The financial statements of New Zealand 1970-2011

The construction and analysis of financial statements for an accounting entity allows its stakeholders to assess its financial position and performance. This is the case for individuals, corporations and countries. Baydoun et al. (2015) proposed a simplified method in constructing an income statement, a balance sheet and cash flow statement. This study extends their work by modifying and applying their one sector model to estimate financial statements for New Zealand and assess its economic performance between 1970 and 2011. The performance assessment is conducted based upon financial ratios. The findings from the analysis will add to the body of knowledge explaining New Zealand's economic performance and the factors that are influential to the New Zealand economy. The significant findings of the study are as follows: 1) there has been gradual but economically significant decrease in the rate of return ratios of the New Zealand economy. The factors responsible for the decrease in New Zealand's return ratios are: 1) asset utilisation inefficiency; 2) a significant increase in the gearing ratio of the New Zealand economy, indicating increased financial risk; 3) consumption levels that mitigate against improvements in the return and risk profile of the New Zealand economy.