Financial Analysis and Decision making-Lloyd TBS

•    Financial Analysis and Decision making-Lloyd TBS
Financial analysis
Financial analysis involves selection, assessment and interpretation of financial statement to ascertain viability, stability and profitability of the organization. The financial analyst focuses on the income statement, balance sheet and cash flow of the organization to predict on how the future of the organization will look like. The interpreted financial report is given to the top management of the organization for decision making.
Lloyds TSB bank is a financial service provider established in UK in 1995 as a retail banking service institution.  It presents its annual reports through the consolidated balance sheet, income statement, statement of changes in equity and consolidated cash flow statement.  Like other banks, it has wide rage of products and services and these makes the financial statement complex. Here is the analysis of Lloyds TBS bank financial annual reports for the financial year 2007.

The Balance sheet
The bank had a total asset base of 353,346 million pounds up from 343, 598 million pounds in the year 2006. The highest asset came from loan and advances to customers of 209, 814 million pounds, which was more than half of the total assets value.  The bank held 4,330 million pound in the central bank reserves as part of its assets. A substantive amount of assets came from trading and disposal of assets at fair value and from the loans the bank extended to other commercial banks.
The total value of resources that the bank owned outsiders was 340,921 million pounds in the year 2007 as compared to 332,091 in the year 2006. Approximate half of this amount came from deposits by customer under the custody of the bank.  The proprietors and the shareholders claimed a total amount of 12, 425 million pounds from the bank as total equity.
There’s also an article on Lloyd TBS Income and Cash-flow statements
 
The Income and Cash flow statements of Lloyd TSB

The income statement
The profit of the bank before tax was 4,000 million pound down from 4,248 million pounds in the year 2006. Despite the decline in pretax profits, the net profit for the year 2007 was more than that of 2006 due the lesser amount of tax paid by the bank in 2007.  In the course of trading, the bank had realized 5,139 million pounds as surplus, which had slightly declined compared to the year 2006.
The Lloyds TSB bank incurred expenses in the course of offering its services, at the same time relative more revenues were collected. The bank therefore realized 3,321 million pounds as profit for the year.

The cash flow
The cash flow revealed the inflow and outflow of cash from the bank as follows. From the operating activities, there was a net cash flow of 10,484 million pounds up from 6,079 in the year 2006.  The pretax profits and cash flow in operating liability forming the inflow of cash while cash outflow came from the tax paid and the cash flow in operating assets.

Net cash outflow in investing activities amounted to 1,083, down from 4,893 million pounds in the year 2006. This shows the bank reduced its investment in the year 2007.
The bank participated in various financing activities and this gave a net cash utility of 3,030 million pounds up from 2,353 in the year 2006. Dividends paid formed bigger part of the cash out flow in the financial activities.  At the end of the year 2007, the bank had cash and cash equivalents totaling to 31,891 million pounds up from 25,438 at the end of year 2006.

References
OECD. (2008). Bank Profitability: Financial statements of banks 2007. November 23, 2010. from http://www. oecd.org/publishing/cprrigenda.
Vance, D. E. (2003). Financial analysis and decision making:  tools and technique to solve financial problems and make effective business decisions. USA. McGraw Hill.