for Bank of New York Mellon is still higher than Bank of America Corporation (Bnymellon.com, 2017).