Explore BrainMass

Financial Management - Charles Schwab and Co.

Using the Internet, research a company to analyze. Prepare a report including the following information:

Please research Charles Schwab and Co.

What is the history of this company? How did it begin? What differentiates this company from its competitors?

Compute the following ratios for this company:

- current ratio
- inventory turnover ratio
- accounts receivable turnover ratio
- debt to equity
- return on assets
- return on equity
- gross margin on sales

What do these ratios indicate about the company?

Who would be interested in each of the ratios listed above? Why?

How well is this company doing? If possible, find the industry ratios for comparison.

What other information/material would be useful for investors and creditors in making economic decisions about this company?
Would you invest in this company?

Solution Preview

The response addresses the queries posted in 2755 words with references.

//Analysis of the company holds importance for every stakeholder of the company. Potential stakeholders of the company evaluate and analyze the company from a financial and non-financial perspective to gain insight into the company's status. We will do financial analysis for Charles Schwab and Co. in order to decide whether to invest in this company or not. However, first, we will discuss the history of the company and start the report like this: //


Charles Schwab and Co. is a subsidiary of Charles Schwab Corporation. The corporation has incorporated its business from 1973 and commenced its business of the discount brokerage house in on May 1, 1975. The company head office is located in San Francisco. Charles Schwab and Co. is the biggest service provider in the USA in the business of online brokerage services. This organization is regarded as one of the rapidly growing organizations in the field of financial services. The company has to lead the way in providing free transaction fee mutual funds and holds one of the biggest positions in the mutual funds industry in the United States. The corporation also went abroad in 1982 when it launched its first foreign branch in Hong Kong. Currently, the company has 300 branches in the 45 states of the United States of America. To add to this, it has two more branches that cater to the needs of the clients of London and Puerto Rico (Charles Schwab Corporation, 2009).

At first Charles Schwab, with its two partners, commenced a business of brokerage under the name of First Commander Corporation in the California region of the USA. Further, all the stocks of the company were purchased by Charles Schwab and incorporated a new business under the name of Charles Schwab & Co., Inc (The Charles Schwab Corporation, 2007). In 1975, the US government deregulation the industry of stock brokerage to counter the issues of the commission that is levied by the brokers of NYSE. The promoter of the company, Charles Schwab has taken advantage of this situation and started its discounted brokerage house in the San Francisco region of the USA by taking a position in the NYSE. The company is completely commenced with debt financing (The Charles Schwab Corporation, 2009). This corporation has faced problems in creating goodwill in the beginning period due to the unhealthy image that has been created by existing companies of this industry.

//As we have discussed the history of Charles Schwab and Co., we will now move forward and discuss what it has done differently from its competitors that gives it an edge over other company's of its industry.//

Charles Schwab quickly realized that to attract clients the company has to do something different and it, as opposed to its competitors, started opening different local branches in different states of the USA to cater to the needs of local clients. The corporation offers to its clients easy and simple access to online services with added features like they can work in different local branches of the company or can deal through telecommunication. The advantage it has over its competitors is that it has foreign branches that have added foreign clients to its business. Under a single roof, clients could have taken different products and services as it has bundles of products and services in its baskets that range from trading in stocks and options, mutual funds, money market instruments like commercial deposits, exchange traded funds, bonds, insurance and banking services and many more (The Charles Schwab Corporation, 2007).

It is one of the most innovative and creative companies, which provides to its clients different suggestions on trading. It provides to its clients different analytical, research and financial tools to guide them towards investments. To add to this, it provides its foreign client advantage of dealing in their dollar portfolios of America from foreign countries. Charles Schwab & Co. offers services in varied cultures and languages through its branches. They understand their clients' needs and thus, assists clients in different languages like Korean, Chinese, etc. (The Charles Schwab Corporation, 2007). It manages the portfolio of the investors and helps them provide with the best of the research to make their money and investment worthwhile. It provides consultancy services to ...

Solution Summary

The response addresses the queries posted in approximately 2,500 words with references. It first discusses the history of the company, how it has operated differently than its competitors to gain a competitive edge, and the financial analysis of the company. Along with the financial analysis, interpretations of these ratios are provided and how they compare to industry ratios. Finally, a decision regarding whether investing in this company would be beneficial is given.