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Analysis of Citigroup's Financial Statements

Analysis of Citigroup's Financial Statements

Citigroup had a good year in 2003, despite a difficult business environment. Rising oil prices threatened to bring inflation back to our country. The economy was not doing well, so people often did not have enough money to save. And with on-line stock purchasing, who needed a broker anymore?

Yet Citigroup, a multinational firm, is managing to do quite well. Its dividends paid is up $2 billion over last year. Long term debt is down a bit, and what had to be reissued is refinanced in this lovely economy. Citicorp is an example of how to do hang in there through tough times, and even make money.

Banks earn income on the spread between what interest they pay their depositors and the interest they receive from investments. When interest rates dip very low and competition intensifies, maintaining that spread can be difficult.

The interest revenue decreased by $1.89 billion. The loss due to decreasing interest rates, however, was over $10 billion. The company managed to market enough consumer and corporate loans to make up the difference.

Also of note are the shifts in the debt structure. The company used its cash to retire debt, and took advantage of rate changes on other debt options. Thus interest paid fell more than interest earned, and the company had a net balance for interest revenue. The company did a great job of making the best of an interesting situation.

Cash reserves are up considerably. Actual cash and deposits are up 21%, while cash and quickly marketable securities are up almost 23%. With interest down another $5 million, that is easily covered. Indeed, total cash would cover the whole year's operating expenses.

Marketable securities are shown at market value, and

in theory could change in value. However, the company is "selling short" securities, meaning that they borrow them, sell them, and then must repurchase them later to return th...

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Analysis of Citigroup's Financial Statements. (1969, December 31). In LotsofEssays.com. Retrieved 03:40, March 29, 2024, from https://www.lotsofessays.com/viewpaper/1706263.html