ANZ Financial Analysis Names Institution ANZ Financial Analysis Abstract After selecting a public listed company on the Australian Securities Exchange
ANZ Financial Analysis
Names
Institution
ANZ Financial Analysis
Abstract
After selecting a public listed company on the Australian Securities Exchange (ASX), this paper shall evaluate the annual report of the organization’s latest annual reports for the past three years. The paper shall utilize the company’s balance sheet, statement of changes in owners’ equity, income statement, cash flow statement carefully. In this paper an analysis of Australia ; New Zealand Bank shall be conducted
Introduction
Australia and New Zealand bank is recognized to provide several diverse financial and banking products to the individual customers. At the moment, the bank has a total of 1,46 branches. Besides, the bank is known in offering some of the best classes of financial services and products to the clients. The Bank is involved in offering credit analysis, continuous monitoring of customers, execution and structuring. The ANZ Bank Group Limited was established in the year 1835 and the headquarters is located in Australia, Melbourne. The bank’s customers are found to be commonly small, retail, institutions, corporates businesses found in Asia Pacific Regions, New Zealand, Australia, United States, Europe, and Middle east (Chuang, & Hu, 2015). Furthermore, the organization provides equipment and motor vehicle financing, regional business banking, investment products, to individual personal consumers. Indeed, the bank involves in the provision of working capital solutions, cash transactions banking, depositing services, trade financing, clearing services, international payments and risk management services to the consumers.
Cash Flow Statement Analysis
After evaluating the cash flow statement of the organization horizontally, it is evident that there is a percentage change in several activities concerning or related to the present year as opposed to the past three years. The financial statement horizontal analysis of the financial statements is very important in knowing the percentage and the amount of change that is attained by the corporations in the current year as opposed of the previous years. Based on the change of performance of the organization, this can be evaluated easily. After the analysis the cash flow statement of ANZ Bank using horizontal analysis it can be established that ANZ Bank performs better in terms of cash position as opposed to the other players in the industry. After observing the cash and cash equivalents it is evident that ANZ Bank has suffered less impact as compared to the other players in the industry. However, the operating activities indicates that the bank is performing poorer than the competitors.
In the Cash flow, the listed values are net revenue, changes alterations on reunite net income, depreciation on amortization, gain on equipment sale, accounts receivables increased value, inventory reduction, accounts payable upsurge, income tax payable reduction. These listed values represents the amount of Net Cash Provided By Operating Activities (Chuang, & Hu, 2015). On the Investment Activities side, it contains the sale of equipment resulting to the Net Cash used for Investing activities. On the Financing Activities side the cash flow contains the Proceeds from long-term borrowing and Net Cash provided that is used for finance. Cash flow is one of the best way that can be used by an investor in evaluating and understanding the net cash flow that a company is contributing or generating.
Figure 1: Cash flow Chart, Source: https://www.wallstreetmojo.com/cash-flow-analysis/Cash Flow from Operations
Despite the fact that the Net Income of ANZ Bank in 2015 was $1,468 million the Operations Cash flow is in line with the past. A closer look and evaluation indicates that the Operations from other countries contributed or resulted to $1,904 million in 2016. This value was not present in 2014 and 2015 without this values the Cash Flow from Operations in Colgate would not be that appealing.
CASH Flow from Investment Activities
Apart from Operations, the organization invested in great amount of assets that led to the provision of higher more returns. One needs to establish or evaluated amount of gain or loss and cashless activities established during that dated so that one can take them into description while determining the amount of net cash influx. The value of net cash inflow that arises from investment activities apart from cash also leads to the provision of acquiring loans. Here the organization need to add back the losses if there are any even though they were selling the long term possessions and the marketable sanctuaries as these loans should be additional hind since there exists no amount of cash outflow from this loss. Then, deduct any amount of profit deducted since there is no any amount of inflowing cash from the profit that the organization has established. Cash Flow analysis of the organization from the investments activities stood at -760 million in the year 2015 as opposed to -870 million in the year 2014 (Bank, A. N. Z. 2016). The capital expenditure was -690 million in the year 2015 as opposed to -760 million in the year 2014 (Chuang, & Hu, 2015). Equally, the organization proceeds were $570 million arising from the sale of investments and marketable securities. In addition, the organization received $240 million out of the sale of subsidiaries. Investment activities arose from cash capital expenditures that incorporated the lease hold improvements, software internal use and the development of websites, other company investments, outlay of cash and intellectual property rights, marketable maturities purchase amounting to -9.10 billion in 2016 unlike the 2015 value of -6.8 Billion.
Cash Flow from Financing Activities
Financing activities cash arose from cash outflows as a result of the Principal long term debts repayments and other obligations associated with financial and capital assets leases. The amount of cash flow from Financial Activities was -$3.1 Billion in the year 2016 and 2015 value of -$4.71 Billion.
Notably, ANZ was involved in purchasing back the issued shares that falls under the cash flow analysis. The repayment and borrowing of loans in the long term or short term including bonds and notes need to be included in the financing activities. One needs also to incorporate the paid dividend if there is any. However, one needs to be considerate in making sure that one does not include the amounts of accrued liabilities and accounts payable since they are considered as to be taken back in the amount of net cash flow from the operating activities. The financing activities remained stable for the years 2013, 2014 and 2015. The principle repayment of debt remained -8.79 million in 2015 while the issuance remained at $9,704 million.
OTHER COMPREHENSIVE INCOME STATEMENT
The main purpose of income statement is to connote the detailed income statement where one needs to incorporate some income from other sources alongside the main purpose and business functional operations. For the Comprehensive income statement, one can denote the major primary components like net income or loss from the company’s income statement including any other net taxes Comprehensive Income. However, from the Bank’s Comprehensive Income Statement, the translation gains and losses arising from foreign currencies does not follow in through in the income statement. Thus, these are the items that need to be incorporated in the Comprehensive Income Statement. Therefore, the cumulative foreign translation of these currencies adjustments for ANZ Corporation is 121 million. Notably, Pension and post retirement losses and gains are not included in the Comprehensive Income Statement (Gyulai, & Sz?cs, 2017).
Figure 4: Company’s Profitability Ratios
In the evaluation and analysis of the income statement through horizontal and vertical analysis method that can be settled that the amount of profitability value and position of ANZ bank is far better than that of other banks. Therefore, it is evident that the figures are increasing the amount of net profit of ANZ Bank from the years 2013 to 2015. Evidently, there is the presence increased to value net revenue by 6.21% in ANZ Bank. However, the bank the amount of net profit increased by a margin of 12% as opposed to an increase of 8.91% industrial average. This is an indication that ANZ has a better financial position as opposed to other banks. However, the amount of gross income remains to be equal as the amount of net revenue since there were no any cost of goods sold encountered at that time. In comparison, the operating profits of other banks were higher leading to increased net profit as compared to ANZ Bank. This is an indication that other banks have better operating positions as compared to ANZ Bank.
Accordingly, the vertical analysis indicates that each of the components in the financial statements or income statement stands as a component percentage of the initial base figure. In this regard, the vertical analysis of the income statement indicates that the sales figure was used as the base figure compared to other items and are evaluated as sales percentage. The income statement vertical analysis is utilized for comparing inter-company evaluation when these companies have the same size. In comparison, the income statements of these banks through vertical analysis indicates that that the net income percentage of other banks is better than that of ANZ (Omar et al. 2014). Notably, the percentage of net operating income to the value of sales of other banks was better to that of ANZ.
The items that are reported in the income statement includes; interest income, interest expenses, amount of net income, share of associates profit, operating income. The other items in this list includes operating expenses, credit impairment charges, profit before credit impairment, profit before income tax, profit attributed to non-controlling interest, profit attributed to the company’s shareholders, earnings per ordinary shares, and dividends per ordinary shares (Chuang, & Hu, 2015).
ANZ Bank Financial Income Statement. Source: www.shareholder.anz.com
Figure 2: ANZ Profitability Ratios. Source: www.investing.com
Figure 3: ANZ 5 Year Income Statement Analysis
Evidently, some items are missing in the Comprehensive Income statement, the none-key items are not included at the underlying profit attributed to the presently ongoing activities within the business. Most of these adjustments are determined and established on a constant basis and made at the prior years. Some of these adjustments are made to arrive at the underlying profits that is incorporated as the statutory profit that is subjected to the Group’s A statutory audit opinion. Besides, there are some underlying profits that are normally not audited. But, the external auditor need to inform the Audit Committee regarding some of these adjustments and thus offer a presentation depending on the guidelines that is offered and released by the Australian Institute (FINSIA) after being determined on a consistent basis even those that are made in some years before.
ACCOUNTING FOR CORPORATE INCOME TAX
Presently, the government announced an increase in taxation aimed at addressing the challenges that faces the economy. Some of the measures that the government takes includes raising of national savings and the population that is ageing. The income tax expenses for the corporation was 2458 for the year 2016, 7507 million in 2015, 5,687 for 2016 and 7,307 million for 2015. Essentially, it is important for Banks to account for income taxes aimed at recognizing tax liabilities that is then estimated to be tax expenses and income tax liability in the present financial year.
The revenues gained are taxable since they are recognized in the financial statements like the allowances for doubtful taxes included in the tax deductible and other receivables like the bad debts. Losses and expenses remain the same. Tax rate calculated from the income statements since the income statements provide a quick overview of the organization’s financial performance. In the income statement with the revenues, after-tax earnings, gross margins including the costs of overheads offering a real rate of taxation percentage in the income statement. Before, the net income calculations, expenses from taxes is included of course figuring out the effective tax rate from the income statement. The effective tax rate remains a ratio that is applied as an indicator of profitability of a corporation that fluctuates at some rates.
ANZ encountered deferred tax assets that was reported in the income statement and financial statement that is less than the amount of income taxable like some pre-paid taxes representing the expected reductions in the taxes expected in future. The Deferred tax Liability comes in place ones the reported income is more than the income taxable indicating the amount of additional extra taxes reported and that one to be paid. The company has more than $6,708 million in the amount of deferred tax assets that is adjusted inside the invested capital for the year 2016 attributed to the future employee obligation benefits not paid but recorded and not taxed yet.
Conclusion
Financial analysis is an important too; in financial statements aimed at establishing the financial performance of a bank just like indicated above. In this regard, the investor shall be able to review how the company has transformed and developed itself on the basis of how they make decisions. From the analysis of ANZ cash Flow, Comprehensive Income Statement and Taxation, the bank is in a very stable position as compared to the rest in the industry thus translating to this high amount of profit margin.
References
Bank, A. N. Z. (2016). The ANZ Business Barometer: M?ori Business Key Insights Report. ANZ’s survey Partners: The Federation of M?ori Authorities, Te Tumu Paeroa, Poutama Trust, and NZ M?ori Tourism.
Chuang, C. C., ; Hu, F. L. (2015). Technology strategy-innovating for growth of ANZ Bank. International Review of Management and Business Research, 4(3), 682.
Gyulai, L., ; Sz?cs, G. (2017). In our study we are focusing on the average profitability of the Hungarian commercial banking sector from 2005 to 2014 with special attention on the effects of the financial crisis. In our globalized world the unavoidable question is how the profitability of our banks fits the same values of the North-American and European, especially the V4 commercial banks. In order to find a well-established answer we carried on a financial ratio analysis with the help of the Bankscope database, which was extended …. Volume of Management, Enterprise and Benchmarking in the 21st century IV, 97-109.
Omar, N., Koya, R. K., Sanusi, Z. M., ; Shafie, N. A. (2014). Financial statement fraud: A case examination using Beneish Model and ratio analysis. International Journal of Trade, Economics and Finance, 5(2), 184.
Uechi, L., Akutsu, T., Stanley, H. E., Marcus, A. J., ; Kenett, D. Y. (2015). Sector dominance ratio analysis of financial markets. Physica A: Statistical Mechanics and its Applications, 421, 488-509.
