Power Of Finance Accounting Harmonization - MyAssignmenthelp.com

Question: Discuss about the Power Of Finance Accounting Harmonization. Answer: Analysis over financial reports of a company is a financial analysis process which is done by the financial analyst, chief financial officers, investors and other stakeholders of the company to evaluate the financial performance of the company. Financial reports of an organization include income statement, cash flow analysis and balance sheet. This method assists the organization to make better decision about the profit, performance and the position of the company (Warren, Reeve Duchac, 2011). Further, the analysis over the financial reports of the company is usually done by the financial analyst to evaluate the changes into the profits, performance and the position of the company. For understanding the financial analysis process in a better way, financial statements of Westpac Banking Corporation Australia has been evaluated. Company overview: Westpac Banking Corporation is normally known as Westpac. It is an Australian bank which offers financial services to its clients. Headquarter of the company is in Westpac place, Sydney. This bank is one of top 5 largest banks in Australia. Around 13.1 million people are entertained by this bank and it has the largest branch network in Australia. The total revenue of the company is continuously increasing and expressing about a better financial position of the company (Turner Thayer, 2001). Further, this bank mainly offers the services related to finance insurance, corporate banking, consumer banking, investment management, investment banking, credit cards, global wealth management and mortgages. Financial statements of the company: Financial statements of an organization include income statement, cash flow analysis and balance sheet. Financial statement analysis is a process which evaluates about the financial position of an organization. For this reports, financial statements of Westpac Banking Corporation has been analyzed. Through the evaluation over the financial statement of the company, it has been analyzed that the various changes have taken place into the performance of the company in last 3 years (Dixon and Monk, 2009). The income statement of the company expresses that the few negative changes have taken place into the profits of the company in 2016 in context with 2015. Further, the balance sheet and cash flow statement of the company expresses that the company is performing well in the industry. Ratio analysis: For analyzing the financial statements in a better way, ratio analysis study has been done. Ratio analysis is one of the method of financial analysis which express about the various financial positions and the performance of an organization. Various ratios such as profitability ratios, efficiency ratios, liquidity ratios, solvency ratios etc have been calculated to reach over a conclusion. Profitability ratios of the company explain that the profit position of the company is quite good (Weygandt, Kimmel Kieso, 2009). Net profit margin of the company is 23.37%, 24.78% and 23.44% in 2016, 2015 and 2014 respectively. It expresses that the profit margin has been reduced in 2016 but still, it is better. Further, the return on equity has also been evaluated and it has been found that the net profit of the company has been reduced in context of equity in 2016. Further, liquidity ratios have been calculated and the current ratio and quick ratios of the company has been measured for last 3 years. Current ratios and quick ratios of the company explain that the bank is required to enhance the level of the current assets in comparison with current liability to manage the short term debt obligation position. The position and the performance of the company in terms of managing the current assets and liabilities are not at all good (Hillier, Grinblatt Titman, 2011). Further, the solvency and efficiency position of the company has also been analyzed to evaluate the performance of the company. Through the calculations, it has been evaluated that the capital structure position of the company is not competitive (Sadler, 2003). This company is required to reduce the level of the debt in terms of equity to make optimal capital structure (Gapenski, 2008). Further, the efficiency ratios of the company expresses that the company is required to reduce the level of the payment collection period so that the working capital of the company could be managed in a better way and at the same time, the cost of the company could also be controlled. Horizontal analysis: Further, for analyzing the financial statements of the company, horizontal analysis has been done. Horizontal analysis explains about the changes in the financial reports of an organization in context with the last year financial reports. Horizontal analysis is one of the methods of financial analysis which express about the various changes into the financial position of an organization (Stratton, SAS Institute Inc., 2009). Further, it also explains that the changes are in the favour of the company or not. It is helpful for the company to analyze with competitive companies as well. The study of horizontal analysis over income statement of the company depicts that the total income of the company has been reduced by 1.48% from 2015 in 2016. Further, it depicts that the net income of the company has been better from last year by 6.13%. It explains that the position of the company is getting better year by year. More, through the study, it has also been found that the net profit of the company has been lower by 7.17% in 2016. Further, it has also been added through the evaluation part that the company is required to look over the financial performance again and make few changes to enhance the performance (Snyder Davenport, 2013). Further, the study of horizontal analysis over balance sheet of the company depicts that the total assets of the company has been enhanced by 3.33% from 2015 in 2016. Further, it depicts that the total liabilities of the company has been enhanced from last year by 2.90%. It explains that the position of the company is getting better year by year. More, through the study, it has also been found that the total equity of the company has been enhanced by 9.46% in 2016 (Marinovic, 2013). Further, it has also been added through the evaluation part that the company is required to look over the financial performance again and make few changes to enhance the performance. Vertical analysis: Further, for analyzing the financial statements of the company, vertical analysis has been done. Vertical analysis explains about the changes in the financial reports of an organization in context with the basic figures such as total income, total assets and total equity and liabilities of the company. Vertical analysis is one of the methods of financial analysis which express about the various changes into the financial position of an organization (Larcker, Richardson Tuna, 2007). Further, it also explains that the changes are in the favour of the company or not. It is helpful for the company to analyze with competitive companies as well. The study of vertical analysis over income statement of the company depicts that the loans and leases are the main operations of the company through which income has been generated by the company. Further, it depicts that the total expenses level of the company has been higher from last year in current year. It explains that the position of the company is getting bad and company is required to make few changes for its betterment. More, through the study, it has also been found that the net profit of the company has been lower by few % from 2015 in 2016 (Kinney Rajborn, 2010). Further, it has also been added through the evaluation part that the company is required to look over the financial performance again and make few changes to enhance the performance. Further, the study of vertical analysis over balance sheet of the company depicts that the loans are the main assets of the company which has huge part of assets of the company. Further, it depicts that the total liabilities of the company is almost similar with the total liabilities of 2015. It explains that the position of the company is almost similar in current year in comparison of last 2 years. More, through the study, it has also been found that the total equity of the company is also similar in 2016, 2015 and 2014 (Jiashu, 2009). Further, it has also been added through the evaluation part that the company is required to look over the financial performance again and make few changes to enhance the performance. Cash conversion cycle: Cash conversion cycle explains about the total cash position of the company. Through the analysis over cash conversion cycle of the company, it has been analyzed that the company is suggested to reduce the days of receivable collection days and the patent days are quite competitive of the company. It would help the company to carry the business with lower working capital (Kieso, Weygandt Warfield, 2010). Competitors analysis: Further, the financial performance of Westpac Banking Corporation has been analyzed in context with the financial performance of its competitive company, national bank of Australia. Through the study over the national bank of Australia, it has been found that the performance of Westpac Banking Corporation is quite better than the performance of National bank of Australia. National bank of Australias profit position is quite lower than the Westpac Banking Corporation (Weygandt, Kimmel Kieso, 2015). Further, it has also been found that the growth rate of Westpac Banking Corporation is quite higher. Thus, through this analysis, it has been found that this company is suggested to look over few positive policies of National Bank of Australia to manage the performance and the position of the company. Further, it has also been found that the Westpac Banking Corporation is performing way better than the performance of national bank of Australia. Conclusion: To conclude, this company is performing very well in the market. The financial analysis of the company explains that the financial performance of the company is quite better in last years. The changes have been evaluated into the financial statements of the company and it has been found that the position of the company is quite better. Though, the ratio analysis expresses that the company is required to make few changes into its capital structure to make an optimal capitals structure. Further, it has also been found that the current assets must be enhanced by the company to maintain the liquidity position and lastly, the efficiency position of the company is better. Thus the financial performance 0of the company is way better References: Dixon, A.D. and Monk, A.H., (2009). The power of finance: accounting harmonization's effect on pension provision.Journal of Economic Geography,9(5), pp.619-639. Gapenski, L.C., (2008).Healthcare finance: an introduction to accounting and financial management. Health Administration Press. Hillier, D., Grinblatt, M. and Titman, S., (2011).Financial markets and corporate strategy. McGraw Hill. Jiashu, G., (2009). 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