Analysis of Commonwealth Bank and Westpac Banking Corporation

Corporate Accounting 1
CORPORATE ACCOUNTING
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Corporate Accounting 2
Executive Summary
The report present analysis of two major banks listed in ASX which include Westpac
Banking and Commonwealth Bank. Westpack Banking Corporation and Commonwealth
Bank are the two largest Australian banking or financial companies and the largest mortgage
lenders within the country. They two banks have offered consistent share price development
in the last two decades, in spite of the global financial crisis and they are amongst the highest
dividend paying Australian listed companies.

Corporate Accounting 3
Table of Contents
Executive Summary...................................................................................................................2
INTRODUCTION......................................................................................................................4
OWNERS EQUITY...................................................................................................................5
Items Reported on Statement of Equity..................................................................................5
Comparative Analysis Debt and Equity Position of Commonwealth and Westpac...............7
CASH FLOWS STATEMENT..................................................................................................7
Items Reported in the Cash Flows Statement.........................................................................7
Comparative Analysis of Commonwealth and Westpac’s based on Three Broad Categories
of the Cash Flows.................................................................................................................10
Comparative Analysis of Commonwealth and Westpac......................................................10
OTHER COMPREHENSIVE INCOME STATEMENT........................................................10
Items Reported In Other Comprehensive Income Statement...............................................10
The reason why items in the statement of other comprehensive are not reported in Profit
and Loss................................................................................................................................12
Comparative Analysis of Other Comprehensive Income Statement....................................12
Whether Other Comprehensive Income Should be included in Examining Managers
Performance?........................................................................................................................12
ACCOUNTING FOR CROPORATE INCOME TAX............................................................13
Tax Expenses Reported in the Latest Financial Statements.................................................13
Effective Tax Rate for the Two Companies.........................................................................13
Comments on the Deferred Tax Assets/Liabilities Reported in the Balance Sheet.............13
Whether There Was an Increase or Decrease in Deferred Tax Assets/Liability..................13
Cash Tax Amount for Both Companies...............................................................................14
Cash Tax Rate for Both Companies.....................................................................................14
The reason behind cash tax rate being different from book tax rate....................................14
Conclusion................................................................................................................................14
REFERENCES.........................................................................................................................16

Corporate Accounting 4
INTRODUCTION
Westpac Banking Corporation and Commonwealth Bank are the two largest Australian
banking or financial companies and the largest mortgage lenders within the country. They
two banks have offered consistent share price development in the last two decades, in spite of
the global financial crisis and they are amongst the highest dividend paying Australian listed
companies. To be more specific, Commonwealth Bank is the Australian largest retail
financial institution and ASX-listed firm (CBA 2018). Besides, the banks carry its main
operations within New Zealand, Australia as well as Asia (Commonwealth Bank 2017). The
bank offers numerous financial assistances including institutional banking, business and retail
banking as well as wealth management services. On the other hand, Westpac Banking Corp is
one of the second-largest financial institutions within Australia (D’Amato 2015). Like the
CBA, the WBC has significantly large retail banking undertaking that set both apart from the
NAB and ANZ Banking and have larger institutional operations and business banking. It
provides comparable suite of the financial services within New Zealand and Australia
(Westpac Group 2017). With these considerations, this report presents analysis of the two
banks. It starts with analysis of the owner’s equity and the items there in followed by analysis
of their cash flow statement. The report is then followed by analysis of the companies’ Other
Comprehensive Income Statement and analysis of how the companies account for the
corporate income tax.
OWNERS EQUITY
Items Reported on Statement of Equity
From Commonwealth’s statement of equity, it is evident that there were various items listed
in this statement. The first item included ordinary share capital which totalled to 34,971
million by 30th June 2017. The second item was the reverses which totalled to 1,869 million.
Third was the retained profit which was totalling to 26,330 million (Commonwealth Bank