Essay about Financial Analysis of Anz and Nab - 2581 Words

|–– | |[Financial Analysis of ANZ and NAB | | Group Assignment | | | | | | | |†¦show more content†¦However, a lower P/E ratio can also be generated with one-off abnormal earnings (Phan, 2011). In 2008, share prices dropped mainly due to the US sub-prime crisis, which started in 2007 (Lixi, 2008). This had a huge impact on the P/E ratio for 2008, which is slightly below the threshold of 10 times. The P/E ratio for ANZ was higher than NAB in 2009 and there was lesser fluctuation in ratio. Share prices tend to rise with improved economic conditions, and with stimulus packages being distributed all over the world, there was uplift in the global economy, hence driving share prices (Larsen, 2012). However, falling earnings over 2009 caused both P/E ratios to rise. NAB’s P/E ratio increased a significant amount and overtook ANZ’s. Over the 5 years, NAB’s P/E ratio fluctuation is observed to be consistently higher than ANZ’s. Moreover, NAB’s higher P/E ratio might be due to investors’ high expectations, which were not supported by earnings. The P/E ratios returned to a more normal course in 2010 due to improved earnings (See Appendices 1). In 2011, earnings were higher than in 2010 but the drop in market share price caused P/E ratio to decrease again. This drop might be linked to concerns over the uncertainties around sovereign debt in Europe. 2) Return on Equity (ROE) According to Forbes,Show MoreRelatedEvaluation Of The Current Liquidity Management Essay2081 Words   |  9 PagesExecutive Summary This report provides analysis of the current liquidity management in banks. Methods of evaluation include peer, trend and horizontal analysis such as ratios, principle and regulations. In the first part, we analyze the differences between liability liquidity management and asset liquidity management and explore the features an effective liquidity management system should possess. 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