Question

Assess American Express company’s international performance in light of Cultural Barriers, Monetary Exchange Rates, and Political Instability?

Assess the financial performance and condition of the American Express?

Assess American Express company’s operational budget?

Assess the performance in terms of key performance indicators.

o   Debt to Equity ratio

o   Debt to Assets ratio

Based on the data, evaluate the overall current financial condition of the American Express company.

o   Support your analysis by referring to the company data

Answer 1

American Express has started expanding the merchant coverage outside of the USA and has leveraged the bank partnership for expansion and adapting agile network with uniqueness in benefits. According to the Amex website, the earnings per share has increased from $6.9 to $7.3 in 2018. The global consumer performance has increased from 6% in 2016 to 12% in 2018. The billed business has been acquired has increased from 13% to 18% and with their differentiated model of innovation, prioritizing customers, growth in loans and meeting partner commitments and focusing on efficiency has brought financial growth. They have improved their product value by adding platinum, cobalt, Amex every day in their portfolio.

In terms of cultural barriers, differences in languages, negotiating requires translators, intellectual property rights, overseas business relationships, and internal agreements with political interferences are hindrances for Amex.

The currency cycles are measured in quarters because the fluctuation in exchange rates has reduced the profit margin. According to Daily Forex, stock markets were volatile, with down in the US market by an average of 1.85% and Pound and Euro were up by 4.2% and 2.6% respectively.

According to Business Wire, 2018, Amex has a political instability of 28% and they expense around 36% for entering into international markets in the American Express Grow Global Program.

American Express revenues have increased by 18.26% which is due to the Global Commercial Services segment increased by 46%. The net income has grown by 21.12 %. According to CSIMarket, American Express net profit margin of 18.8 % has currently ranked no. 16 in Consumer Financial Services industry, 489 in the Financial sector and 849 in S&P 500. The efficiency can be measured through net income per employee which is 54,395TTM.

Total Debt to Equity is 2.61 and Asset turnover ratio is 0.2. The quick ratio is 0.32 and the working capital ratio is 2.08. the total debt to total assets is 32.61.

According to the annual report of Amex, the financial condition is they had accelerated revenue growth rate which is due t Costco relationship. The credit quality is strong and there was high shareholder return of 36%. $2.6 billion tax charged. Revenues net of interest expense has grown primarily due to growth in billed business, net interest income, and net card fees,