Question:
Facts:
An accountant is responsible for providing high level financial advice to their clients. The banking Royal Commission in Australia shook up this lucrative industry and gave accountants the opportunity to provide high level analytical advice to the banks themselves as well as shareholders/customers/potential investors.
Two large banks within Australia include:
National Australia Bank (ASX: NAB)
Website: www.nab.com.auCommonwealth Bank (ASX: CBA)Website: www.cba.com.au
You have just formed a small Accounting firm. You have been approached by Ms. Lewis, a 65-year-old retired Doctor who is looking to invest $1 million dollars to help support her retirement income. She has identified the following potential investments: NAB and CBA because of their strong dividend yield returns and your task is to make a recommendation on which would be the best investment for Ms Lewis’ situation.
Requirement:
Utilise the company website, annual reports, media searches and other financial information (from Library Databases such as DatAnalysis Premium) to substantiate your recommendation.
The referenced report must include the following with each section clear underlined:
1) Brief introduction and Background
Should describe the purpose of the task, the client you are preparing the report for and what is key about the client that will impact your overall recommendation (no references are necessary).
2) Ratio comparison and brief reasoning
Using DatAnalysis Premium through the Library website, choose the most appropriate two ratios per category that will help you to make your recommendation. State their amounts for the financial years ending - 2016, 2017, 2018 per the following categories. Briefly state why you have chosen those two ratios and their amounts. The categories are as follows:
a) Profitability
b) Efficiency
c) Gearing
3) Other information
What is an important other factor/item of information that will help you to make your recommendation (can come from any source). State what it is and give a brief reason as to why you chose these (with references).
4) Analysis
Analyse the trend and discuss the ratios in the context of the report requirements.
5) Final Recommendation
Provide your final recommendation of which bank Ms Lewis should invest her $10 million in. Give a brief justification as to why you have made this stock recommendation and provide an overall conclusion for Ms. Lewis.
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