Internship Report v3

PROJECT REPORT
(Project Semester January – June 2019)
INTERNSHIP AT J.P. MORGAN
Investment Opportunity in Aerospace Industry
Submitted by
Gurashish Singh Walia
BE-16102048
Under the guidance of
Dr. R.M. Belokar Mr. Mayank Kumar
Professor, Dept. of Production Engineering Vice President
Punjab Engineering College, Chandigarh Centralised Research Group
(Deemed to be University) J.P. Morgan Services Limited, Mumbai
Department of Civil Engineering
Punjab Engineering College (Deemed to be University), Chandigarh
January to June, 2019
1
DECLARATION
I hereby declare that the project work entitled (“Investment Opportunity in Aerospace
Industry”) is an authentic record of my own work carried out at J.P. Morgan Services India
Private Limited as requirements of six months project semester for the award of degree of B.E.
Civil, Punjab Engineering College (Deemed to be University), Chandigarh, under the guidance
of Mr. Mayank Kumar, Ms. Gurneet Kaur and Dr. R.M.Belokar during January to June, 2019.
Gurashish
BE16102048
Date: 16th July, 2019
Certified that the above statement made by the student is correct to the best of our knowledge
and belief.
Dr. R.M.Belokar Mr. Mayank Kumar

Faculty Coordinator Industrial Coordinator
Punjab Engineering College (Deemed to be University) J.P. Morgan Services Limited
Chandigarh Mumbai
2
Certificate
3
ACKNOWLEDGEMENT
Enumerating and enlisting all the individuals whose contributions went into making of the report
would be a very difficult task…
I am very grateful to Mr. Ranjan Bannerjee, Executive Director, J.P. Morgan Services India
Private Limited, for showing faith in me and providing me with an invaluable opportunity to work
with this firm.
I would like to express my great sense of gratitude to Ms. Gurneet Kaur, Vice President, and Mr.
Mayank Kumar, Vice President, J.P. Morgan Services India Private Limited for giving me a
chance to work under them and be such wonderful mentors.
I would like to express my sincerest gratitude to Dr. R.M.Belokar, Punjab Engineering College
(Deemed to be University) for providing great support throughout the internship.
I would take the opportunity to thank all the teachers of Punjab Engineering College (Deemed to
be University) for making me capable enough to be a part of such a reputed firm.
Last but definitely not the least, I would take the opportunity of thanking the management and
employees of the firm for cooperating with me, sharing their valuable insights and making my
internship with J.P. Morgan such an exciting and enlightening journey.
4
CONTENTS
1. Summary ........................................................................................................................ 7
2. Introduction ................................................................................................................... 8
2.1. Brief Overview… .................................................................................................. 8
2.2. Timeline ................................................................................................................. 9
2.3. Key mergers which shaped what JPMorgan Chase is today ............................. 13
2.4. Financial Data… .................................................................................................. 14
2.5. Investment Banking Arm ..................................................................................... 16
2.6. Departments at CRG ............................................................................................ 21
3. Industry - Introduction to Finance .............................................................................. 23

3.1. Basic Accounting Principles… ............................................................................. 23
3.2. Financial Statements… ......................................................................................... 24
3.2.1. Income Statement…...........................................................................24
3.2.2. Balance Sheet… ................................................................................ 28
3.2.3. Cash Flow Statement… ..................................................................... 31
3.2.4. Relation between the three statements… ........................................... 33
3.3. Financial Ratios… ................................................................................................. 35
3.4. Comps and Valuation… .........................................................................................36
3.4.1. Trading comparables… ...................................................................... 37
3.4.2. Transaction comparables… ................................................................38
3.4.3. Sum of the Parts valuation… .............................................................. 40
3.4.4. Discounted Cash Flow valuation… .................................................... 41
4. Work and Review............................................................................................................ 43

4.1. Overview…............................................................................................................. 46
4.2. Components of Pitch................................................................................................49
4.3. Comps and Valuation… .......................................................................................... 58
4.4. Research, Updates & Databases… .......................................................................... 68
4.4.1. Peer Analysis ....................................................................................... 68
5
4.4.2. Case Studies… .................................................................................... 69
4.4.3. Industry Specific Databases… ............................................................ 69
4.5. Review .................................................................................................................... 70
5. Final Project – Investment Opportunity in Semiconductor Industry........................ 71
6. Difficulties faced during the project semester .............................................................. 80
7. Financial Glossary ........................................................................................................... 81
8. References ......................................................................................................................... 85
6
1. SUMMARY
As a trainee, I was a part of J.P. Morgan CIB (Corporate and Investment Bank) CRG (Centralized
Research Group) department. CRG Mumbai team is an integral part of J.P. Morgan’s Investment
Banking business working closely with the firm’s IB teams across the globe.
The internship started off with a couple of weeks long training period where we went through a
steep learning curve. We were introduced to the company ethics, compliance training, basic
finance, accounting principles, basic and advanced excel, presentation skills and an introduction
to the various databases used by the company.
We were allotted specific teams prior to the starting of the internship. I was a part of the DIT
(Diversified Industrials and Transport) - EMEA team which covered various industries such as
manufacturing, construction, chemicals, mobility, automobiles, aerospace and building materials
etc.
As a junior analyst, I got to attend structured training programs at different stages of my tenure
with the firm. It helped me build excellent corporate finance and valuation skills along with
enriching global industry insights. I got a chance to work directly with front-end bankers in the
across multiple geographies on innovative and challenging Investment Banking assignments every
day. I got to exchange ideas and inputs with the senior most minds of J.P. Morgan and work with
them to build proposals. I got to speak to specialists across regions on areas I was working on.
Interacting with people from different cultures was a new learning experience in itself.
My final project was a sum total of what I had learnt throughout my internship. The project was a
Case Study based assignment, wherein I had to devise and analyse the key investment highlights
of an acquisition in the aerospace industry, by a major player, which could be useful from an
Investment Banking perspective. From all the knowledge I had gathered about making a pitch, I
made a project on ‘Investment Opportunity in Aerospace Industry’ and highlighted a potential
acquisition of Moog by Honeywell, which could be pursued by the firm.
7
2. INTRODUCTION
2.1 BRIEF OVERVIEW
JPMorgan Chase & Co. is a multinational banking and financial services holding company
headquartered in New York City. It is the largest bank in the United States, and the world's sixth
largest bank by total assets, with total assets of US$2.63 trillion. Moreover, it is the fifth largest
public company in the world according to the Forbes Global 2000. It is a major provider of
financial services, and according to Forbes magazine is the world's sixth largest public company
based on a composite ranking.
The J.P. Morgan brand, historically known as Morgan, is used by the investment banking, asset
management, private banking, private wealth management, and treasury & securities services
divisions. Fiduciary activity within private banking and private wealth management is done under
the aegis of JPMorgan Chase Bank, N.A. — the actual trustee. The Chase brand is used for credit
card services in the United States and Canada, the bank's retail banking activities in the United
States, and commercial banking. The corporate headquarters is located at 270 Park Avenue in
Midtown Manhattan, New York City. JPMorgan Chase & Co. is considered to be a universal bank.
JPMorgan Chase is one of the Big Four banks of the United States, along with Bank of America,
Citigroup, and Wells Fargo. According to Bloomberg, as of October 2011, JPMorgan Chase had
surpassed Bank of America as the largest U.S. bank by assets.
Jamie Dimon Jennifer A. Piepszak

CEO, Chairman and President Chief Financial Officer
8
2.2 TIMELINE OF THE COMPANY
JPMorgan Chase, in its current structure, is the result of the combination of several large U.S.
banking companies since 1996, including Chase Manhattan Bank, J.P. Morgan & Co., Bank One,
Bear Stearns and Washington Mutual. Going back further, its predecessors include major banking
firms among which are Chemical Bank, Manufacturers Hanover, First Chicago Bank, National
Bank of Detroit, Texas Commerce Bank, Providian Financial and Great Western Bank. Its original
predecessor, the Bank of the Manhattan Company, was the second oldest banking corporation in
the United States, and the 31st oldest bank in the world, having been established on September 1,
1799 by Aaron Burr.
2.2.1 Chemical banking Corporation

The New York Chemical Manufacturing Company was founded in 1823 as a maker of various
chemicals. In 1824, the company amended its charter to perform banking activities and created the
Chemical Bank of New York. After 1851, the bank was separated from its parent and grew
organically and through a series of mergers, most notably with Corn Exchange Bank in 1954,
Texas Commerce Bank (a large bank in Texas) in 1986, and Manufacturer's Hanover Trust
Company in 1991 (the first major bank merger "among equals"). In the 1980s and early 1990s,
Chemical emerged as one of the leaders in the financing of leveraged buyout transactions. In 1984,
Chemical launched Chemical Venture Partners to invest in private equity transactions alongside
various financial sponsors. By the late 1980s, Chemical developed its reputation for financing
buyouts, building a syndicated leveraged finance business and related advisory businesses under
the auspices of pioneering investment banker, Jimmy Lee. At many points throughout this history,
Chemical Bank was the largest bank in the United States.
In 1996, Chemical Bank acquired Chase Manhattan. Although Chemical was the nominal survivor,
it took the better-known Chase name. To this day, JPMorgan Chase retains Chemical's pre-1996
stock price history, as well as Chemical's former headquarters at 270 Park Avenue.
2.2.2 Chase Manhattan Bank

The Chase Manhattan Bank was formed upon the 1955 purchase of Chase National Bank
(established in 1877) by the Bank of the Manhattan Company (established in 1799), the company's
9
oldest predecessor institution. The Bank of the Manhattan Company was the creation of Aaron
Burr, who transformed The Manhattan Company from a water carrier into a bank.
Led by David Rockefeller during the 1970s and 1980s, Chase Manhattan emerged as one of the
largest and most prestigious banking concerns, with leadership positions in syndicated lending,
treasury and securities services, credit cards, mortgages, and retail financial services. Weakened
by the real estate collapse in the early 1990s, it was acquired by Chemical Bank in 1996, retaining
the Chase name. Before its merger with J.P. Morgan & Co., the new Chase expanded the
investment and asset management groups through two acquisitions. In 1999, it acquired San
Francisco-based Hambrecht & Quist for US$1.35 billion. In April 2000, UK-based Robert Fleming
& Co. was purchased by the new Chase Manhattan Bank for US$7.7 billion.
2.2.3 J.P. Morgan & Company

The heritage of the House of Morgan traces its roots to the partnership of Drexel, Morgan & Co.,
which in 1895 was renamed J.P. Morgan & Co. Arguably the most influential financial institution
of its era, J.P. Morgan & Co. financed the formation of the United States Steel Corporation, which
took over the business of Andrew Carnegie and others and was the world's first billion dollar
corporation. In 1895, J.P. Morgan & Co. supplied the United States government with US$62
million in gold to float a bond issue and restore the treasury surplus of US$100 million. In 1892,
the company began to finance the New York, New Haven and Hartford Railroad and led it through
a series of acquisitions that made it the dominant railroad transporter in New England.
Built in 1914, 23 Wall Street was known as the "House of Morgan", and for decades the bank's
headquarters was the most important address in American finance.
In August 1914, Henry P. Davison, a Morgan partner, traveled to the UK and made a deal with the
Bank of England to make J.P. Morgan & Co. the monopoly underwriter of war bonds for the UK
and France. The Bank of England became a "fiscal agent" of J.P. Morgan & Co., and vice versa.
Thus, the company profited from the financing and purchasing activities of the two European
governments.
In the 1930s, all of J.P. Morgan & Co. along with all integrated banking businesses in the United
States, was required by the provisions of the Glass–Steagall Act to separate its investment banking
10
from its commercial banking operations. J.P. Morgan & Co. chose to operate as a commercial
bank, because at the time commercial lending was perceived as more profitable and prestigious.
Additionally, many within J.P. Morgan believed that a change in political climate would eventually
allow the company to resume its securities businesses but it would be nearly impossible to
reconstitute the bank if it were disassembled.
In 1935, after being barred from securities business for over a year, the heads of J.P. Morgan spun
off its investment-banking operations. Led by J.P. Morgan partners, Henry S. Morgan and Harold
Stanley, Morgan Stanley was founded on September 16, 1935, with US$6.6 million of nonvoting
preferred stock from J.P. Morgan partners. In order to bolster its position, in 1959, J.P. Morgan
merged with the Guaranty Trust Company of New York to form the Morgan Guaranty Trust
Company. The bank would continue to operate as Morgan Guaranty Trust until the 1980s, before
beginning to migrate back toward the use of the J.P. Morgan brand. In 1984, the group finally
purchased the Purdue National Corporation of Lafayette Indiana, uniting a history between the two
figures of Salmon Portland Chase and John Purdue. In 1988, the company once again began
operating exclusively as J.P. Morgan & Co.
`
2.2.4 Bank One Corporation

In 2004, JPMorgan Chase merged with Chicago-based Bank One Corp., bringing on board current
chairman and CEO Jamie Dimon as president and COO and designating him as CEO William B.
Harrison, Jr.'s successor. Dimon's pay was pegged at 90% of Harrison's. Dimon quickly made his
influence felt by embarking on a cost-cutting strategy, and replaced former JPMorgan Chase
executives in key positions with Bank One executives—many of whom were with Dimon at
Citigroup. Dimon became CEO in January 2006 and Chairman in December 2006.
Bank One Corporation was formed upon the 1998 merger between Banc One of Columbus, Ohio
and First Chicago NBD. These two large banking companies had themselves been created through
the merger of many banks. This merger was largely considered a failure until Dimon—recently
ousted as President of Citigroup—took over and reformed the new firm's practices—especially its
disastrous technology mishmash inherited from the many mergers prior to this one. Dimon effected
11
changes more than sufficient to make Bank One Corporation a viable merger partner for JPMorgan
Chase.
Bank One Corporation traced its roots to First Bancgroup of Ohio, founded as a holding company
for City National Bank of Columbus, Ohio and several other banks in that state, all of which were
renamed "Bank One" when the holding company was renamed Banc One Corporation. With the
beginning of interstate banking they spread into other states, always renaming acquired banks
"Bank One", though for a long time they resisted combining them into one bank.
`After the First Chicago NBD merger, adverse financial results led to the departure of CEO John
B. McCoy, whose father and
grandfather had headed Banc One and
predecessors. Jamie Dimon was
brought in to head the company.
The First Chicago Bank Logo
JPMorgan Chase completed the
acquisition of Bank One in the third quarter of 2004. The former Bank One and First Chicago
headquarters in Chicago serve as the headquarters of Chase, JPMorgan Chase's commercial and
retail banking subsidiary.
2.2.5 Bear Stearns

At the end of 2007, Bear Stearns & Co. Inc. was the fifth largest
investment bank in the United States but its market capitalization had
deteriorated through the second half of 2007. On Friday, March 14,
2008, Bear Stearns lost 47.0% of its equity market value to close at
Bear Stearns logo US$30.00 per share as rumors emerged that clients were withdrawing
capital from the bank. Over the following weekend it emerged that Bear Stearns might prove
insolvent, and on or around March 15, 2008, the Federal Reserve engineered a deal to prevent a
wider systemic crisis from the collapse of Bear Stearns.
12
2.2.6 Washington Mutual
On September 25, 2008, JPMorgan Chase bought most of the banking
operations of Washington Mutual from the receivership of the Federal
Deposit Insurance Corporation. That night, the Office of Thrift
Washington Mutual Supervision, in what was by far the largest bank failure in American
logo history, had seized Washington Mutual Bank and placed it into
receivership. The FDIC sold the bank's assets, secured debt obligations and deposits to JPMorgan
Chase & Co for US$1.836 billion, which re-opened the bank the following day. As a result of the
takeover, Washington Mutual shareholders lost all their equity.
JPMorgan Chase raised US$10 billion in a stock sale to cover write-downs and losses after taking
on deposits and branches of Washington Mutual. Through the acquisition, JPMorgan now owns
the former accounts of Providian Financial, a credit card issuer WaMu acquired in 2005. The
company announced plans to complete the rebranding of Washington Mutual branches to Chase
by late 2009.
Chief executive Robert S. Cameron received a US$7.5 million sign-on bonus and cash severance
of US$11.6 million after being CEO for 17 days.
2.3 KEY MERGERS WHICH SHAPED WHAT JPMORGAN CHASE IS TODAY:
In 1991, Manufacturers Hanover Corp. merged with Chemical Banking Corp., under the
name of Chemical Banking Corp., then the second-largest banking institution in the United
States.
In 1995, First Chicago Corp. merged with NBD Bancorp., forming First Chicago NBD, the
largest banking institution based in the Midwest.
In 1996, The Chase Manhattan Corp. merged with Chemical Banking Corp., under the
name of The Chase Manhattan Corp.
In 1998, Banc One Corp. merged with First Chicago, under the name of Bank One Corp.
After a subsequent merger, Bank One became the largest financial services firm in the
Midwest, the fourth-largest bank in the U. S. and the world's largest Visa credit card issuer.
13
In 2000, J.P. Morgan & Co. Incorporated merged with The Chase Manhattan Corp.,
effectively combining four of the largest and oldest money center banking institutions in
New York City (J.P. Morgan, Chase, Chemical and Manufacturers Hanover) into one firm
under the name of J.P. Morgan Chase & Co.
In 2004, Bank One Corp. merged with J.P. Morgan Chase & Co. The New York Times
said the merger "would realign the competitive landscape for banks" by uniting the
investment and commercial banking skills of J.P. Morgan Chase with the consumer
banking strengths of Bank One.
In 2008, JPMorgan Chase & Co. acquired The Bear Stearns Companies Inc., strengthening
its capabilities across a broad range of businesses, including prime brokerage, cash clearing
and energy trading globally.
Also in 2008, JPMorgan Chase & Co. acquired the deposits, assets and certain liabilities of
Washington Mutual's banking operations. This acquisition expanded Chase's consumer
branch network into California, Florida and Washington State and created the nation's
second-largest branch network — with locations reaching 42.0% of the U.S. population.
In 2010, J.P. Morgan acquired full ownership of its U.K. joint venture, J.P. Morgan
Cazenove, one of Britain's premier investment banks.
2.4 FINANCIAL DATA

Historical Data:
Year 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Revenue 67,252 100,434 102,694 97,234 97,031 96,606 95,112 93,543 95,668 100,705 109,029
Net income 5,605 11,728 17,370 21,284 21,284 17,923 21,745 24,442 24,733 24,441 32,474
Assets 2,175 2,032 2,118 2,359 2,367 2,416 2,572 2,352 2,491 2,534 2,623
Employees 224,961 222,316 239,831 260,157 258,965 251,196 241,359 234,698 243,355 252,539 256,105
Fig:1 JP Morgan historical financials

All data in US$ millions
14
Financial Highlights Trading information
Fiscal Year Stock price history
Fiscal year ends Dec 31 Beta 1.18
Most recent quarter Mar 31, 2019 52 week change (9.0%)
Profitability 52 week high 70.6
Profit margin (LTM) 27.32% 52 week low 50.0
Operating margin 36.74% 50 day moving avg. 63.1
Management effectiveness 200 day moving avg. 61.0
Return on assets (LTM) 0.96% Share statistics
Return on equity (LTM) 9.90% Avg. volume (3 month) 15,965,800
Income statement Avg. volume (10 day) 24,536,000
Revenue (LTM) 97.0bn Share outstanding 3.7bn
Q. revenue growth (yoy) 23.8 Float 3.6bn
Gross profit (7.3%) % held by insider 0.6%
EBITDA (LTM) N/A Held by institution 76.2%
Diluted EPS (LTM) 6.7 Shares short 26.3mm
Balance sheet Short ratio 1.8
Total cash (LTM) 967.8bn Dividends and splits
Total debt (MRQ) 591.5bn Annual dividend yield 3.1%
Total cash per share 264.7 5 yr avg. dividend yield 2.6%
Book value per share 61.3 Payout ratio 29.8%
Cash flow statement Dividend date Jul 31, 2016
Operating cash flow 37.2bn Last split factor 3:2
Levered free cash flow N/A Last split date Jun 12, 2000
15
2.5 INVESTMENT BANKING ARM
An investment bank is a financial institution that assists individuals, corporations, and
governments in raising financial capital by underwriting or acting as the client's agent in the
issuance of securities. An investment bank may also assist companies involved in mergers and
acquisitions (M&A) and provide ancillary services such as market making, trading of derivatives
and equity securities, and FICC services (fixed income instruments, currencies, and commodities)
Ranking of advisory arms of top investment banks:
Fees
Rank Company Logo Country (US$mm)
(US$mm)
1 J.P. Morgan Co. 5,833
2 Goldman Sachs 5,809
3 Bank of America Merrill Lynch 5,247
4 Morgan Stanley 4,905
5 Citi Group 4,084
6 Deutsche Group 3,421
7 Credit Suisse 3,254
8 Barclays 3,229
9 Wells Fargo 2,051
Fig 2: Position held in investment banking
16
The two main lines of business in investment banking are called the sell side and the buy side. The
"sell side" involves trading securities for cash or for other securities (e.g. facilitating transactions,
market-making), or the promotion of securities (e.g. underwriting, research, etc.). The "buy side"
involves the provision of advice to institutions that buy investment services. Private equity funds,
mutual funds, life insurance companies, unit trusts, and hedge funds are the most common types
of buy-side entities.
An investment bank can also be split into private and public functions with a Chinese wall
separating the two to prevent information from crossing. The private areas of the bank deal with
private insider information that may not be publicly disclosed, while the public areas, such as stock
analysis, deal with public information.
2.5.1 Core Activities

Investment banking is split into front office, middle office, and back office activities. While large
service investment banks offer all lines of business, both "sell side" and "buy side", smaller sell-
side investment firms such as boutique investment banks and small broker-dealers focus on
investment banking and sales/trading/research, respectively.
Investment banks offer services to both corporations issuing securities and investors buying
securities. For corporations, investment bankers offer information on when and how to place
their securities on the open market, an activity very important to an investment bank's reputation.
Therefore, investment bankers play a very important role in issuing new security offerings.
2.5.2 Front and middle office:

My work was to assist the financial analysts in the front and the middle offices who directly
remain in contact with the clients. Front and middle offices are generally described as a revenue
generating role. There are two main areas within these offices
• Investment banking involves advising the world's largest organizations on mergers and
acquisitions, as well as a wide array of fund raising strategies.
• Markets is divided into "sales and trading" (including "structuring"), and "research".
17
2.5.3 Investment Banking
Corporate finance is the traditional aspect of investment banks, which involves helping customers
raise funds in capital markets and giving advice on mergers and acquisitions (M&A); this may
involve subscribing investors to a security issuance, coordinating with bidders, or negotiating with
a merger target. A pitch book of financial information is generated to market the bank to a potential
M&A client; if the pitch is successful, the bank arranges the deal for the client. The investment
banking division (IBD) is generally divided into industry coverage and product coverage groups.
Industry coverage groups focus on a specific industry—such as healthcare, public finance
(governments), FIG (financial institutions group), industrials, TMT (technology, media, and
telecommunication), P&E (power & energy), consumer/retail, food & beverage, corporate defense
and governance—and maintain relationships with corporations within the industry to bring in
business for the bank. Product coverage groups focus on financial products—such as mergers and
acquisitions, leveraged finance, public finance, asset finance and leasing, structured finance,
restructuring, equity, and high-grade debt—and generally work and collaborate with industry
groups on the more intricate and specialized needs of a client.
Research group:
The securities research division reviews companies and writes reports about their prospects, often
with "buy", "hold" or "sell" ratings. Investment banks typically have sell-side analysts which cover
various industries. Their sponsored funds or proprietary trading offices will also have buy-side
research. All research groups provide a key service in terms of advisory and strategy. There is a
potential conflict of interest between the investment bank and its analysis, in that published
analysis can impact the performance of a security (in the secondary markets or an initial public
offering) or influence the relationship between the banker and its corporate clients, thereby
affecting the bank's profits.
My area of coverage was within the DIT sector catering to the corporates within the EMEA
geography. As a part of J.P. Morgan investment banking team my work was to provide support to
bankers in these regions which included preparing pitch books, financial analyses and other
support materials which senior client bankers take to their clients during meetings. These books
can relate to mergers and acquisitions, capital structures and corporate broking.
18
My main responsibilities included:
❖ Pitching material preparation: Work with associates and analysts across regional
locations to prepare marketing materials for clients including components like market and
industry landscapes, financial analysis & valuations, target companies profiles &
benchmarking etc.
❖ Financial analysis: Analysis and interpretation of financial statements including

preparing trading and transaction comparable, modeling & valuations, financial and
operating benchmarking analyses for various financial institutions. Extract information
from company accounts, databases and other sources, using accounting knowledge &
judgment. To accurately perform financial analysis while maintaining the reputation of
the company I was initially given a one month training in finance and thereon I was given
work on live projects to assist the bankers and track my performance on a global level.
❖ Research: Source and interpret company & industry information from a variety of data
sources (company reports, Internet, online databases, JPMorgan proprietary content) with
an aim to forming views on the industry, key trends and individual companies.
Summarize and synthesize news updates/research reports on priority clients, weekly
industry reports; updates for ongoing Equity mandates, for internal and external use. For
research purpose we had a variety of software available (names cannot be disclosed for
compliance issues).
❖ Management reporting: Provide weekly updates to senior management on deals

announced/closed/priced, new mandates, client calling efforts by bankers, sector update
news, and other relevant management metrics across the region.
This documentation is part of the internship program carried out at J.P. Morgan Services India
Private Limited, Mumbai. J.P. Morgan Chase & Co. (also known as JPM) is an American
multinational banking and financial services holding company. With a legacy dating back to 1799,
JPM has a history of demonstrating leadership during times of both economic growth and financial
instability. It is the largest bank in the United States, with total assets of US $2.6 trillion.
J.P. Morgan is currently one of the leading investment banks in India and has a market leading
position across the spectrum of services it offers. India is an important focus for J.P. Morgan’s
expansion in the Asia Pacific region.
19
The various lines of business in JPM India franchise are:
Corporate and Investment Bank Asset Management
Lines of Business
Private Equity Treasury Services
Fig 3: Line of business of JP Morgan

JPM CIB constitutes of industry leadership and capabilities in investment banking, corporate
banking and financial transaction processes to serve institutional clients.
Under the ‘Corporate and Investment Bank’, CRG (Centralized Research Group) is an integral
part of J.P. Morgan’s global Investment Banking.
A closer look into Centralized Research Group. . .
Ideation Pitching Execution
The above mentioned three steps are a sum total of the various steps involved in executing a deal.
These steps include: Capital analysis, Client tracking, Interloper analysis, Valuation, Market
analysis, Deal documentation, Merger analysis, Deal structuring, Research, Target identification,
Financial analysis, Due diligence etc in no fixed order.
20
2.6. DEPARTMENTS AT CRG
INDUSTRY TEAMS:
These teams perform comprehensive company and industry research leading to detailed industry
landscape, strategic opportunities, financial analysis and company positioning pitches. They also
interact and manage relations with bankers including idea sharing, project pipeline & potential IB
opportunities based on respective geographies. The sector teams in CRG, Mumbai are:
Technology Media and Telecom (TMT)

Financial Institutions Group (FIG)
Diversified Industrial Team (DIT)
Real Estate (RE)
Energy team
Financial Sponsors Group (FSG)
Consumer & Retail (C&R)
Healthcare
PRODUCT TEAMS:
The Product teams provide advice, structuring and execution capabilities to clients wanting to raise
debt, equity capital or go for possible acquisitions. These teams have also been further subdivided
in order to maximize the firm’s expertise.
Mergers and Acquisitions (M&A)

Debt Capital Markets (DCM)
Equity Capital Markets (ECM)
21
3. INTRODUCTION TO FINANCE
3.1. BASIC ACCOUNTING PRINCIPLES
The process of recording of business transactions is called accounting.
As an analyst, the first thing to understand about any probable deal is to study the performance of
all the companies involved. It is required to look into the financial statements of a business to
understand its performance over specific periods, for example, quarterly or half yearly or
annually. Understanding simple financial reports is of utmost importance to communicate
effectively with the financial people involved in the organization.
Each publicly listed company is expected to release its financial statements after a particular
period based on the accounting principles of the country in which it is listed.
For example, US companies follow the GAAP (Generally Accepted Accounting Principles) and
release quarterly reports known as 10-Q reports and annual reports known as 10-K reports, apart
from the many other reports that the companies are expected to release.
It is not mandatory for the private companies to release any such financial statements.
The primary financial statements involved are:
An accounting of revenue, expenses, and profit for a given period.
Income company has recorded a money spent and associated return.

Statement
business at a given date.
A report that shows the effect of all transactions that involved or influenced
cash but did not appear in the income statement.
Cash Flow
Statement
22
GAAP ( Generally Accepted Accounting Principles):
It is the common set of accounting principles, standards and procedures. IT is a combination of

authoritative standards that helps provide a fair image of the company’s performance.
3 main components of GAAP:
Assets: An item owned by the company.
Liabilities: obligations of the company, to transfer something of value to another party
Equity: Owner’s value in an asset or a group of assets.
Dual Aspect Concept: Every business transaction has a dual affect, i.e. it affects two accounts.
This is based on the accounting equation: Liabilities = Assets
3.2 FINANCIAL STATEMENTS

3.2.1. INCOME STATEMENT
This is a financial statement that measures an organization’s financial performance over a specific
accounting period by giving a summary of how it incurs its revenues and expenses. It also shows
the net profit or loss incurred over that period and is often referred to as a ‘Profit and Loss’
statement (PnL) or ‘Revenue and Expenses’ statement.
TYPES OF ACCOUNTING SYSTEMS:
Revenue is recognized when the customer has ownership

Accrual Costs are incurred in the period in which they arise
to administer
Cash Records transactions at the point of payment

Only applicable to very small companies or traders
It reflects exactly what the business has in its bank account
and can help with cash flow
23
The income statement uses the following main terms that can be defined as:
➢ Revenue or Sales: Income that flows into an organization. In government and no profit
organizations it includes taxes and grants. In accrual accounting system, revenues are
shown in the period they are earned, not when the cash is collected. Revenues occur when
money is earned, receipts occur when cash is received.
➢ Cost of goods sold (COGS): Purchase cost of the merchandise that was subsequently sold
to the customers.
➢ Expenses: Costs that are not matched with sales as part of the COGS. They may be
matched with a specific time, usually monthly, quarterly, or annually, or they may be one-
off payments. Expenses include: staff wages, rent, utility bills, insurance, equipment etc.
➢ Gross profit: (Gross margin) Calculated as Sales – COGS
➢ EBITDA (Earnings before Interests, Taxes, Depreciation and Amortization)
➢ EBIT: (Earnings Before Interest and Taxes): Also known as the Operating income.
➢ Net profit: (Net income0 Calculated by subtracting all overhead expenses from the gross
profit.
➢ Profit Margin: Calculated as a ratio of Net Profit (Net income) divided by Revenues
(Sales)
➢ Depreciation: Assets have a certain length of time in which they operate efficiently,
known as ‘an asset’s useful life’. During this period, the value of an asset depreciates due
to age, wear and tear, or obsolescence. The loss in value is recorded in accounts as a non-
cash expense, which reduces earnings.
➢ Amortization: This is the depreciation of items like patents, rights.
Example of calculating depreciation:
Annual Quarterly
cost $4000 5 year life span
$4000/5=$800 $800/4=$200
24
Sample income statement:
APPLE 10-K 2014:
Fig 4: Sample income statements of Apple
25
3.2.2. BALANCE SHEET
The balance sheet is a listing of the organization’s assets, liabilities, and owners’ equity at a point
in time. In this sense, the balance sheet is like a snapshot of the organization’s financial position,
frozen at a specific point in time.
The balance sheet uses the following main terms that can be defined as:
➢ Fixed Assets: Refers to all the things a business owns which have value to the business
over a long period. This is usually understood to be any time longer than one year.
➢ Current Assets: Refers to the assets with value available entirely over a short term. This
is usually understood to be a period less than one year. This is either because they are what
the business sells or because they are money or can be quickly turned into money. Example:
Cash or Cash equivalents, short term investments
➢ Current Liabilities: This refers to those things that the business can be called upon to pay
in a short term – within the year. Example – Debts, Bank overdrafts.
➢ Non-current liabilities: This refers to the dues and debts that have to be paid by the
company over a long period of time – more than one year.
➢ Working Capital: Calculated as Current assets – Current liabilities. An organization
without sufficient working capital cannot pay its debts as they fall due.
➢ Equity: This is defined as the ownership right of the owner(s) of the entity in the assets
that remain after deducting the liabilities.
➢ Accounts payable: Represent amounts owed to suppliers of merchandise inventory that
was purchased on credit and will be paid within a specific period of time.
➢ Accrued liabilities: Represent amounts owed to various creditors, including any wages
owed to employees for services provided
ACCOUNTING EQUATION (BALANCE SHEET EQUATION)
ASSETS LIABILITIES EQUITY
26
DOUBLE ENTRY SYSTEM:
The double entry system of accounting or bookkeeping means that every business transaction will
involve two accounts (or more). For example, when a company borrows money from its bank, the
company's Cash account will increase and its liability account Loans Payable will increase. If a
company pays $200 for an advertisement, its Cash account will decrease and its account
advertising expense will increase.
Double entry also allows for the accounting equation (assets = liabilities + owner's equity) to
always be in balance.
27
Sample Balance Sheet:
APPLE 10-K 2014:
Fig 5: Sample balance sheet of Apple
28
3.2.3. CASH FLOW STATEMENT
The purpose of the statement of cash flows is to identify the sources and uses of cash during the
year.
This objective is accomplished by reporting the changes in all of the other balance sheet items.
Because of the equality that exists between assets and liabilities plus owners’ equity, the total of
the changes in every other asset and each liability and element of owners’ equity will equal the
changes in cash.
Types of Cash Flows
Cash flow
•Reconciling items1 are
from
considered and added
Operating back
activities
•Include amounts raised

Types of Cash flow from the sale of
from longterm debt and
Cash Flow Financing common stock, and
activities dividends paid on
common stock
Cash flow
•Show the cash used to
from
purchase long-lived
Investing assets
activities
Reconciling items such as Depreciation expense1 is added back to net income because, even
though it was deducted as an expense in determining net income, depreciation expense did not
require the use of cash.
29
Sample Cash Flow statement:
APPLE 10-K 2014:
Fig 6: Sample cash flows statements of Apple
30
3.2.4. RELATION OF THE THREE FINANCIAL STATEMENTS
The income statement, balance sheet and cash flow statement are all interrelated.
Income statement:
- Net Income is the beginning point in CF statement
- Interest Expense is a function of debt from the BS
- D&A is a function of Property, Plant, and Equipment (PP&E) from BS
- Net Income x (1 - Payout Ratio) = Retained Earnings
Cash Flow Statement:
- Organized into CF from operations, CF from investing, CF from financing
- Net Income from IS
- Adjust non-cash items (especially D&A)
- Eventually end up with CHANGE IN CASH
- Take beginning cash from BS, add/subtract change in cash
- That gives you Ending Cash Balance which feeds into BS
Balance Sheet:
- Debt is impacted from CF from Financing: mandatory amortization + optional amortization
- Cash balance is determined as mentioned above from the CF statement
- Assets decreased by D&A
- Retained earnings impacted from supplementary section of IS
31
Fig 7: Relationship between financial statements
32
3.3 FINANCIAL RATIOS
Financial ratios are a key element in measuring a company’s performance.
The main ratios can be classified under 6 broad headings:
1. Liquidity Measurement ratios: These ratios attempt to measure a company's ability to

pay off its short-term debt obligations. This is done by comparing a company's most liquid
assets (or, those that can be easily converted to cash), its short-term liabilities. In general,
the greater the coverage of liquid assets to short-term liabilities the better as it is a clear
signal that a company can pay its debts that are coming due in the near future and still fund
its ongoing operations. The biggest difference between each ratio is the type of assets used
in the calculation.
a. Current ratio
b. Quick ratio
c. Cash ratio
d. Cash Conversion ratio
2. Profitability Measurement ratios: These ratios are the different measures of corporate
profitability and financial performance. These ratios, much like the operational
performance ratios, give users a good understanding of how well the company utilized its
resources in generating profit and shareholder value. The long-term profitability of a
company is vital for both the survivability of the company as well as the benefit received
by shareholders. It is these ratios that can give insight into the all important "profit".
a. Profit margin analysis
b. Effective tax rate
c. Return on Assets
d. Return on Equity
e. Return on Capital Employed
3. Debt ratios: These ratios give analysts a general idea of the company's overall debt load
as well as its mix of equity and debt. Debt ratios can be used to determine the overall level
of financial risk a company and its shareholders face. In general, the greater the amount of
debt held by a company the greater the financial risk of bankruptcy.
a. Debt ratio
33
b. Debt Equity ratio
c. Capitalization ratio
d. Interest coverage ratio
e. Cash Flow to Debt ratio
4. Operating Performance ratios: Each of these ratios have differing inputs and measure
different segments of a company's overall operational performance, but the ratios do give
users insight into the company's performance and management during the period being
measured. These ratios look at how well a company turns its assets into revenue as well as
how efficiently a company converts its sales into cash. Basically, these ratios look at how
efficiently and effectively a company is using its resources to generate sales and increase
shareholder value. In general, the better these ratios are, the better it is for shareholders.
a. Fixed assets turnover
b. Sales per employee
c. Operating Cycle
5. Cash Flow indicator ratios: These ratios can give users another look at the financial health
and performance of a company. However, through the magic of accounting and non- cash-
based transactions, companies that appear very profitable can actually be at a financial risk
if they are generating little cash from these profits. For example, if a company makes a ton
of sales on credit, they will look profitable but haven't actually received cash for the sales,
which can hurt their financial health since they have obligations to pay. The ratios in this
section use cash flow compared to other company metrics to determine how much cash they
are generating from their sales, the amount of cash they are generating free and clear, and
the amount of cash they have to cover obligations.
a. Operating Cash Flow/Sales ratio
b. Free Cash Flow/Operating Cash ratio
c. Cash Flow coverage ratio
d. Dividend payout ratio
6. Investment valuation ratios: These ratios can be used by investors to estimate the
attractiveness of a potential or existing investment and get an idea of its valuation.
a. Per share data
b. Price/Book value ratio
34
c. Price/Cash flow ratio
d. Price Earnings ratio
e. Price/Earnings to growth ratio
f. Price/sales ratio
g. Dividend yield
h. Enterprise value multiple
A few commonly used ratios are:
35
3.4 COMPS & VALUATION
Accurate business valuation is one of the most important aspects of M&A as valuations like these
will have a major impact on the price at which the business is sold.
A valuation will assist the business owners in determining the value of their business and even
maximizing value when considering a sale, merger, acquisition, joint venture or strategic
partnership.
The financial statement analysis generally involves common size analysis, ratio analysis (liquidity,
turnover, profitability, etc.), trend analysis and industry comparative analysis. This permits the
valuation analyst to compare the subject company to other businesses in the same or similar
industry, and to discover trends affecting the company and/or the industry over time. By comparing
a company’s financial statements in different time periods, the valuation expert can view growth
or decline in revenues or expenses, changes in capital structure, or other financial trends. How the
subject company compares to the industry will help with the risk assessment and ultimately help
determine the discount rate and the selection of market multiples.
Hostile Defense:
Is our company
undervalued to a
hostile bidder?
Sell-side
Research: Should Acquitisions:
our clients buy, How much
sell or hold a should we pay for
the company?
given stock?
Why is
valuation
Debt Offerings:
What is the value
important? Divestitures:
How much
of the company
should we sell
against which
our company for?
debt is issued ?
IPO: How much is
the company
worth?
36
VALUATION TECHNIQUES
Trading Comparables
• Relative valuation method
• Use ratios to value a company by assuming that it should be worth similar multiples to
similar listed companies
Transaction Comparables
• Considers the past sales of similar companies as well as the market value of publicly
traded firms that have an equivalent business model to the company being valued
Sum of the parts valuation

• Valuing a company by determining what its divisions would be worth if it was broken up
and spun off or acquired by another company
Discounted Cash Flow

• Method of valuing a project, company, or asset using the concepts of the time value of
Money
3.4.1 TRADING COMPARABLES

Trading comparables (trading comps) are valuation methods that use ratios to value a company by
assuming that it should be worth similar multiples to similar listed companies.
The use of trading comps requires listed peers to the company being valued: similar companies in
the same industry. The multiples used in the valuation are based on those at which peers trade -
the simplest technique is to simply take the average of each ratio used for a selected group of
similar companies.
When calculating the value of the operation the most commonly used ratio is the EBITDA
multiple, which is the ratio of EBITDA (Earnings Before Interest Taxes Depreciation and
Amortization) to the Enterprise Value (equity value plus Net Debt). When valuing the equity of a
company, the most widely used multiple is the Price Earnings Ratio (PER) of stocks in a similar
industry, which is the ratio of Stock price to Earnings per Share of any public company.
Once the trading comps are spread, the multiples can be shown on graphs and hence compared.
37
Fig 8: Sample quarterly rolling trading comps
38
3.4.2 TRANSACTION COMPARABLES
A method of valuing a company that is for sale. Comparable transactions considers the past sales
of similar companies as well as the market value of publicly traded firms that have an equivalent
business model to the company being valued.
To get a more accurate valuation, more than one comparable transaction should be used. This
method of valuation can help identify the current value and potential growth for a company.
The difficulty with this approach is the limited availability of financial data regarding past
transactions between private companies. A comparable transaction approach is generally used in
conjunction with other valuation techniques including the discounted cash flow and other
comparable company analysis techniques.
Fig 9: Transaction comparables
39
3.4.3 SUM OF THE PARTS (SOTP) VALUATION
Valuing a company by determining what its divisions would be worth if it was broken up and spun
off or acquired by another company.
For example, you might hear that a young technology company is "worth more than the sum of its
parts." This means that the value of the tech company's divisions could be worth more if they were
sold to other companies. In most cases, larger companies have the ability to take advantage of
synergies and economies of scale that are unavailable to smaller companies, enabling them to
maximize a division's profitability and unlock unrealized value.
Fig 10: Sum of the parts valuation
40
3.4.4 DISCOUNTED CASH FLOW (DCF)
A valuation method used to estimate the attractiveness of an investment opportunity. Discounted
cash flow (DCF) analysis uses future free cash flow projections and discounts them (most often
using the weighted average cost of capital) to arrive at a present value, which is used to evaluate
the potential for investment. If the value arrived at through DCF analysis is higher than the current
cost of the investment, the opportunity may be a good one. Three key drivers:
o Free cash flow projections

o Terminal value at the end of the projection period
o Discount rate (weighted average cost of capital, WACC)
Calculated as:
PV = CF1 / (1+k) + CF2 / (1+k)2 + … [TCF / (k - g)] / (1+k)n-1
Where:
PV: Present value
CFi: Cash flow in year i
k: discount rate
TCF: Terminal cash flow rate
g: growth rate assumption in perpetuity beyond terminal year
n: the number of periods in the valuation model including the terminal year
There are many variations when it comes to what you can use for your cash flows and
discount rate in a DCF analysis. For example, free cash flows can be calculated as operating
profit + depreciation + amortization of goodwill - capital expenditures - cash taxes - change in
working capital. Although the calculations are complex, the purpose of DCF analysis is simply
to estimate the money you'd receive from an investment and to adjust for the time
value of money.
“DCF models are powerful, but they do have shortcomings. Small changes in inputs can result in
large changes in the value of a company. Investors must constantly second-guess valuations; the
inputs that produce these valuations are always changing and are susceptible to error.”
41
Fig 11: Discounted cash flows output
42
4. WORK
4.1. OVERVIEW
As a junior analyst with J.P. Morgan, I got the exposure to work with top-tier professionals at the
heart of a leading global investment bank. With the support of a long and enriching training
program, regular speaker sessions, mentoring and feedback, and numerous development
opportunities, they helped me gain a strong career foundation in financial services.
The internship started off with two weeks long training period where we went through a steep
learning curve. We were introduced to the company ethics, compliance training, basic finance,
corporate finance, accounting principles, basic and advanced excel, presentation skills and an
introduction to the various databases used by the company.
After completion of the training program, we joined our respective teams. I was allotted the
‘Telecom, Media & Telecommunications’ team and was aligned to the EMEA (Europe, Middle
East and Africa) geography, headed by Mr. Rishik Waghray. A mentor and a buddy were assigned
to help with the everyday work and to check the work I did before sending it out to on-shore bankers
in London, New York and Chicago.
There was a clear pattern to how any project was to be tackled – the work started with researching
about the industry, market and the concerned companies thoroughly before analyzing all available
data; working on financial models in Excel and finally outputting all of the data in the form of
presentations. Making the presentation was dependent on the type of deal. It could be an ideation
project for internal use, an ongoing pitch or even a live deal.
My work initially was centered around making presentations and back up excels for all the deals
that were happening in the sector. Making presentation was dependent on the type of deal. It could
be an ideation project for internal use, an ongoing pitch or even a live deal. As time passed I was
43
involved in more analytical work like how to present the pitch and finding data points from raw
data which supports our analysis.
Every presentation involved a lot of in-depth analysis of the company we were working on and
whether it was sell-side or buy-side.
Apart from this, the deal could also be an RFP, in which we had to pitch as to why the company
should have us as a financial advisor. That involved making equity stories or presenting potential
targets for them.
Every day was a new learning experience and a new challenge in itself. Every company and project
that we worked on had different characteristics and provided a different challenge throughout the
internship.
I received the following training sessions in order to prepare for the work:
✓ MS Excel
✓ MS Power Point (company templates)
✓ Database research
✓ Accounts
✓ Company profiles
✓ Basics of FactSet
✓ Valuation methods and comps
✓ Stock price charts and rolling multiples
✓ Trading and transaction comps
✓ Public Information Brochure and Board / Management page
✓ Shareholder overview
✓ Analyst recommendation
✓ Accretion – Dilution
✓ Discounted Cash Flow
The following cover the major type of work done on a day-to-day basis in the internship:
✓ Basic company profile

✓ Detailed profiling
44
✓ Public market overview
✓ BoD / Management bios
✓ Debt maturity analysis
✓ Shareholder analysis
✓ Equity story
✓ Analyst commentary
✓ Annotated stock price chart
✓ Industry landscaping
✓ Credentials
✓ Trading comps
✓ Transaction comps
✓ Multiple based valuation
✓ SoTP valuation
✓ Peer analysis
✓ Operational benchmarking
✓ Case studies
✓ Industry specific databases
Apart from the everyday on goings, our team also had Fortnightly Pre-Lunch Series, focused on
the latest trends and deals in the Telecom, Media & Telecommunications’ space. I had worked on
and presented three presentations to the entire team, during the course of the internship. The
presentations were based on the latest financial happenings on the following sectors– Non-alcoholic
beer trends; Protein and pork industry; New generation products in vaping. I also learnt and taught
a new implementation of the Automated Comps Machine tool to the entire team on multiple
occasions, including a team- wide meeting specifically for the same.
45
4.2 COMPONENTS OF PITCH
4.2.1. PROFILES:
Profiles are brief introductions of companies to give investors an idea about what the company
does, industry, functions it performs, services provided, performance and management.
When there are several companies of a similar nature to be shown, essentials like financials,
management and services that differentiate them for the others are shown.
When companies have to be shown in a slightly more detailed format, like potential targets that
investors need to be well versed with, one pager profiles are made. For public companies, a
public market overview is a must that includes the company’s performance over the years with
forecasts.
Sometimes the bankers require a very detailed analysis of a company which is then done via
detailed profiles.
Profiles
profiles
Strip profiles: Also known as ‘Row Profiles’. These are brief company profiles that consist of a
brief company introduction, management, a few financials etc. They are made such that 4-5 strip
profiles can fit in one page. Example:
46
One Pager Profiles: These profiles contain a detailed company overview, management, detailed
financials, recent developments, share price chart etc.
Fig 12: Business overview of Liverpool F.C.
Detailed profiles: These profiles contain a detailed company description, management, public
market overview, capital markets overview, recent developments, products and solutions offered
by the company etc. These profiles can vary between 2-4 pages.
47
4.2.2. PUBLIC MARKET OVERVIEW (PMO)
Fig 13: Public market overview of Liverpool
A public market overview of a public company involves the financials of the past years and
forecasts for the investors to judge where the company will be in the following years. The
forecasts are made by brokers who study the company’s performance and make calculated
estimates. It may also include comparisons with peers (i.e similar companies).
Another component of a public market overview is usually a stock price chart that depicts the
manner in which the stock has performed over a period of time against the index of that country
Optionally, it can also contain the industry landscape alongwith the companies over the world
that perform similar services and the market segmentation.
48
4.2.3. STOCK PRICE CHARTS
Stock price charts represent how the stock of the company has been performing over a particular
period of time. The default chart is 1 year Open/High/Low/Close (OHLC) chart for an individual
stock. The intervals (aside from the Intraday) are for 5 days, 1 Month, 3 Months, 6 Months and
from 1 to 10 years (if the company has 10 years of price and volume data available). The historical
charts include the last sale from the current day.
The price performance of a company is represented along with the index of the stock exchange
where it is listed so that the relative performance can be seen clearly.
Annotated Stock price charts represent major business events like results announcement, change
of board of directors/management or the rise or fall in the stock performance.
Fig 14: Share price performance chart of IDEA
49
4.2.4. ANALYST COMMENTARY
These are the reviews given by various analysts in their broker reports. Analyst commentary is
included in the profiles as it gives an idea about how the company/industry is performing at that
time.
Fig 15: Analyst commentary of Lenovo
50
4.2.5. INDUSTRY LANDSCAPING
Whether it is a start-up, a merger, an acquisition or a sell off, the most basic knowledge required
is of the industry. Knowing the industry and the company’s peers is the first and the foremost part
of any deal.
OR
Fig 16: Industry landscaping
51
4.2.6. CREDENTIALS
Depending on the number and size of deals that the investment bank has performed over a
particular period of time, the rankings are announced, sectorwise.
When a pitchbook is prepared, credentials of that bank are generally included in it for the client to
know.
Fig 17: Global credentials of JP Morgan
52
4.2.7. EQUITY STORY
Equity Story is, in its essence, the reasoning why the particular stock should be bought by
investors. It emphasizes the strong side of the company and places the stock in either the value or
the growth category. In a nutshell, the value stock is expected to have little price appreciation, but
pay out relatively high dividend, whereas the growth stock is expected to have a high appreciation
potential, but not necessarily pay much dividend. How a stock is classified depends on several
factors, such as where in the industry life cycle it is, what the macro conditions are, what industry
it belongs to, or sometimes even if it has a hot buzzword in its description.
An equity story is prepared for a client, which represents how the investment bank will be
presenting the company’s performance.
The equity story is a good example of "art rather than science" concept. There is no predefined
format you can simply put data into. It has a lot in common with advertisement - you have to be
creative. The description below is therefore, just an example and not a fixed structure.
An equity story would often start with positioning the company: assigning it to the appropriate
sector, stating what its current ranking in the industry is, and what strengths it has as compared to
the competitors. It then proceeds to the macro conditions to support the case for the company's
positive prospects. It may be the new technological paradigm, the stage of the economic cycle,
the demographic trend that expands the customer base, or any other positive development to
promote the image of a company with excellent potential. Next, some company data summarized
in graphs and tables to support the idea of macro trend boosting company performance is
provided. This may be the number of new accounts for a bank, the number of new users for an
Internet company, the number of shipments for a logistics company, and so forth. Depending on
the type of the offering, there may be a page that will summarize the appealing points for certain
investor groups, for example High Net Worth Individuals or Institutional Investors. Finally, a
summary page with the bullet points highlighting the "Why XYZ Inc.?" follows, that ideally
should provide the catch phrases for Sales to work with.
53
4.2.8. BOD/MANAGEMENT BIOS
Fig 18: Management bios

“BIOS given is here is from a website. Different from the format JPM makes”
A brief biography, along with a photograph of the main members of the executive team is
prepared for the review of the bankers.
It also helps establish any contacts with any of the key decision makers of the company.
54
4.3. COMPS & VALUATION
Accurate business valuation is one of the most important aspects of M&A as valuations like these
will have a major impact on the price at which the business is sold.
A valuation will assist the business owners in determining the value of their business and even
maximizing value when considering a sale, merger, acquisition, joint venture or strategic
partnership.
The financial statement analysis generally involves common size analysis, ratio analysis (liquidity,
turnover, profitability, etc.), trend analysis and industry comparative analysis. This permits the
valuation analyst to compare the subject company to other businesses in the same or similar
industry, and to discover trends affecting the company and/or the industry over time. By comparing
a company’s financial statements in different time periods, the valuation expert can view growth
or decline in revenues or expenses, changes in capital structure, or other financial trends. How the
subject company compares to the industry will help with the risk assessment and ultimately help
determine the discount rate and the selection of market multiples.
Hostile Defense:
Is our company
undervalued to a
hostile bidder?
Sell-side
Research: Should Acquitisions:
our clients buy, How much
sell or hold a should we pay for
the company?
given stock?
Why is
valuation
Debt Offerings:
What is the value
important? Divestitures:
How much
of the company
should we sell
against which
our company for?
debt is issued ?
IPO: How much is
the company
worth?
55
VALUATION TECHNIQUES
Trading Comparables
• Relative valuation method
• Use ratios to value a company by assuming that it should be worth similar multiples to
similar listed companies
Transaction Comparables
• Considers the past sales of similar companies as well as the market value of publicly
traded firms that have an equivalent business model to the company being valued
While there are many different possible techniques to arrive at the value of a company—a lot of
which are company, industry, or situation-specific—there is a relatively small subset of generally
accepted valuation techniques that come into play quite frequently, in many different scenarios.
We will describe these methods in greater detail later in this training course:
Comparable Company Analysis (Public Comps): Evaluating other, similar companies’ current
valuation metrics, determined by market prices, and applying them to the company being valued.
Discounted Cash Flow Analysis (DCF): Valuing a company by projecting its future cash flows
and then using the Net Present Value (NPV) method to value the firm.
Precedent Transaction Analysis (M&A Comps): Looking at historical prices for completed
M&A transactions involving similar companies to get a range of valuation multiples. This
analysis attempts to arrive at a “control premium” paid by an acquirer to have control of the
business.
Leverage Buyout/“Ability to Pay” Analysis (LBO): Valuing a company by assuming the

acquisition of the company via a leveraged buyout, which uses a significant amount of borrowed
funds to fund the purchase, and assuming a required rate of return for the purchasing entity.
56
These valuation techniques are easily the most commonly used, other than in valuations for
specific, niche industries such as oil & gas or metal mining (and even in those industries, the
aforementioned valuation techniques frequently come into play). Frequently, however, more than
one technique will be used in a given situation to provide different valuation estimates, with the
concept being to triangulate a company’s value by looking at it from multiple angels.
For example, M&A bankers are typically most interested in Transaction and Comparables
valuation for acquisition and divestiture. Equity Capital Markets (ECM) bankers underwrite
company shares in the public equity markets in advance of an initial public offering (IPO) or
secondary offering, and thus rely heavily on Comparables valuation. Financial sponsors and
leveraged finance groups will almost always value a company based upon leveraged buyout
(LBO) transaction assumptions, but will also look at others. Also, in many cases, all of these
groups will employ some degree of DCF valuation analysis. These different divisions of an
investment bank may come up with similar valuation ranges using some subset of the techniques
given, but will approach this process often with entirely different goals in mind.
When to use each valuation technique:
All of the valuation techniques listed earlier should be practiced but some may be more
applicable than others, given the group, the client, and the exact situation.
Comparable Company Analysis: The Comparable Company valuation technique is generally

the easiest to perform. It requires that the comparable companies have publicly traded securities,
so that the value of the comparable companies can be estimated properly. We will detail the
calculation process for Comparable Company analysis later in this guide.
The analysis is best used when a minority (small, or non-controlling) stake in a company is
being acquired or a new issuance of equity is being considered (this also does not cause a change
in control). With no change of control occurring, Comparable Company analysis is usually the
most relied-upon technique.
Discounted Cash Flow (DCF): A DCF valuation attempts to get at the value of a company in
the most direct manner possible: a company’s worth is equal to the current value of the cash it
will generate in the future, and DCF is a framework for attempting to calculate exactly that. In
57
this respect, DCF is the most theoretically correct of all of the valuation methods because it is the
most precise.
However, this level of preciseness can be tricky. What DCFs gain in precision (giving an exact
estimate based on theory and computation), they often lose in accuracy (giving a true indicator of
the exact value of the company). DCFs are exceedingly difficult to get right in practice, because
they involve predicting future cash flows (and the value of them, as determined by the discount
rate), and all such predictions require assumptions. The farther into the future we predict, the
more difficult these projections become. Any number of assumptions made in a DCF valuation
can swing the value of the company—sometimes quite significantly. Therefore, DCF valuations
are typically most useful and reliable in a company with highly stable and predictable cash flows,
such as an established Utility company.
Precedent Transaction Valuation: The Precedent Transaction valuation technique is also

generally fairly easy to perform. It does require that the specifics of a prior
acquisition/divestiture deal are known (price per share, number of shares acquired or spun off,
amount of debt assumed, etc.), but this is usually the case if the target (acquired company) had
publicly traded instruments prior to the transaction. In some industries, however, relatively few
truly comparable M&A transactions have occurred (or the acquisitions were too small to have
publicized deal details), so the Precedent Transaction analysis maybe be difficult to conduct.
If the buyer acquires a majority stake in a company (or similarly, when a controlling stake in a
business is divested), a Precedent Transaction analysis is almost always the theoretically correct
Comparable Company analysis to perform. When a majority stake is purchased, the buyer
assumes control of the acquired entity. By having control over the business, the buyer has more
flexibility and more options about how to create value for the business, with less interference
from other stakeholders. Therefore, when control is transferred, a control premium is typically
paid.
Leverage Buyout (LBO): Another possible way to value a company is via LBO analysis. LBOs
are typically used by “financial sponsors” (private equity firms) who are looking to acquire
companies inexpensively in the hopes that they can be sold at a profit in several years. In order to
maximize returns from these investments, LBO firms generally try to use as much borrowed
58
capital (debt financing) as possible to fund the acquisition of the company, thereby minimizing
the amount of equity capital that the sponsor itself must invest (equity financing). Assuming that
the investment makes a profit, this debt leverage maximizes the return achieved for the sponsors’
investors.
4.3.1 TRADING COMPARABLES
Trading comparables (trading comps) are valuation methods that use ratios to value a company by
assuming that it should be worth similar multiples to similar listed companies.
similar companies.
When calculating the value of the operation the most commonly used ratio is the EBITDA
multiple, which is the ratio of EBITDA (Earnings Before Interest Taxes Depreciation and
Amortization) to the Enterprise Value (equity value plus Net Debt). When valuing the equity of a
company, the most widely used multiple is the Price Earnings Ratio (PER) of stocks in a similar
industry, which is the ratio of Stock price to Earnings per Share of any public company.
Once the trading comps are spread, the multiples can be shown on graphs and hence compared.
The methodology is not greatly different to that used when analysing listed companies from the
point of view of portfolio investment (especially by an analyst calculating a target price). However,
the term is more often used in the context of valuing companies for transactions such as IPOs and
takeovers.
Unlike with portfolio investment, the desired number is likely to be a total value rather than a per
share value, but the principal behind the ratios remain the same, and the same sorts of ratios are
used: revenue multiples, profit multiples (such as EV/EBITDA) and asset based (such as net asset
value).
59
similar companies.
Fig 19: Sample trading comparables of peers
60
4.3.2 TRANSACTION COMPARABLES
A method of valuing a company that is for sale. Comparable transactions considers the past sales
of similar companies as well as the market value of publicly traded firms that have an equivalent
business model to the company being valued.
To get a more accurate valuation, more than one comparable transaction should be used. This
method of valuation can help identify the current value and potential growth for a company.
The difficulty with this approach is the limited availability of financial data regarding past
transactions between private companies. A comparable transaction approach is generally used in
conjunction with other valuation techniques including the discounted cash flow and other
comparable company analysis techniques.
Fig 20: Sample transaction comparables of peers
61
4.3.3 SUM OF THE PARTS (SOTP) VALUATION
Valuing a company by determining what its divisions would be worth if it was broken up and spun
off or acquired by another company.
For example, you might hear that a young technology company is "worth more than the sum of its
parts." This means that the value of the tech company's divisions could be worth more if they were
sold to other companies. In most cases, larger companies have the ability to take advantage of
synergies and economies of scale that are unavailable to smaller companies, enabling them to
maximize a division's profitability and unlock unrealized value.
Fig 21: Sum of the parts valuation of a conglomerate
62
4.3.4 DISCOUNTED CASH FLOW (DCF)
A valuation method used to estimate the attractiveness of an investment opportunity. Discounted
cash flow (DCF) analysis uses future free cash flow projections and discounts them (most often
using the weighted average cost of capital) to arrive at a present value, which is used to evaluate
the potential for investment. If the value arrived at through DCF analysis is higher than the current
cost of the investment, the opportunity may be a good one. Three key drivers:
o Free cash flow projections

o Terminal value at the end of the projection period
o Discount rate (weighted average cost of capital, WACC)
Calculated as:
PV = CF1 / (1+k) + CF2 / (1+k)2 + … [TCF / (k - g)] / (1+k)n-1
Where:
PV: Present value
CFi: Cash flow in year i
k: discount rate
TCF: Terminal cash flow rate
g: growth rate assumption in perpetuity beyond terminal year
n: the number of periods in the valuation model including the terminal year
There are many variations when it comes to what you can use for your cash flows and
discount rate in a DCF analysis. For example, free cash flows can be calculated as operating
profit + depreciation + amortization of goodwill - capital expenditures - cash taxes - change in
working capital. Although the calculations are complex, the purpose of DCF analysis is simply
to estimate the money you'd receive from an investment and to adjust for the time
value of money.
“DCF models are powerful, but they do have shortcomings. Small changes in inputs
can result in large changes in the value of a company. Investors must constantly
second-guess valuations; the inputs that produce these valuations are always
changing and are susceptible to error.”
63
Fig 22: Discounted cash flows analysis
64
4.4 RESEARCH, UPDATES AND DATABASES
4.4.1 PEER ANALYSIS
Peer group analysis is the practice of comparing a firm's results to those of similar companies or
competitors.
Defining a peer group:
o Companies across similar markets of operation
o Companies of similar size – include some that are the same size as the target company,
some slightly smaller as well as the size the other company aspires to be
o Peer groups should be limited to 10-20 peers at most for a meaningful analysis
o Rather than defining peers based on asset size and geography – a more innovative and
realistic approach is to define peers based on operating strategy, lending practices, funding
strategy, earnings strength, etc.
Fig 23: Peer analysis of IBM
4.4.2 CASE STUDIES

A case study represents the key financials and points involved in the completed transaction.
It includes the names of the banks that were included in the deal as book runners, the name of the
lead bookrunner, the key points of the deal and the size of the transaction.
A case study is made for a transaction that has been completed and hence can be disclosed.
It helps everyone know about the deal.
65
4.4.3 INDUSTRY SPECIFIC DATABASES
We were given access to certain databases which were linked to the Microsoft Suite so that we
could easily extract the required data, like daily stock price values by just putting the ticker of the
company and the period.
Also, apart from the databases which provided the financials of the company, we had access to
databases which could provide company wise recent news.
Also, we were given access to the Business Research Centre (BRC) and the Presentations Global.
(PPS)
The BRC helped as pull data from even more databases to which we directly didn’t have access.
Also it helped save time when we had to download a couple of broker/research reports or primers
for a company/industry.
The PPS helped us edit the presentations in JPM format. It not only saved time but also could do
advanced graphics editing for cover pages or other images to improve their resolutions.
4.5 REVIEW
The finance industry is a challenging place to work in as the work hours are very long and
attention to detail is expected of you in the minutest things. That being said, the exposure to
various different sectors, markets and companies really helps to broaden the horizons and to
discover new economic trends and technologies alike.
J.P. Morgan has a very healthy work environment and my team-mates helped me a lot with the
work. Not only this, even the on shore bankers in London were always willing to lend a helping
hand. The firm focuses on the holistic development of its employees and as a result we were
given exposure to social work as well.
The internship proceeded in a very well planned and organized manner. We were given
sufficient time get up to speed with financial jargon. The internship helped inculcate a sense of
professionalism and decorum.
Overall, it was a very useful and good experience.
66
5. FINAL PROJECT: Investment Opportunity in Aerospace Industry
Overview
My project was to highlight Investment Opportunity in Aerospace Industry, which is a part of the
“Diversified industrials” sub-sector of “Diversified Industrials and Transporation” which was my
team during the internship.
The project is divided in three sub-sections:
• Investment highlights
• Target overview
• Relative valuation analysis
The project highlights MOOG as a potential target for acquisition by Honeywell, both of
which are semiconductor companies based in the USA. The aim of the project has been to
reach at a valuation of MOOG through relative valuation methods and highlight why this
acquisition may be accretive in terms of growth for Honeywell.
67
68
70
71
72
73
74
75
76
6. DIFFICULTIES FACED DURING THE INTERNSHIP
SEMESTER
Coming from an engineering background, it was difficult initially as finance was absolutely out of
scope for us.
But after the month long training period, we started understanding the jargon used in the everyday
life.
Investment banking requires us to be working round the clock. As it was our first corporate
experience, working for 14-18 hours a day was the biggest challenge.
Adapting to the JPM specific formatting was a challenge in itself. We were told that the work we
do has to go to the bankers on shore and then to the clients and hence making a mistake was
inexcusable. Every page made or edited had be checked and crosschecked so that there was no
scope of error.
Not only the presentations, even the excel documents made as backup had a specific format
involved. Not to forget the comments that we had to include which were the sources of the
documents used.
Every day was a new challenge as we go different projects with different bankers. Understanding
the work allotted, which was different everyday was tough. Completing and checking the work
and sending it by the deadline was tougher.
As we got familiar with the company we realized, it was not just the work that we did that was
according to a particular set of rules, it was also applicable to the work that had to be sent forward.
For example, we had to cc ‘XX’ application name, to the bankers at higher positions so that they
could view the email and the attachments in other devices apart from the company laptop.
In the end, identifying an upcoming trend was a tough call. We had been working on so many
deals but that was all ongoing. It required a lot of research on the sector that helped us identify a
trend that we could predict would change the industry in the coming future.
Also a major challenge was taking out time to make the final project while we were still staffed on
other projects. We had to use the interstices to work on the final project.
After identifying the trend and working on it, another difficult part was choosing investment
rationale for the deal. It required shortlisiting a few reasons from among countless citations by
brokers across the world. It required a lot of brain storming to finally short list the criteria.
Learning everything was a steady process. Every day was a new challenge but that’s what made
the internship more exciting. Overall, it gave us a lot to learn and widened our horizons.
82
79 7
7
7
7
7
7. FINANCIAL GLOSSARY
1. Angel Investors: These are highly successful entrepreneurs and CEOs who have
generated good amount of wealth for themselves and are interested in investing in
startup/early stage ventures which have the potential of creating good results and high
returns.
2. Bond: Also commonly referred to as fixed-income securities and are one of the three
main generic asset classes, along with stocks (equities) and cash equivalents. Many
corporate and government bonds are publicly traded on exchanges, while others are
traded only over-the-counter (OTC).
3. Disinvestment: It refers to selling of shares in the open market, by the government in

its public sector undertakings with a view to raise funds for government expenditure.
4. Dividend: a sum of money paid regularly (typically annually) by a company to its

shareholders out of its profits (or reserves).
5. Equity: the value of an ownership interest in property, including shareholders' equity

in a business. Equity or shareholders´ equity is part of the total capital of a business.
6. Hedge fund: an offshore investment fund, typically formed as a private limited

partnership, that engages in speculation using credit or borrowed capital.
7. Index: Prominent stock exchanges maintain an index to indicate the level of turnover
in the sale purchase of shares. Index of Bombay Stock exchange (BSE) is known as
‘Sensex’ and that of National Stock Exchange (NSE) as ‘Nifty’.
8. Investment Banking: Involves helping customers raise funds in capital markets and
giving advice on mergers and acquisitions (M&A); this may involve subscribing
investors to a security issuance, coordinating with bidders, or negotiating with a merger
target
83
9. Liquidity: Ability of a business to pay current liabilities as they come due. Defined as
current assets/current liabilities.
10. Listing: Shares, before being offered to the market need to be listed on the stock
exchanges for the purpose of trading. Listing implies that the shares have been listed
on the stock exchange and are available for trading in the secondary market. The
process of listing on the stock exchanges has to be done within 7 days of finalization
of issue.
11. NOSH (Number of Shares Outstanding): Shares outstanding are all the shares of a
corporation or financial asset that have been authorized, issued and purchased by
investors and are held by them. They have rights and represent ownership in the
corporation by the person that holds the shares.
12. Pitchbook: is a marketing presentation (information layout) used by investment banks

around the world. It consists of a careful arrangement and analysis of the investment
considerations of a potential or current client, and/or a reference for comparison for an
employee in an investment or commercial bank.
13. Private Equity: is an asset class consisting of equity securities and debt in operating
companies that are not publicly traded on a stock exchange.
14. Retail Banking: The provision of services by a bank to individual consumers, rather
than to companies, corporations or other banks. Services offered include savings and
transactional accounts, mortgages, personal loans, debit cards, and credit cards.
15. Solvency: The ability of a company to pay repay all its financial obligations.
16. Stock Exchange: These are private corporate bodies offering an organized market for
buying and selling of corporate shares and other securities.
17. Working Capital: It is calculated as current assets – current liabilities. It should always
be a positive number as it shows that the company has enough resources to carry
forward its processes.
84
INITIAL PUBLIC OFFERING (IPO)
The first sale of stock by a private company to the public. IPOs are often issued by smaller, younger
companies seeking the capital to expand, but can also be done by large privately owned companies
looking to become publicly traded.
In an IPO, the issuer obtains the assistance of an underwriting firm, which helps it determine what
type of security to issue (common or preferred), the best offering price and the time to bring it to
market.
Also referred to as a "public offering."
IPOs can be a risky investment. For the individual investor, it is tough to predict what the stock
will do on its initial day of trading and in the near future because there is often little historical data
with which to analyze the company. Also, most IPOs are of companies going through a transitory
growth period, which are subject to additional uncertainty regarding their future values.
85
REQUEST FOR PROPOSAL (RFP)
A type of bidding solicitation in which a company or organization announces that funding is

available for a particular project or program, and companies can place bids for the project's
completion. The Request For Proposal (RFP) outlines the bidding process and contract terms, and
provides guidance on how the bid should be formatted and presented. A RFP is typically open to
a wide range of bidders, creating open competition between companies looking for work.
A Request For Proposal for a specific program may require the company to review the bids not
only examine their feasibility, but also the health of the bidding company and the ability of the
bidder to actually do what is proposed. The RFP may provide detailed information on the project
or program, but can leave leeway for the bidder to fill in the blanks with how the project would be
completed or program run.
86
8. REFERENCES
The completion of my final presentation required a lot of sources internal to JP Morgan and cannot be
disclosed due to confidentiality issues.
For the preparation of this report I have used the following open sources available through the internet:
• J.P. Morgan internal sources

• Money Control: http://www.moneycontrol.com/
• Investopedia: http://www.investopedia.com/articles/basics/04/092404.asp
• Wikipedia: https://en.wikipedia.org/wiki/Stock_exchange
• Yahoo Finance: www.yahoofinance.com
• Bloomberg: www.bloomberg.com
• Apple: www.apple.com
• Broker reports
• Financial Times: http://www.ft.com/ft-trading-room/exchanges-consolidation
• https://www.newyorkfed.org/medialibrary/media/research/current_issues/ci8-6.pdf
• http://money.cnn.com/2011/02/18/markets/exchange_mergers/
• http://www.wallstreetandtech.com/trading-technology/the-inevitable-exchange-consolidation/d/d-
id/1257820?
• http://www.theglobeandmail.com/globe-investor/global-stock-exchange-consolidation-may-just-
be-starting/article565918/
87

Internship Report v3

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Internship Report v3

Uploaded by

Copyright:

Available Formats

PROJECT REPORT

(Project Semester January – June 2019)

INTERNSHIP AT J.P. MORGAN

Investment Opportunity in Aerospace Industry

Gurashish Singh Walia

Under the guidance of

Dr. R.M. Belokar Mr. Mayank Kumar

Professor, Dept. of Production Engineering Vice President

Punjab Engineering College, Chandigarh Centralised Research Group

(Deemed to be University) J.P. Morgan Services Limited, Mumbai

Department of Civil Engineering

Punjab Engineering College (Deemed to be University), Chandigarh

January to June, 2019

Date: 16th July, 2019

Dr. R.M.Belokar Mr. Mayank Kumar

3. Industry - Introduction to Finance .............................................................................. 23

4. Work and Review............................................................................................................ 43

5. Final Project – Investment Opportunity in Semiconductor Industry........................ 71

6. Difficulties faced during the project semester .............................................................. 80

7. Financial Glossary ........................................................................................................... 81

2.1 BRIEF OVERVIEW

Jamie Dimon Jennifer A. Piepszak

2.2.1 Chemical banking Corporation

2.2.2 Chase Manhattan Bank

2.2.3 J.P. Morgan & Company

2.2.4 Bank One Corporation

2.2.5 Bear Stearns

2.3 KEY MERGERS WHICH SHAPED WHAT JPMORGAN CHASE IS TODAY:

2.4 FINANCIAL DATA

Fig:1 JP Morgan historical financials

Fiscal Year Stock price history

Fiscal year ends Dec 31 Beta 1.18

Most recent quarter Mar 31, 2019 52 week change (9.0%)

Profitability 52 week high 70.6

Profit margin (LTM) 27.32% 52 week low 50.0

Operating margin 36.74% 50 day moving avg. 63.1

Management effectiveness 200 day moving avg. 61.0

Return on assets (LTM) 0.96% Share statistics

Return on equity (LTM) 9.90% Avg. volume (3 month) 15,965,800

Income statement Avg. volume (10 day) 24,536,000

Revenue (LTM) 97.0bn Share outstanding 3.7bn

Q. revenue growth (yoy) 23.8 Float 3.6bn

Gross profit (7.3%) % held by insider 0.6%

EBITDA (LTM) N/A Held by institution 76.2%

Diluted EPS (LTM) 6.7 Shares short 26.3mm

Balance sheet Short ratio 1.8

Total cash (LTM) 967.8bn Dividends and splits

Total debt (MRQ) 591.5bn Annual dividend yield 3.1%

Total cash per share 264.7 5 yr avg. dividend yield 2.6%

Book value per share 61.3 Payout ratio 29.8%

Cash flow statement Dividend date Jul 31, 2016

Operating cash flow 37.2bn Last split factor 3:2

1 J.P. Morgan Co. 5,833

2 Goldman Sachs 5,809

3 Bank of America Merrill Lynch 5,247

4 Morgan Stanley 4,905

5 Citi Group 4,084

6 Deutsche Group 3,421

7 Credit Suisse 3,254

9 Wells Fargo 2,051

Fig 2: Position held in investment banking

2.5.1 Core Activities

2.5.2 Front and middle office: