Washington Mutual - By: Jared Bladen ACG2021

Washington Mutual

   By: Jared Bladen
        ACG2021

Executive Summary
• After reviewing Washington Mutual's financial statements, I believe
  that the company has suffered from the recession in the housing
  market. However, Washington Mutual is trying to continue to grow
  and continue to improve business relations and make it easy for the
  consumer. They are trying to keep a very profitable company as
  they have been in the past and get through this drought in housing
  industry. With a dedication to quality and public relations
  Washington Mutual will continue to grow and increase the amount of
  people they reach out to help.

                          Annual Report
      http://www.americanfunds.com/pdf/mfgear-901_wmifa.pdf

Introduction
• Kerry K Killinger Chief Executive Officer
• Corporate Headquarters
  Washington Mutual
  1301 Second Avenue
  Seattle, WA 98101
• Ending Date of latest fiscal year December 2006
•   Washington Mutual is the largest thrift in the US, offers traditional consumer
    and commercial banking services, including deposit accounts, mortgages
    and other loans, securities brokerage, and mutual funds. It is one of the
    largest originators and servicers of residential mortgages in the US.
•   Washington Mutual is a nationwide public company.

Audit Report
•   Washington Mutual's Independent Auditors – PricewatershouseCoopers
    LLP (Public Accounting Firm)
•   The statement of assets and liabilities, including the investment portfolio,
    and other related statements of operations all accordingly respect the
    financial position of Washington Mutual Investors Fund according to
    PricewasterhouseCooper. The results of its operations for the year end and
    the changes in net assets for each of the years in the period along with its
    financial highlights for each of the periods presented are in conformity with
    the accounting principles accepted in the United States of America.
    PricewatershourseCoopers conducted audits of these financial statements
    in acceptance with the standards of the Public Company Accounting
    Oversight Board. Those standards require that the accounting firm perform
    the audit and try to come up with reasonable assurance about whether the
    financial statements are free of material misstatement.

Stock Market Information
•   Most recent price of stock – 17.01
•   Twelve month trading range – 10.73 - 45.56
•   Dividend per share – 2.06
•   Date of information – Feb 16, 2008
•   In my opinion I would say hold the stock because it is
    capable to rise much higher to an optimum level of
    selling if you wait. The price of a share is not very much
    and is worth holding onto for the future.

Industry Situation and Company Plans

•   The housing industry which plays a major role to Washington Mutual is very
    low. A Recession in the housing market causes a lower need for mortgages
    to be taken out on homes. Even though homes are not always on top
    priority to consumers their business are. Washington Mutual is a service
    based company who holds no inventory. Washington Mutual Plans on
    approaching smaller businesses who are trying to get started and help them
    out in receiving. They plan on offering things to customers the first time to
    satisfying them, where they will tell their friends and keep coming back.
    They are trying to reach people in every possible way via internet or online
    banking. Washington Mutual is trying to build a good basis through
    developing the future leaders of the business by improving facilities to
    where people can have personal growth and work together.
•   http://findarticles.com/p/articles/mi_m0EIN/is_2002_Dec_19/ai_95622351
•   http://media.corporateir.net/media_files/IROL/10/101159/wamu_build/wamu_ar06_v2.
    html

Income Statement
• The format of Washington                      Dec 2006    Dec 2005
  mutual's income statement
  resembles that of a multi-step
  income statement.
                                   Gross Profit 20,191.0    17,939.0
• From 2005 to 2006 the gross
  profit along with each of the
  other categories continue to
  grow. This in turn shows that    Income
  the company is moving in         from
                                                10,398 9,412
  steady progression forward and   Operations
  growing financially.
                                   Net Icome    3,558       3,432

                                           *amounts in millions

Balance sheet
•   Overall for the years in         2006                               Stock Holders
    2006 and 2005 The                                Liabilities            Equity
                                     Assets
    amount of liabilities                            319,319       +   26,969
                                     346,288   =
    increased. From 2005 to
    2006 the amount went up
    3025 million. The stock
    holders equity decreased         2005                               Stock Holders
    310 million. This in turn        Assets          Liabilities            Equity
    allowed the total number of                      316,294       +   27,279
                                     343,573   =
    assets to increase 2715
    million.
•   The accounts that
    changed the most were
    liabilities and assets. The
    asset increase is caused
    by the increase in liabilities
    from 2005 to 2006.

                                                   *amounts in millions

Statement of Cash Flows
• The cash flow from operations are more than the net
  income from the previous two years for Washington
  Mutual.
• The company is growing through long term investments
  but also with short term due to their abilities to due both.
• Washington Mutual's Primary source of financing is
  loans either to business or people trying to buy
  something.
• Over the past couple of years the cash has increased.

Accounting Policies
•   Washington Mutual's format of accounting policies is that of a 10-Q for each quarterly
    report. The financial statements have to be prepared to comply with accounting
    principles generally accepted in the United States of America. These principles
    require management to make estimates and assumptions that affect reported
    amounts and disclosures. Actual results could differ from those that are estimated.
•   Topics of notes to financial statements include:
    1.Organization and Accounting Policies
    2.Federal Income Tax and Distributions
    3.Fees and Transactions with Related Parties
    4.Investment Transactions
    5.Capital Share Transactions

Financial Analysis and Liquidity Ratios

                                                                2006                  2005

•   Working capital:                                      (252,352,000)                 (258,694,000)

•   Current ratio:                                              1.084                        1.086
•   Receivable turnover:                                         3.8                          3.7
•   Avg day sales col.                                            96                           99
•   Inventory on hand                                            N/A                          N/A
•   Avg Days Inv. on
                                                                  N/A                          N/A
    hand
       Due to the fact that Washington Mutual is a service based company they do not hold any inventory.

Financial Analysis and Profitability Ratios

                                                                2006                      2005

     • Profit margin                                           13.4%                    15.8%

     • Asset turnover                                           7.6%                    6.65%

     • Return on Assets                                           1%                    1.05%

     • Return on equity                                        13.1%                    14.3%

Over the year from 2005 to 2006 the profit margin decreased by 2.4% along with the decrease in return on equity by
1.2%. Increases in the asset turnover by .95% and decrease in return on assets by .05%.

Financial Analysis and Solvency Ratios

                             2006        2005

• Debt to Equity :           11.84       11.59

• Over the year from
  2005 to 2006 the
  increase in debt to
  equity is .25.

Financial Analysis and Market Strength Ratios
                            2006         2005

• Earning Per share:         3.46        3.73

• Dividend Yield:            2.06        1.90

• The earning per
  share decreased from
  2005 to 2006 by.27.
  The dividend yield
  increased by .16.

Links to financial statements
• Income statement –
http://www.hoovers.com/washington-mutual/ID__15119,period__A/freecofinincome.xhtml

• Balance sheet –
http://finance.yahoo.com/q/bs?s=WM&annual