Merrill Lynch - ACCT 503 02 Professor Frankel Lina (Anna)...

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ACCT 503 02 Professor Frankel Lina (Anna) Wang 1. Comparison of Merrill Lynch and Morgan Stanley From the comparisons above, we can see that Merrill Lynch’s ROE is higher than that of Morgan Stanley. It appears that Morgan Stanley generated a higher return for shareholders. However, Merrill Lynch’s Operating ROA is higher than Morgan Stanley’s Operating ROA. Merrill Lynch gave a better performance in operating activity than Morgan Stanley. Merrill Lynch’s higher Operating ROA is due to its higher operating asset turnover. Merrill Lynch used its operating assets more efficiently than Morgan Stanley. Morgan Stanley gained a higher financial leverage gain by using a higher financial leverage and a larger spread. A higher financial leverage might bring higher risk. Merrill Lynch’s performance is influenced by the following factors: Cutting costs Merrill Lynch reduced full time employees by 30% in 2002 and instilled a new culture that rewarded accountability, and changed some compensation package. The employees’ overall productivity greatly improved. Restructuring business Management realigned sources—emphasizing wealth management services, and focusing on more profitable financial products and services. 2.
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Merrill Lynch - ACCT 503 02 Professor Frankel Lina (Anna)...

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