Report on Financial Statements of a Banking Company
Added on 2020-05-28
21 Pages3421 Words167 Views
Running head: ACCOUNTINGAccountingName of the Student:Name of the University:Authors note:
ACCOUNTING1Table of Contents1. Executive summary................................................................................................................22. Introduction............................................................................................................................23. Income statement...................................................................................................................34. Statement of Financial position..............................................................................................45. Cash Flow Statement..............................................................................................................66. Financial Ratio Analysis:.......................................................................................................77. Horizontal and Vertical Analysis.........................................................................................13Reference..................................................................................................................................15Appendices...............................................................................................................................17Appendix 1 (BALANCE SHEET).......................................................................................17Appendix 2 (INCOME STATEMENT)...............................................................................17Appendix 3 Horizontal and vertical analysis.......................................................................18
ACCOUNTING21. Executive summary In the following report, we are going to analyse the financial statements of a bankingcompany having its business operation in Australia and New Zealand. In terms of size andassets held it is the second largest bank operating in both the countries. In pursuance ofanalysing its financial position and performance we will take into consideration not only thedata of the current year but also will be conducting trend analysis to gauge the impact of thedecision and action taken by the company towards wealth creation of the shareholders. Thereare many financial and non-financial matters to be considered by the shareholders beforeinvesting in the shares of any company. On their behalf, we will be conducting these analysesand will draw a conclusion about the present and future viability of the company’s financialposition and performance. The analysis will be based upon the data of the last three years ofthe company’s operation in Australia. This data will be taken from the financial statements ofthe company as laid down in the annual report of the company and will then be comparedwith the industry standard. We will be using tools like horizontal analysis, vertical analysis,and ratio analysis covering ratios relating to profitability, efficiency, solvency and liquidity ofthe company. The trend obtained from comparing the data of the last three years will help usto understand and present the data in graphical and other formats that will aide in theunderstanding of the stakeholders about the financial position and performance of thecompany. 2. Introduction The company on which we will be presenting our analysis or report is WestpacBanking Corporation or more commonly known as WESTPAC. It is a bank and alsoprovides various sorts of financial services. It has its headquarters in Sydney Westpac Place.It has the largest number of branches with respect to any other bank carrying out operationwithin Australia. The bank has around 1429 branches and 3850 ATMs all around Australia.
ACCOUNTING3In terms of assets held by the banks of Australia it is the second largest bank operating withinthe country (Louis et al., 2014). It is not only operating in Australia but also has its businessfootprints in New Zealand. In New Zealand too it is the second largest bank in terms of assetsheld. In our report we will be analysing various key financial indicators to determine the realand accurate picture of the company’s financial position and performance. In addition tocurrent year data we will be taking the data of past to financial years and will try to draw up atrend analysis which will enable us to decide whether the company is capable enough tocreate wealth for its shareholders. Finally, based on our analysis we will be drawingconclusion in respect of the company’s financial position and performance. 3. Income statement One of the many reasons that influence the decisions of the shareholders is profitearned by the company in a specific period of time and the capability of the organisation toearn profits in the future. Information regarding the amount of profit earned by theorganisation is contained in the income statement of the company. The income statement alsoenables the shareholders to get a picture of the ways in which the company earned its profitand about the reliability that can be placed upon the company regarding its future viabilityand profitability (Zeff, 2016). The profit of an organisation is arrived at by deducting theexpenses from the income of the company. Owner’s equity increases with financial profitsand it decreases with financial losses.
ACCOUNTING420172016201571007200730074007500760077007800790080008100COMPARISON OF INCOME STATEMENT FROM 2015 TO 2017$MILLIONSFigure 1: Income Statement(Source: created by Author)The comparison between the profits earned by the entity gives out a clear picture ofits profitability. We can very clearly observe that there was a dip in the profits of thecompany in the year 2016. However, the company finally recorded a in the profit but it couldnot catch up to the profit of the year 2015. This indicates that the company will have to workon improving its profitability if it has to earn the trust of its shareholders.4. Statement of Financial positionThe balance sheet of the company also known as the statement of financial position isthat part of the financial statements that reflects the true financial position of the entity at aparticular point of time. It lays down the list of resources that are within the control of theentity and also the various legal and contractual obligation of the company.
ACCOUNTING5201720162015$- $100,000.00 $200,000.00 $300,000.00 $400,000.00 $500,000.00 $600,000.00 $700,000.00 $800,000.00 $900,000.00 Total Assets, Liabilities and equities comparison$MILLIONFigure 2: Assets liabilities comparison(Source: created by Author)From the analysis of statement of financial position we can analyse that thecompanies Total Assets have been growing consistently year to year basis. That is from theyear 2015 the assets of the company have grown form $812156 million to $851875 million inthe year 2017. The liabilities of the company are also growing every year i.e. from $758241million in the year 2015 they grew to $790533 million in the year 2017. Similar trend can beobserved in case of the equities of the company that grew steadily from $53915 million in theyear 2015 to $61342 million in the year 2017 (Warren & Jones, 2018). The company isincreasing its equity every year that is a good sign for the shareholders, as they will not haveto worry that the entity will dilute their holding by taking loans and borrowings.
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