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The Bank of Nova Scotia

1. Provide a brief but concise introduction of Bank Of Nova Scotia including:
- Corporate history
- Industry
- Primary Competitors
- Primary Products and/or Services

2. Include a financial analysis of the company using ratios relevant to your company and industry. (These ratios must be accompanied by commentary explaining their meaning and relevance). Not every ratio will be relevant in your analysis. However, a minimum of 15 these ratios must be used.

- Current Ratio
- Quick Ratio
- Days Sales Outstanding
- Fixed Asset Turnover Ratio
- Total Asset Turnover Ratio
- Debt Ratio
- Times Interest Earned Ratio
- EBITDA Ratio
- Profit Margin on Sales Ratio
- Basic Earning Power Ratio
- Return on Total Assets Ratio
- Return on Common Equity
- Price/Earnings Ratio
- Price/Cash Flow Ratio
- Market/Book Ratio
- Price to Sales (TTM)
- Price to Book (MRQ)
- Inventory Turnover Ratio
- Sales (5-year growth rate)
- Gross Margin (5 year average)
- Operating Margin (5 year average)
- Net Profit Margin (5 year average)
- Revenue per Employee (TTM)
- Net Income per Employee (TTM)
- Return on Assets (5 year Average)

3. Include a discussion of how Bank of Nova Scotia is affected by and dealing with fluctuations in the value of the U.S. Dollar.

4. Discuss how the Bank of Nova Scotia is affected by and dealing with the tight credit markets.

5. Discuss how the Bank of Nova Scotia is affected by and dealing with the global rise in commodity prices.

6. Discuss a current event not listed here—how is the company affected by this issue and how are they dealing with it (The Wall Street Journal, Business Week, The Economist, and the Financial Times are good sources).

Solution Preview

In accordance with BrainMass rules, this is not a hand in ready assignment but only background help

Step 1
The corporate history is that Bank of Nova Scotia was founded in Halifax in 1832. The bank wanted to facilitate trans-Atlantic trade of the time. The bank was incorporated by the Legislative Assembly of Novia Scotia on March 30, 1832 with William Lawson serving as the first president. The bank moved to Toronto in March 1900. The bank opened a branch in Havana in 1906, in New York City in 1907, and in London in 1920. In 2003 it received a license from the Chinese Government to deal in Chinese currency. In 2012 it acquired ING Direct Bank of Canada from ING Groep N.V.

Industry of Bank of Nova Scotia is personal and commercial banking, wealth banking, corporate and investment banking. The general industry is financial services.

The primary competitors of Bank of Nova Scotia are Royal Bank of Canada, Toronto Dominion Bank, Canadian Imperial Bank of Commerce, and Bank of Montreal. These compete both in Canada and with BNS abroad.
The main services of Bank of Nova Scotia are personal and business banking, wealth management, business banking, corporate banking, and institutional banking.

Step 2
Financial analysis of the company using ratios relevant to Bank of Nova Scotia:
We first consider the following relevant ratios:
1. Price to Sales: Company: 3.49 Industry: 4.93
2. Price to Book: Company: 1.86 Industry: 2.98
3. Price to Cash Flow: Company: 10.43 Industry: 12.67
4. Price to Tangible Book (MRQ): Company: 2.26 Industry: 2.95
5. P/E ratio: Company: 11.54 Industry: 14.23
These ratios indicate that shares of Bank of Nova Scotia are undervalued when compared to the industry. The price of the shares in the stock market is divided by earning per share, book value, cash flow, and sales and is compared with those of the competitors; it gives an idea about how the market perceives the Bank of Nova Scotia.
For Bank of Nova Scotia instead of return on common equity, the earning per share is more ...

Solution Summary

This solution explains the financial and business position of the Bank of Nova Scotia. The sources used are also included in the solution.