Economic review federal reserve bank kansas city

MBA403: Financial & Economic Interpretation and Communication Assessment 3: Financial Analysis Report on Commonwealth Bank Prepared By: Chaithanya Chowdary Nellavalli
Student ID: 13809.

Interpretation...............................................................................................................................................2

Profitability.............................................................................................................................................2

Conclusion...................................................................................................................................................4

References...................................................................................................................................................5

Table 2- Financial Performance Indicators

Management	Net Income	$2,920.876

Profitability

In the year 2019, the profits realized were relatively low compared to the years 2020 and 2018, and this is shown from its financial indicators. The decline of the gross profit margin by 2.11%, from 68.25% to 66.14% in 2019, resulted from the company making low sales within the same year. There was also a decline in net profit margin by 4.82%, and this was caused by a decrease in the amount of sales made by the company of the high margin products. A drop in the company’s return on equity ratio by 16.16% signifies that the company’s ability to generate profits from investments made by various stakeholders was also substantially reduced (Kisman & Sawitri, 2019). This trend suggests that the company is becoming incapable of availing high-value shares to its stakeholders.

declined, the vital factor is that the company can meet its obligations over the long-term period.

The company has a high liquidation value, which is evident when its book value per share is considered. During liquidation, shareholders can still be saved from incurring huge losses.

Although the value declined over the year 2019, it always attracts investors. Operating Cash Flow per Share also decreased by 0.1. However, it is above 1. Again, the slight decline resulted from the high expenses met by the company as it tried to expand its services to reach more customers across and outside the country. However, potential investors may be scared away as they may fear risking their funds, hence immediate precautionary measures need to be considered to improve it.

Conclusion

From the analysis of the financial report above, it can be noted that the commonwealth bank has injected vast amounts of revenue into the expansion of its services to customers in different parts of the world. Some of its financial performance indicators are lowering the company's
performance based on how investors view the company's financial status and, thus, their investment decisions. For instance, the company seems to have indulged so much in borrowing as it uses much of its cash in investment practices, affecting its liquidity. In such a case, the company needs to avoid borrowing as much as possible. For instance, to improve its
performance, the company can; lower its expenses, recover all outstanding payments, sell unused assets, consolidate debts, and improve its marketing. This will assist get its services to as many customers as possible in the different parts of the world. In the end, it will improve on its revenues and net-profit and still be able to spend more on financial investments without affecting its financial health.

Nuhiu, A., Hoti, A., and Bektashi, M., 2017. Determinants of commercial banks profitability through analysis of financial performance indicators: evidence from Kosovo. Business: Theory and Practice, 18, pp.160-170
Wilkinson, J, Spong, K & Christensson, J 2010, ‘Financial Stability Reports: How Useful During a Financial Crisis?’, Economic Review - Federal Reserve Bank of Kansas City, vol. 95, no. 1, pp. 41–70.

Appendix