Analysis of Equity, Cash Flow and Corporate Income Tax of Commonwealth and Westpac Banks in Australia

Corporate Accounting
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Executive Summary
The following discussion is made on two listed companies belonging to the same industry in
Australia. We have chosen Commonwealth and Westpac banks in order to conduct an
analysis on various parts of a financial report. This analysis can also be done for other parts
not discussed in the report. The following discussion will help the investors and other users of
the financial statements to have an insight into the working of these two organisations.
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Contents
Introduction................................................................................................................................5
Analysis of Equity......................................................................................................................6
Discussion on each item of equity for both the companies....................................................6
Discussion and debt and equity of both the companies..........................................................7
Analysis of Cash flow statement................................................................................................9
Discussion on the cash flow statement of both the companies..............................................9
Comparison of cash flow of three years of both the companies...........................................10
Description of analysis of cash flow of both the companies................................................11
Analysis of comprehensive income statement.........................................................................13
Items reported in the other comprehensive income statement.............................................13
Reasons for not reporting these items in the profit and loss statement................................13
Comparative analysis of the items of the other comprehensive income statement..............13
Use of other comprehensive income in evaluation of performance of managers................14
Analysis of corporate income tax.............................................................................................14
Tax expense for the companies for the current year.............................................................14
Effective income tax rate......................................................................................................14
Deferred tax liabilities and assets.........................................................................................14
Increase in DTA and DTL....................................................................................................15
Calculation of cash tax using the book tax...........................................................................15
Calculation of cash tax rate..................................................................................................17
Difference in cash tax and book tax.....................................................................................17
Conclusion................................................................................................................................18
Bibliography.............................................................................................................................19
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Introduction
The financial reports of the companies comprise of many parts. It is important that we learn
about the nature and characteristics of such pieces of the financial report (Alvarez, 2013). In
our discussion below we have discussed about few financial parts of companies in Australia
that belong to same sector. The following discussion is done on Commonwealth group and
Westpac group of Australia.
Commonwealth bank of Australia is the biggest bank of Australia which has its business
spread across Australia, New Zealand, Asia, United sates and United Kingdom. This is not
only the largest bank in Australia, but also in the whole of southern hemisphere. The bank is
involved in providing a lot of services such as insurance, superannuation, fund management,
institutional banking, retail, broking services, etc. this bank was first established in 1911, and
later in 1991 it was listed in the Australian stock exchange. The bank has more than 1100
branches spread across the world along with 51800 people working for it.
Westpac bank is an Australian based bank which has its headquarters located in Sydney. The
bank is one of the top four banks in Australia. The bank has been consecutively for four years
ranked as the most sustainable bank globally. The bank was first established in 1817 as Bank
of New South Wales, later it in 1982, t was remained Westpac. They got listed on the
Australian stock exchange in 1970. The bank has about 1490 branches with 32620
employees. The vision of the company is set as to be the world great service company which
helps customers and communities and helps them to prosper and grow. The bank has about
14 million people being associated with it.
In the following discussion we have discussed few parts of the financial statements of both
these companies in order to have a better understanding (Bragg, 2015).
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