Financial Analysis of Kiwi Bank: Ratio Analysis and Project Evaluation

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Diploma in Business
BUS 202Finance
Assessment2
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Executive summary
The present report is undertaken to provide a financial analysis of the Kiwi Bank. In this
context, the report has carried out the financial ratio analysis of the bank for examining its
business performance. The results obtained from the ratio analysis will help in providing
recommendation to the potential investors for investing in the company. The recommendations
obtained from the ratio analysis will help in improving the financial performance of the
company. In addition to this, the NPV, IRR and WACC of different projects are calculated to
provide the best possible option for the company for investing purpose. The use of different
capital budgeting techniques in the report will provide the company in selecting a best possible
option for the investment purpose.

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Contents
Executive summary........................................................................................................................................2
Introduction....................................................................................................................................................4
Financial Ratios.............................................................................................................................................4
Ratio Analysis................................................................................................................................................6
Profitability Analysis.................................................................................................................................6
Liquidity Analysis......................................................................................................................................8
Efficiency Analysis....................................................................................................................................9
Leverage Analysis....................................................................................................................................10
Growth Analysis......................................................................................................................................11
Recommendation to Potential Investors..................................................................................................11
Project Evaluation........................................................................................................................................12
Weight-age Average Cost of Capital for various given projects.................................................................17
Conclusion...................................................................................................................................................18
References....................................................................................................................................................19
Appendix......................................................................................................................................................20

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Introduction
Kiwi Bank is the subsidiary company which is wholly owned by the state owned
enterprise New Zealand Post Limited. Kiwi Bank provides some of its major services through
Postshops (Post Offices) and from the bank branches situated in many parts of the country. The
Kiwi Bank is majorly owned by the New Zealand Government and the chairperson in the board
of directors is the former New Zealand Prime Minister Jim Bolger from 2001-2010. Currently
the chairperson of the board of director is Susan Macken. The core business activities of the
Kiwi Bank are personal banking, Kiwi Saver, business banking and other wealth maximization
services. The personal banking services of the Kiwi Bank includes home loan, debit card
services, credit card services, saving accounts, everyday accounts, investment services, other
loans and various insurance services (Services, 2017). The business banking services provided
by the Kiwi Bank includes lending services, cheque accounts, investment, payment services,
merchant banking, cards services and other important services. International services includes
money transfers both online and manual system, foreign exchange currency services and other
services involving the international transactions. Kiwi Bank was established in year 2002 and the
mission of the bank is to win the hearts of Kiwis by providing better service, better products,
lower fees and better interest rates (About Us, 2017).
Financial Ratios
Profitability Ratios

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Ratio Formula 2017 2016 Change in Percentage
Gross Profit 368 373
Net Sales 831 898
Answer 0.44 0.42 6.61%
Net profit 53 124
Net Sales 831 898
Answer 0.06 0.14 -53.81%
Net profit 53 124
Total Assets 20616 19357
Answer 0.00 0.01 -59.87%
Net profit 53 124
Equity 1380 1129
Answer 0.04 0.11 -65.03%
Profitability Ratio
Gross Profit Margin
Net Profit Margin
Return on Assets
Return on Equity
Liquidity Ratios
Ratio Formula 2017 2016 Change in Percentage
Current Assets 20061 18477
Current Liabilities 16054 14921
Answer 1.25 1.24 0.91%
Cash + Marketable
Securities + Accounts
Receivable
772 833
Current Liabilities 16054 14921
Answer 0.05 0.06 -13.86%
Cash Equivalents +
Marketable Securities 464 509
Current Liabilities 16054 14921
Answer 0.03 0.03 -15.27%
Current Assets 20061 18477
Current Liabilities 16054 14921
Answer 4007.00 3556.00 12.68%
Liquidity Ratios
Cash Ratio
Working Capital
Current Ratio
Acid Test
Efficiency Ratios

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Ratio Formula 2017 2016 Change in Percentage
et Sales 831 898
Accouts Receivables 308 324
Answer 2.70 2.77 -2.65%
Cost of Goods Sold 463 525
Average Inventory 0 0
Answer #DIV/0! #DIV/0! #DIV/0!
Purchases 463 525
Accounts Payable 71 139
Answer 6.52 3.78 72.65%
Net Sales 831 898
Average Total Assets 20616 19357
Answer 0.04 0.05 -13.11%
Efficiency Ratios
Accounts Receivable Turnover
Inventory Turnover
Payables Turnover
Total Asset Turnover
Leverage Ratio
Ratio Formula 2017 2016 Change in Percentage
Total Liabilities 19236 18228
Total Assets 20616 19357
Answer 0.93 0.94 -0.91%
Total Equity 1380 1129
Total Assets 20616 19357
Answer 0.07 0.06 14.77%
Total Debt 19236 18228
Total Equity 1380 1129
Answer 13.94 16.15 -13.66%
Equity
Debt to Equity
Leverage Ratio
Total Debts