Corporate Accounting: Comparative Evaluation of Equity, Debt, and Cash Flow Statements of Bendigo and Adelaide Bank, Bank of Queensland, and Westpac Bank

The article conducts a comparative analysis of the shareholder's equity, debt, and cash flow statements of Bendigo and Adelaide Bank, Bank of Queensland, and Westpac Bank. The analysis depicts an overall increasing trend in the shareholder's equity of all the three entities. The debt component of all the three entities is higher than the equity, indicating a less willingness to take risks. The close evaluation of the figures indicates that the position of the Bendigo and Adelaide Bank is better than the other two banks.

Running Head: CORPORATE ACCOUNTING 0
Corporate Accounting

Running Head: CORPORATE ACCOUNTING
Table of Contents
Executive Summary...............................................................................................................................1
Introduction...........................................................................................................................................3
Owners’ Equity......................................................................................................................................3
Ordinary Share capital...........................................................................................................................4
Reserves............................................................................................................................................6
Retained profits.................................................................................................................................6
Comparative Evaluation of Equity and Debt.........................................................................................6
Comparative Analysis...........................................................................................................................7
Cash flow statements.............................................................................................................................7
Operating Activities...........................................................................................................................8
Comparative Evaluation..................................................................................................................13
Close Evaluation..............................................................................................................................13
Other Comprehensive Income statement.............................................................................................14
Comprehensive income Analysis.....................................................................................................16
Non-inclusion of profit and loss account.........................................................................................17
Reasons for exclusion......................................................................................................................17
Performance of managers................................................................................................................18
Accounting for Corporate Income Tax................................................................................................18
Income tax expense.........................................................................................................................20
Effective tax rate..............................................................................................................................20
Deferred tax assets/liabilities...........................................................................................................20
Deferred tax calculation...................................................................................................................20
Cash tax amount..............................................................................................................................21
Distinction between cash tax rate and effective rate........................................................................21
References...........................................................................................................................................22

Running Head: CORPORATE ACCOUNTING
Introduction
The company Bendigo, was engaged in the selling of the financial products via 900 outlets in
Australia before the merger. The chief headquarters of the bank are located in the city of
Bendigo, with the main branches at the Victoria and Queensland, and the location of the main
office is at city of Adelaide. The revenue of the entity for the year 2016 was AU$1.551
billion. At present, the company as a whole is chiefly managed by Robert Johanson and
Marnie Baker (Bendigo and Adelaide Bank, 2017).
The Bank of Queensland is considered as one of the oldest banks, comprising of about 252
branches across the globe. These include the 166 owner managed branches and the 78
corporate branches. The company was established in the year 1863 that is after the formation
of the Bendigo and Adelaide bank. The entity received its official banking license on the year
1942 (Bank of Queensland, 2017). Roger Davis and Jon Sutton are key people responsible for
managing the affairs of the bank.
The entity Westpac Bank received its name from the combination of the words Western and
Pacific. The Westpac Bank is regarded as the first bank of Australia and is a popular entity in
the financial sector of Australia. As per the reports of the entity, in March 2018, Westpac had
record of 14 million customers and approximately 40000 employees as the part of the entity
(Westpac Bank, 2017).
Owners’ Equity
Bendigo Adelaide Bank
Shareholder's Equity 2017 2016 2015
Share Capital

Running Head: CORPORATE ACCOUNTING
Ordinary Share
capital 4448 4288 4355
Reserves 110 43 134
Retained profits 254 240 205
4812 4571 4694
The shareholders equity is regarded as one of the essential components of the financial
statements of any entity. The term shareholders equity is comprised of share capital, the
retained profits and the reserves. The shareholder capital is further bifurcated into ordinary
share and treasury shares. The overall shareholders equity in the year 2015 was recorded to
be the $ 4694 million which further reduced to $ 4571 million in the year 2016 and increased
to $ 4812 in the year 2017. The chief reason for the increase in the shareholders equity in the
year 2017 can be stated to be the reserves and the retained profits. Thus, it can be stated that
share capital of the Bendigo and Adelaide bank has been fluctuating over the years (Dorn
Katz, Patterson and Van Reenen, 2017).
Ordinary Share capital
The ordinary share capital refers to the sum that has been brought by the promoters of the
business in the association for the organisation. The said amount is called by the organisation
as an offer for the capital contribution of the entity. The allotment of the said shares is done
after the applications have been received for the shares.
Bank of Queensland
Shareholder's Equity 2017 2016 2015
Share Capital

Running Head: CORPORATE ACCOUNTING
Ordinary Share
capital 3367 3250 3128
Reserves 48 18 75
Retained profits 347 223 166
3762 3491 3369
Westpac Bank
Shareholder's Equity 2017 2016 2015
Share Capital
Ordinary Share
capital 34889 33469 29280
Treasury Shares -437 -369 -385
Reserves 858 790 1031
Retained profits 16871 15311 23172
52618 49570 53483
There is an upward trend in the in the period of three years starting from 2015, in terms of the
shareholder’s equity of the entity, the Bank of Queensland. While the reserves of the bank
reduced for the year 2016, the greater pace in the retained profits can be attributed towards
the overall increase in the shareholder’s equity for the year 2016. The same increasing trend
continues for the year 2017 for the retained profits. The reserves have contributed in the
payment of the expenses, leading to an overall increase in the share capital. The share capital
has increased from $3128 to $3367 from 2015 to 2017. It is evident that the performance of
the bank has improved from the year 2015 to 2017 (Stiglitz and Rosengard, 2015).

Running Head: CORPORATE ACCOUNTING
Reserves
The reserves are displayed as a part of the shareholders equity. These depict a credit balance
and are comprised of various range of profits accumulated in the entity for the various
specific purposes. Some of the instances of the purposes for which the reserves are used by
the entity are the payment of the bonuses, purchasing the furniture, paying for the legal
settlement and others. Among the three entities as stated above, the reserves of the Westpac
bank depict the highest balance and the lowest reserves are that of the Bank of Queensland in
the year 2016, amounting to $18 million (Stiglitz and Rosengard, 2015).
Retained profits
Another essential component of the balance sheet and the shareholder’s equity are the
retained profits. These refer to the surplus balance of profits of the entity, which have been
earned for the sale of the services to the customers. The said amounts are primarily used by
the enterprise towards the payment of the future liabilities and the dividends to the
shareholders. It must be noted that the balances of the reserves have fallen for that of the
Westpac Bank from $23172 to $16871. These are in addition to the highest overall equity
amount of the Westpac bank, as compared to the data of the two other banks. The said high
can be attributed towards the trust and the brand name earned by the company for the
customers, over the years (Westpac Bank, 2017).
Comparative Evaluation of Equity and Debt
The following table displays the amount of the total debt and equity of all the three banks.
Basis Bendigo and
Adelaide Bank
Bank of Queensland Westpac Bank
Debt 66941 44692 842688
Equity 4812 3762 52181

Running Head: CORPORATE ACCOUNTING
The fact that the all the three entities possess the debt higher than then the equity, is
descriptive that the entities are less willing to take the risks. In addition, the higher debt
component is also yielding the leverage against the income earned, in terms of the tax
advantage over the finance costs paid (Bank of Queensland, 2017).
Comparative Analysis
As per the discussions conducted in the previous parts, it can be concluded that there is an
overall increasing trend in the shareholder’s equity of the all the three entities. The
comparative analysis as conducted above depicted the comparison and the contrast of the
financial position in terms of the shareholder’s equity, of the all the three banks. The current
shareholder capital of Banks of Queensland, Bendigo Adelaide Bank and the Westpac Bank
are $3762, $4812 and $52618 respectively. The same depicts the amount of investment made
by the promoters and the shareholders of the companies.
Cash flow statements
The cash flow statement tool aids to get an insight of the cash inflow and the cash outflow of
the organisation concerning a financial year. The tool is a measure of the management of the
cash position of an entity. This is in addition to the evaluation of the company’s ability to pay
off the expenses and the obligations of the organisation. The preparation of the cash flow
statement is done under the three major heads that are the operating, investing and financing
activities.

Running Head: CORPORATE ACCOUNTING
Operating Activities
The operating activities refer to those activities that are directly attributable to the chief
operations of the business enterprise. Thus, there exists an explicit relationship between the
core objectives of the enterprise, the overall administration and the revenues of the entity.
The results of the core activities like manufacturing and trading are dealt in this section of the
statement of cash flow.
Changes in the Working Capital
The working capital refers to the difference between the amounts of the current assets and the
current liabilities of the entity. The calculation of the working capital is done in order to
evaluate the existence of balance of assets to cover the payment of the liabilities.
Net Operating Cash Flow
In terms of the banking activities, the net cash flow from the operations refers to the money
needed by the bank to grow its financing operations, which is the core activity of the banks.
In addition, the segment also aids in the reporting of the whether there are any external
requirements of cash to finance the expansion of the business operations.
Investing Activities
The investing activity segment of the cash flow statement evaluates the amount invested by
an entity for the purchase of the assets and the benefits derived from the same. The benefit of
the use of the asset is described in the form of generation of the realizable value after the
usage of the assets. It must be noted that these benefits share a direct relationship with the
efficient use of the assets.
Capital Expenditures

Running Head: CORPORATE ACCOUNTING
The capital expenditure in relation to the assets refers to the amount utilised for the
acquisition of the fixed assets like plant and apparatus, building, capital speculation and
others. The fact that the fixed assets hold the potential to generate the future benefits and
revenues for the business, the same needs to be recorded.
Sale of Fixed Assets & Businesses
The sales of the fixed assets are descriptive of the facts that the capital fixed assets have
either become obsolete nature or are in the non-working conditions and the same are sold. In
addition, the assets fully or in part may have been sold in exchange of another assets in part
or the full payment in cash. The machinery and the fixed assets are essential components of
the business operations of the entity, and the same generate beneficial outcome in the form of
cash flows to the business.
Net Change in Cash
The figure of the net change in cash is the sum of the amounts of the cash flows from
operating activities, cash flows from financing activities, and the cash from investing
activities. This gives an insight of the change in the increase or decrease of the money the
varied stages of the technique of the cash flow statement.
Free Cash Flow
The free flow income is referred to as the income that is earned by the banks by selling their
products and services to the customers. The same is also regarded as the leftover with the
entity, after the payment for its operations and the expenses to carry out the said operations
(Free cash flow, 2017).

Running Head: CORPORATE ACCOUNTING
(Source: Bendigo and Adelaide Bank, 2017)

Running Head: CORPORATE ACCOUNTING
(Source: Bank of Queensaland, 2017)

Running Head: CORPORATE ACCOUNTING
(Source: Westpac Bank, 2017)

Running Head: CORPORATE ACCOUNTING
Comparative Evaluation
The cash flow statements of the company reflect the inflow and the outflow of the cash. The
entire position of the cash is dependent on the basis of the cash flow statement. From the
overall analysis certain things can be derived from the overall study of the cash flow
statements of all the three banks. The cash from operating activities in case of the Westpac
bank is negative 235 whereas as compared to the previous year the net cash flow from the
operating activities is 3443. The net cash form the investing activities were (6094) in the year
2016 whereas it resulted to only 1604 in the year 2017. The redemption of the loan capital is
2188 in the year 2017 and the purchase of shares are the major reason for the decrease in the
net cash from the financing the activities. On the other hand the net cash and cash equivalents
of the bank of Queensland were 703 in the year 2015 whereas the same reached to 537 in the
year 2017. This indicates that the position of the bank of Queensland is in danger. Finally the
position of the Bendigo and Adelaide bank is (Ayers, Call and Schwab, 2018).
Close Evaluation
The close evaluation of the figures dealing with the banks namely Bendigo and Adelaide
bank, Bank of Queensland and Westpac Bank, the comparison in general is done to identify
which bank is performing better and what are the reasons of the variance (Ahiadorme Gyeke-
Dako and Abor, 2018). The cash flow experts are not only interested in the amount of the
salary or the wages or rent rather than they are also interested in the several activities such as
the salary form the working activities, contribution from different areas and the funds from
the different pockets. Moreover the creation of the balance between the different years can
show the connection with the previous year. The cash dealing will reflect the ultimate
comparison of how the banks shall improve the performance and work upon the reduction in
the cash and the cash equivalents. It is required to maintain a certain level of the cash (Miao,
Teoh and Zhu, 2016).

Running Head: CORPORATE ACCOUNTING
Other Comprehensive Income statement
(Source: Bendigo and Adelaide Bank, 2017)

Running Head: CORPORATE ACCOUNTING
(Source: Bank of Queensaland, 2017)

Running Head: CORPORATE ACCOUNTING
(Source: Westpac Bank, 2017)
Comprehensive income Analysis
In financial accounting the comprehensive income is broken down into the multiple ways and
the firms have some grip on when to recognise and report the earnings. In order to
compensate the process the Financial Accounting Standards Board the incomes are bifurcated
into the comprehensive income and the other comprehensive income. The other
comprehensive income for the banks has been showcased in the table above. Generally there
is a separate statement for the comprehensive income in the annual reports of the
organisation. The core reason for the change in the interest of the owner can be measured
with the help of this statement. The expenses which are not realised in the normal income
statement are presented in the comprehensive income statement such as charge in the
company’s net assets from non-owners sources, including all expenses and incomes that by

Running Head: CORPORATE ACCOUNTING
pass the income statement (Black, 2016). Currently the comprehensive income of the
Westpac bank is 7991 for the year 2017 for the consolidated group whereas for the bank of
Queensland the comprehensive income is 447 which have been increased from the previous
year at 329. Analysing the comprehensive income of Bendigo ad Adelaide Bank the
performance improved in comparison to the previous year that is from 231.1 to 386.4.
Non-inclusion of profit and loss account
The specifications of the Comprehensive income are not included into the profit and loss
account because there are certain items in the comprehensive income that are not included in
the income statement. The statement of the comprehensive account is the special account
which accounts for the different category of expenses such as gain and losses on the
derivative instruments, debt security, unrealized gains and foreign currency adjustments,
Availability for the securities. These incomes cannot be included due to the separate
identification of the incomes and the expenses, the inclusion will not determine the correct
amount of profit (Edinger, Moore, Wang and Berger, 2018).
Reasons for exclusion
In the present scenario the comprehensive income statement reflects the special incomes and
the expense and also it helps in producing the tax on the items belonging to the equity of the
firm and thereafter the certain adjustments are made and the real profit or loss is booked. The
comparative analysis of all the three banks will give a deeper outlook of the situations. There
are certain items like actuarial loss, foreign currency transactions for which the proper heads
are not categorised in the income statement and hence to avoid the situation of the
materiality, the firms shall form the two different statements (Khan and Bradbury, 2016).

Running Head: CORPORATE ACCOUNTING
Performance of managers
The performance of the managers is basically based on how well they manage the work of the
entire department. The profit and loss account reflects the true evaluation of the profits
exclusive of the comprehensive income statement. The managers are also responsible for
supervising the work done by the accountants and they are truly responsible for the same.
Hence the managers are responsible for the preparation of the comprehensive statement at the
secondary level but the main responsibility lies in the hands of the accountants and the
preparatory of the financial statements.
Accounting for Corporate Income Tax
Accounting for Corporate Tax Westpac bank Bank of
Queensland
Bendigo and
Adelaide
Bank
Tax Expense 2620 126 148
Income tax expense 2620 126 148
Earnings before Tax 10463 542 460
Effective Tax rate 25% 23% 32%
Deffered Tax Assets/Liabilities
(17) 1053 52 43
2016 1399 81 28
Deferred tax assets increase
Increase/ Decrease 346 29 -15

Running Head: CORPORATE ACCOUNTING
Income tax provision 1295 33 21.5
Increase/Decrease in Deffered
Tax 346 29 -15
Total taxes 1641 62 6.5
Other income 6131 347 237.6
Tax paid on other Income 15 1 1
Unlevered Taxes 1626 61 6
Earnings Before Income tax 10463 542 460
Cash Tax Rate 16% 11% 1%
Income Tax Provision 1295 33 21.5
Deffered Tax 1053 52 43
Total Taxes 2348 85 64.5
Interest Income 17765 2015 2298
Tax paid 44.5 4.7 7.4
Cash Tax Amount 2304 80 57
Income tax expense
There is a certain item called tax expense which is presented in the balance sheet as well as
the income statement. The tax expense is the amount of the tax owned in the given period.
The tax provisions are shown in the balance sheet whereas the tax expense is shown in the

Running Head: CORPORATE ACCOUNTING
income statement. The tax expense of the three banks is 2620 for the Westpac bank, 126 for
the bank of Queensland and 148 for the Bendigo and Adelaide Bank.
Effective tax rate
Following table reflect the effective tax rate calculation of the Bank of Queensland, Westpac
Bank and Bendigo and Adelaide Bank. The rates are 23%, 25% and 32% respectively.
Deferred tax assets/liabilities
There are two items present in the balance sheet one is the deferred tax assets and the other
thing is the deferred tax liability. The deferred tax asset is the process of creation of an
account where the tax payable amount is much more than the income tax actually paid by the
company. The deferred tax assets are created in case of Bank of Queensland. Also the
Bendigo bank showcases the deferred tax liability which is created when the company
actually has paid more income tax to the government (Balakrishnan Blouin and Guay, 2018).
Deferred tax calculation
The movement in the deferred tax assets as well as the deferred tax liability is visually
presented in the form of the table. The figure of the negative 15 reflects the reduction in the
deferred tax liability whereas the figure of 346 and 29 are the sharp height in the deferred tax
assets of the Westpac Bank and Bank of Queensland (Guenther Matsunaga and Williams,
2016).
Cash tax amount
The cash tax amount as calculated can be seen from the table above can be observed that the
cash tax amount of the three banks are $2304, $80 and $57 respectively, for the Westpac
Bank, the Bank of Queensland and Bendigo and Adelaide bank (Edwards, Schwab and
Shevlin, 2015).

Running Head: CORPORATE ACCOUNTING
Distinction between cash tax rate and effective rate
There is a distinction between the pre taxable income and the pre taxable book value.
Therefore there is a slight variation between the change rate and the effective tax rate. The
core reason is due to the change in the value. The difference is bifurcated into two main
scenarios. The primary and the secondary manner, whereas under the primary manner
suggests that the regular transactions are calculated at the cash tax rate and the permanent
transactions recorded at effective tax rate (Dyreng, Hanlon, Maydew and Thornock, 2017).

Running Head: CORPORATE ACCOUNTING
References
Ahiadorme, J.W., Gyeke-Dako, A. and Abor, J.Y., 2018. Debt holdings and investment cash
flow sensitivity of listed firms. International Journal of Emerging Markets, 13(5), pp.943-
958.
Ayers, B.C., Call, A.C. and Schwab, C.M., 2018. Do Analysts' Cash Flow Forecasts
Encourage Managers to Improve the Firm's Cash Flows? Evidence from Tax
Planning. Contemporary Accounting Research.
Balakrishnan, K., Blouin, J. and Guay, W., 2018. Tax Aggressiveness and Corporate
Transparency. The Accounting Review.
Bank of Queensland, 2017 Annual Report [Online] Available from
https://www.boq.com.au/content/dam/boq/files/reports/annual-report/annual-report-2017.pdf
[Accessed on 31st January 2019]
Bendigo and Adelaide Bank, 2017 Annual Report [Online] Available from
https://www.bendigoadelaide.com.au/shareholders/pdf/annual_reports/2017-Annual-
Financial-Report.pdf [Accessed on 31st January 2019]
Black, D.E., 2016. Other comprehensive income: a review and directions for future
research. Accounting & Finance, 56(1), pp.9-45.
Dorn, D., Katz, L.F., Patterson, C. and Van Reenen, J., 2017. Concentrating on the Fall of the
Labor Share. American Economic Review, 107(5), pp.180-85.
Dyreng, S.D., Hanlon, M., Maydew, E.L. and Thornock, J.R., 2017. Changes in corporate
effective tax rates over the past 25 years. Journal of Financial Economics, 124(3), pp.441-
463.

Running Head: CORPORATE ACCOUNTING
Edinger, T., Moore, J., Wang, D. and Berger, D., 2018. Other Comprehensive Income and the
Market's Processing of Earnings Information.
Edwards, A., Schwab, C. and Shevlin, T., 2015. Financial constraints and cash tax
savings. The Accounting Review, 91(3), pp.859-881.
Gordon, E.A., Henry, E., Jorgensen, B.N. and Linthicum, C.L., 2017. Flexibility in cash-flow
classification under IFRS: determinants and consequences. Review of Accounting
Studies, 22(2), pp.839-872.
Guenther, D.A., Matsunaga, S.R. and Williams, B.M., 2016. Is tax avoidance related to firm
risk?. The Accounting Review, 92(1), pp.115-136.
Hsu, L. and Lawrence, B., 2016. The role of social media and brand equity during a product
recall crisis: A shareholder value perspective. International journal of research in
Marketing, 33(1), pp.59-77.
Khan, S. and Bradbury, M.E., 2016. The volatility of comprehensive income and its
association with market risk. Accounting & Finance, 56(3), pp.727-748.
Lin, S., Martinez, D., Wang, C. and Yang, Y.W., 2017. Is other comprehensive income
reported in the income statement more value relevant? The role of financial statement
presentation. Journal of Accounting, Auditing & Finance, p.0148558X16670779.
Miao, B., Teoh, S.H. and Zhu, Z., 2016. Limited attention, statement of cash flow disclosure,
and the valuation of accruals. Review of Accounting Studies, 21(2), pp.473-515.
Stiglitz, J.E. and Rosengard, J.K., 2015. Economics of the public sector: Fourth international
student edition. WW Norton & Company.

Running Head: CORPORATE ACCOUNTING
Westpac Bank, 2017 Annual Report [Online] Available from
https://www.westpac.com.au/content/dam/public/wbc/documents/pdf/aw/ic/
2017_Westpac_Annual_Report_Web_ready_&_Bookmarked.pdf [Accessed on 31st January
2019]