MBA403 Investor Report: Financial and Economic Analysis of Westpac

This report provides an investor's perspective on Westpac Banking Corporation, analyzing both financial and non-financial information. It examines key financial ratios such as operating profit margin, asset turnover, liquidity, and market value, highlighting trends and implications. The non-financial analysis covers customer base, employee relations, and sustainability initiatives. The report concludes with recommendations for potential investors, suggesting areas for improvement and investment considerations. The analysis utilizes data from Westpac's annual reports and other sources to offer a comprehensive overview of the company's performance and future prospects. The report emphasizes the importance of financial and non-financial data for making informed investment decisions.

Running Head: FINANCIAL AND ECONOMIC INTERPRETATION AND
COMMUNICATION
Executive Summary
Westpac that is also known as Westpac Banking Corporation is the Australian Bank
as well as the provider of the financial services that is headquartered in Sydney and listed on
the indices of ASX. It is the first bank of Australia that have various ranges of the financial
packages for supporting the business, personal or the corporate needs. Hence, this report will
include the discussion as well as providing investor report on the changes of the financial
information as well as non-financial information for Westpac Banking Corporation.
Moreover, the situations prevailing in the organization will be analyzed and based on that
overall picture will be reviewed and then presented to the stakeholders that is regarding the
analysis of market. Hence, analyzing the financial as well as non-financial information are
important and useful for taking key decisions by the investors for the investment purposes.
Analysis
Operating Profit Margin 2018 2017
Operating Profit 11,731.00$ 11,515.00$
Revenue 8,099.00$ 7,997.00$
Formula 1.45 1.44
Assets Turnover 2018 2017
Revenue 8,099.00$ 7,997.00$
Total Assets 879,592.00$ 851,875.00$
Formula 1% 1%
Current Ratio 2018 2017
Current Assets 32,221.00$ 25,525.00$
Current Liabilities 18,137.00$ 21,907.00$
Formula 1.78 1.17
Debt Equity Ratio 2018 2017
Long Term Debt 796,882.00$ 768,626.00$
Shareholders' Funds 64,521.00$ 61,288.00$
Formula 12.35 12.54
Dividend Yield Ratio 2018 2017
Dividend Paid 5,769.00$ 4,839.00$
Market Price of Share 29.69$ 34.48$
Formula 194.31$ 140.34$
Financial Leverage Ratio
Market Value Ratio
Profitability Ratio
Efficiency Ratio
Liquidity Ratio
Figure 1: Ratio Analysis
Interpretation
Financial Results
Financial results of the Westpac are shown by its profitability, efficiency, liquidity,
financial leverage as well as market value ratio. The operating profit margin of the
organization shows that the organization has low profitability in terms of its operating profit
over revenue that was 1.44 and 1.45 for the year 2017 and 2018. It indicates that the company
is making profit but not that much that leads to the high financial risk and not able to control
the expenses for earning the profit (Westpac.com.au. 2019).Moreover, the assets turnover
shows that the turnover from the assets is same over both the years that is 1%,which means
that the assets of the company is not able to generate enough turnover to the company.
Further, the liquidity ratio of the company was 1.17 and 1.78 of the year 2017 and 2018 that
means that there was 0.61 increases in the liquidity position of the company, which indicates
that the company is capable for paying its short-term liabilities by its short-term assets
(Omaret al. 2014). The financial leverage ratio of Westpac was 12.54 and 12.35 for the year
2017 and 2018 that means that the company is dependent on high level of debt out of the

1FINANCIAL AND ECONOMIC INTERPRETATION AND COMMUNICATION
equity. Lastly, the market value ratio was 140.34 and 194.31 in the year 2017 and 2018 that
means that the company the market value of the company has been increased by 53.97. It
indicates the continuous payment of the dividend by the company in order to maintain the
investor’s interest (Ehiedu 2014).
Non-Financial Information
The non-financial information of the company includes information about customer,
employees, environment, sustainable lending and investment, supply chain as well as social
impact. Westpac is considered as the oldest bank of the Westpac and it is one of the four
major organizations of banking in the Australia and it is among one of the New Zealand’s
largest bank. The company provides the broader ranges of the banking as well as financial
services in the market that includes institutional banking, business and consumer. The
portfolio of the Westpac Group of the financial services brands as well as businesses are
focused for being the great service companies of the world by helping the communities,
customers as well as people for growing and prospering (Theriou 2015). The business of the
company operates the unique portfolio of brand that includes Westpac, Bank of Melbourne,
RAMS, BankSA and St.George that serves almost and over 13 million customers. There are
five customer facing divisions of Group such as consumer bank, business bank, Westpac
International bank, Westpac New Zealand as well as BT Financial Group Australia (Mwangi,
Makau and Kosimbei 2014).
In the recent past few years, the profit growth of the bank has picked up and these
profits are sufficient for enabling them for further increasing their capital. The company
maintains the frameworks of the risk management as well as the number of the supporting
policies, which defines the responsibilities and roles, acceptable practices as well as the limits
and the key controls (Ghasempour and Yusof 2014). The existing model of risk governance
and the structure of committee have been embedded into the existing process for ensuring the
sustainability. The sustainability strategy of the Westpac has been resourced, envisaged,
reported as well as implemented by the non-accounting personnel. There has been limited
contribution of the finance function and formal accounting to the required provision of the
required information. Moreover, the accountants that are trained are integral and employed by
the involved team in the instituting as well as developing the aspects of supply chain of the
strategy of sustainability (Sauaia 2014).
Conclusion & Recommendations
Hence, it is concluded from analyzing the financial results of the Westpac Group that
in terms of the liquidity, profitability, management of cash and the market value, there is
average performance of the organisation. The profitability ratio is low, the efficiency ratio is
low, there is good liquidity ratio as the company has the ability for paying the short-term
liabilities, the company is highly leveraged as debt to equity ratio is high and the company’s
position of the market value are high that is the good sign. Although, the non-financial
analysis shows that the banking sector of Australia is experiencing the growth and is
performing well. Further, the management of the company has capability for making the
strategic decisions in relation to the growth as well as development of the organization.
Therefore, investors of the company should invest in the organization because of their
approach for long-term. Moreover, the recommendations that should be given to the company
is that they should reduce the operating expenses for increasing the revenue and overall
profitability. Moreover, the efficiency should be increased by proper utilizing the assets for
increasing the revenue. Lastly, the debt should be minimized.

2FINANCIAL AND ECONOMIC INTERPRETATION AND COMMUNICATION
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https://www.westpac.com.au/content/dam/public/wbc/documents/pdf/aw/ic/
2018_Westpac_Annual_Report.pdf [Accessed 18 Jun. 2019].