Financial ratio and Financial Institution

I woke up this morning and as i generally do, i looked at the business news on ABC, and Westpac being in news i could not help but reading more into it(a close relative working for the bank; always makes me curious when the name pops up); so as Westpac releases its financial results showing same profits as last year this time, the investors as ABC news put it "ditched the second biggest home lender."

The accountant in me could not help but prod more into what is it investors generally prefer as a measure of its financial performance. While financial institutions prefer various methods to measure its financial performance, ranging from price-earning ratio, dividend payout ratio, dividend yield ratio and many many more; as seen from the Wespac Interim results 2015 notes, it uses the "cash earning per share" ratio to measure its earnings.

Now the reason why the financial institutions use the cash earning per share ratio is that as the formula suggest: 

Cash EPS=          Operating Cash flow

                      Ordinary shares outstanding

As we know operating cash flow is that amount which is actually generated when a particular amount is invested in the business. So from my understanding cash EPS would give the most fair idea to the investors about the earnings per share, also because it considers the diluted number of shares including any convertible share warrants and share options. Investors would be disappointed to see that Westpac shares would not be earning much more than last year interim results.

Now for a new investor like me who is thinking of investing in a financial institution it would be helpful to know the interim results of other banks and then compare the Cash EPS of all of them.

Working overseas? Here's what comes along!

Since a few days i have been going into reading up about what if you go to a different country for work for an extended period of time and you extend your work holiday(as in more work and a bit of holiday) in that particular country, how would the tax dragons look at you?

So ATO first of all establishes whether you are a resident for tax purpose or not, and the questions it asks to establish that are 1) Whether you live in Australia 2) Whether you are a resident returning back to Australia 3) Whether you have stayed or you intend to stay for half the year or more in the land down under<even though in parts> 4) Whether you have social or economic ties with any country other than Australia to determine whether you receive any long term payments from any other country. Looking at these questions if for example Mr. Watson is living in a different country from July 2014 and is there till August 2015 for work, he would still be an Australian resident for tax purpose because now he is back and intends to stay in Australia now on. So only if he was out of Australia for work say from; July 2014 to June 2016; he would be considered a non-resident for tax purpose for the year 2014-15.

Different country, different rules:

Now if tax in one country is a web, it is of course a network of webs when taxes of different countries are considered together. Like if an individual is an Australian resident working overseas temporarily then that person would have to pay the taxes here on the income earned overseas and would get a "foreign income tax offset" from the tax to paid in Australia.

From what i came across in one of the CPA magazines there is no obligation on the foreign government in Hong Kong or Singapore to deduct tax on an ongoing basis and employees pay their own tax at the year end. The tax rates in the US are higher brackets for different categories. Also many countries have tax treaties(Double Taxation Avoidance Agreements) with each other, like Australia has with a few countries including India, UK, US and China. These treaties decide the tax rates for interest, dividend and royalties to be paid and taxed only in any one of these countries, to avoid the foreign tax traps for confused individuals sailing between two countries to earn their bread(okay! a little more than that). This would help avoid being taxed twice in your home country and country where you work.

This is a vast topic with too many possible arenas to look into. Will come back with a new possibility soon.