Financial Analysis of Westpac Banking Corporation

RUNNING HEAD: Financial analysis of Westpac Banking Corporation
1
Name of the student
Topic- Financial analysis of Westpac Banking Corporation
University name

Table of Contents
Introduction...........................................................................................................................................3
1. Description of Westpac Banking Corporation...........................................................................3
2. Governance and Ownership structure............................................................................................3
3. Performance ratio analysis of Westpac Banking Corporation........................................................5
4. Changes in the share price of Westpac Banking Corporation........................................................7
5. 4.1 Graphical presentation for the changes in the share price of Westpac Banking Corporation
over the period of two years..................................................................................................................7
6. 4.2 Comprising between the share price movement of Westpac Banking Corporation and the
market shares listed on the all ordinary stock exchange........................................................................7
7. Announcements.............................................................................................................................8
8. Research via internet.....................................................................................................................9
6.2 Computation of required rate of return by using CAPM method...............................................10
6.3 Determining the investment method (Conservative investment)................................................10
9. Weighted average Cost of Capital...............................................................................................11
9.1 Computing cost of Equity using CAPM method..................................................................11
7.2 Implications that a higher WACC on investment decision of Westpac Banking Corporation. . .11
10. Debt ratio consideration of Westpac Banking Corporation......................................................12
8.1 Stable Debt to equity ratio of the company....................................................................................12
8.2 Gearing ratio discussion.............................................................................................................13
11. Divided policies of the company.............................................................................................13
12. Letter of recommendation........................................................................................................13
Conclusion...........................................................................................................................................15
13. References...............................................................................................................................16
14. Appendix.................................................................................................................................17

Financial analysis of Westpac Banking Corporation
3
Introduction
There are several financial tools which could be used by investors before making
investment decisions. The Westpac Banking Company has been selected in this report. The
discussion emphasises on the financial performance of the company, weighted average cost
of capital, share price analysis, dividend policy. It also contains the letter of recommendation
used by the investors to make the financial decision.
1. Description of Westpac Banking Corporation
Westpac banking Corporation, known as Westpac, is an Australian bank and financial service
provider. It was the first bank in Australia and one of Australia’s “big four” banks. Westpac
provide a broad range of banking and financial services in the market which includes
consumer, business and institutional banking and wealth management services.
The current CEO of the company is Brian Hartzer who is performing all the activities for an
effective run of business.
2. Governance and Ownership structure
The management team of the corporation have several managerial persons who make
decision for the effective run of the business.
(Yahoo finance, 2017)

The chart shows the shareholding of members who owned the highest shareholding in
Westpac.
These key managerial persons takes all the important decisions in business.
The governance of Westpac has shown that it comply with all the rules and regulations.
Westpac has strengthen legal compliance program.
(Yahoo finance, 2017)
Source: Yahoo Finance
3. Performance ratio analysis of Westpac Banking Corporation
Ratio analysis is used to identify the future financial trend and current financial performance
(Westpac Bank Corporation. 2016).
Information about Westpac Banking Corporation
Westpac Banking Corporation