Investment Report on Westpac & Commonwealth Bank

The Australian economy is playing a crucial role in terms of global economy. Based on the government’s analysis, Australia has been placed at the top 20 for the world’s largest economy. This caused a lot of economists to pay attention to Australia’s performance. Economists use macroeconomic objectives to analyse the national economy. This essay will focus on two macroeconomic objectives, how they are measured, and how they relate to each other. Furthermore, it will also discuss Australia’s performance over the past three years (2013-2015) and predictions concerning Australia’s performance in terms of these objectives in 2016.

Unsurprisingly, interest rate hikes dominated the front page. Westpac, Australia's second largest bank, recently hiked rates 0.2 percent in a cynical ploy to dampen exploding property prices. In reality, the costs of doing business are simply being offset by taxpayer money, as Westpac seeks to build up its capital reserves on the backs

19. Each stock’s rate of return in a given year consists of a dividend yield (which might be zero) plus a capital gains yield (which could be positive, negative, or zero). Such returns are calculated for all the stocks in the S&P 500. A weighted average of those returns, using each stock’s total market value, is then calculated, and that average return is often used as an indicator of the “return on the market.”

Ratio analysis will be used to measure the profitability, liquidity and efficiency of the named business and to analyse the performance of the business using ratio analysis.

The Reserve Bank also currently faces challenges in effective decision-making regarding the careful control of the housing bubble Australia is currently experiencing through strategic changes to Interest rates, ensuring modest yet sustainable growth. The Reserve Bank also needs to consider the future of the Australian economy, due to the new two-speed economy caused by drops in Chinese demand for WA’s resources, being countered by an overall increase in infrastructure investment in NSW. Interest rate decisions must be in the best interest of both states’

Whereas the investors primarily use the Return on investment ratio to monitor how well the company is utilizing their investment.

Rate of Return on equity measures a corporation 's profitability by revealing how much profit a company generates with the money shareholders have invested. It indicates how efficiently the business uses its investment funds. For Tesco, Rate of Return on Shareholders’ Fund has increased from 13.85% in 2004 to 14.91% in 2009. This shows an improvement of 1.06% in five years period. When one examines the Sainsbury’s Rate of Return on Shareholders’ Fund, there is an increase from 7.76% to 8.36%. There is a 0.6% growth in the Rate of Return on Shareholders’ Fund. In comparison with Tesco, Sainsbury’s Rate of Return on Shareholders’ Fund is lower. Shareholders earned 13.85% from their investment (measured in book value

Alliance Pty Ltd requested Tafey Financial Services to analyse the financial performance of certain public companies listed on the Australian Stock Exchange (ASX) with a view to invest in one of these companies. The details of the scope of work are contained in the signed letter of engagement.

However, a lower P/E ratio can also be generated with one-off abnormal earnings (Phan, 2011).

The main issue in the article is the decline of the Australian dollar against the US dollar. Upon perusing it is understood that the Australian dollar is steadily declining during the current year. The economists said that this is due to the fall of commodity prices globally. The Australia is agriculture and resource based economy, and the Australian dollar heavily depends on commodity price and terms of trade. According to the IMF the reason for the falling commodity prices is the slowing of demand globally. It’s mentioned that Australia, Canada and New Zealand are the three of the worst performing currencies of 2015. In order to stimulate economy the Reserve Bank of Australia is planning to cut its rate to 1.5% before March 2016 to deal with lower GDP and low domestic demand that is increasing unemployment. Mining investment has slowed down, which reduced the value of iron ore, causing Capital imports to fall in Australia. If the dollar declines too far, then Australia’s import will be reduced and this is difficult for businesses. Another nail in the coffin for the Australian economy is the plan to raise the rates of UK and US which could further decline the value of AUD.

Financial ratio analysis is a critical management tool that provides information on the organizational performance over a period of time. The management applies the ratios to check on the effectiveness of the strategies they employed. On the other hand, the owners and shareholders use the financial ratios to determine the effectiveness of the management in running the business. In addition the ratios can be applied to compare the company’s performance with its competitors. The financial ratios include current ratio, operating profit margin, return on assets, return on equity and debt to equity ratio.

(RBA)The S&P/ASX 200 reached a dramatically low point of 3,120 point,with share prices of banks sharply declined. Australian households cut off their income on durables, such as furniture and cars, postponed the replacement and used their existing furniture or cars instead. Given the depreciation of US dollar, the Australian dollar also depreciated rapidly as the crisis expanded, decreasing by over 30 per cent from its peak.(RBA) The depreciation of the Australian dollar has affected international transactions,in particular, the increase in export. Under the circumstances, the Australian government has prompted RBA to enhance liquidity. As the policy progressed, the Australian dollar has recovered since 2009, reflecting the prudential regulations and the resilience of the Australian

After the deepest recession in the world economy following the Global Financial Crisis, the whole economy operated under a loose monetary policy. The starter was the three-round quantitative easing announced by the US Federal Reserve, and then followed by the European Central Bank and the bank of England. Despite the QE, most central banks started reduction of interest rate. On Mar 3rd, the Reserve Bank of Australia announced a cut in the cash rate by 25 basis points to 1.75 per becoming the lowest cash rate in history. The purpose of this research essay is to analyze and discuss how such monetary policy will influence the Australia economy. The focus of my analysis will be divided into three areas, the impact on inflation

The main issue in the article is the decline of Australian dollar against the US dollar. Upon perusing it is understood that the Australian dollar is steadily declining during the current year. The economists said that this is due to the fall of commodity prices globally. The Australia is agriculture and resource based economy, and the Australian dollar heavily depends on commodity price and terms of trade. According to IMF the reason for the falling commodity prices is the slowing of demand globally. It’s mentioned that Australia, Canada and New Zealand are the three of the worst performing currencies of 2015. In order to stimulate economy the Reserve Bank of Australia is planning to cut its rate to 1.5% before March 2016 to deal with lower GDP and low domestic demand that is increasing unemployment. Mining investment has slowed down which reduced the value of iron ore causing Capital imports to fall in Australia. If the dollar declines too far then Australia’s import will be reduced and this is difficult for businesses. Another nail in the coffin for Australian economy is the plan to raise the rates of UK and US which could further decline the value of AUD.

To increase and maximize the wealth/value of shareholders, it is necessary that the company is competitive in their market and can reliably “earn a considerable return on its investments above their cost of capital” (Doyle, 2000). The increasing rates of return of well performing companies attract new investors who invest money to become shareholders. These outside funds from investors are essential for growth of businesses and the expansion into new markets. Measurements of generated shareholder returns over a certain time period deliver the company useful information on whether their objectives have been achieved or should be new adjusted (Atrill, 2009).