Financial System Objectives and Structure of Australian Financial System

KNOWLEDGE TEST

Answer the following questions
Question 1: What are the main objectives of financial system? Write your answer in 50-70 words.
Financial system is defined as set of various institutions which allow for exchange of
essential funds. Following are the objective of financial system which define below:
Allocation of resource: Financial system act as regulator of monetary resource thus they
allocate funds according to the requirement of different sectors.
Mobilize saving: Banks, financial institutions an intermediary focus n mobilize saving of
investor in effective manner.
Provid credit assessment: It includes different types of financial institutions which
developed for the purpose of prove financial assistance to small as well as large organization for
run their business successfully.
Pool funds & risk: Financial system focus on diversify risk in by formulate different
structure of portfolio.
Question 2: Elaborate the Structure of the Australian Financial System? Write your answer in 50-70 words.
Australian Financial system is run for settle ownership claim and transfer funds from one
institution to other. Following are the element of Australian Financial system:
Authorized deposit taking institution
Bank: Institution which provides lending and borrowing facility to individual business entities.
Insurance: Institution which proved life as well as general insurance services.
Financial market: It includes, primary and secondary market which dealing in short a swell as long
term securities.
Payment system: It consider, EFTPOS, cash, cheque & high payment system.
Secure vehicle: It includes, organization which provides loan to business entities, these includes,
commercial loan, mortgage, assets backed bonds and trade receivables.
Question 3: How to Forecast Financial Statements? Write your answer in 50-70 words.

Forecasting financial system is difficult process as it require quantitative understand for
recognize performance of financial statement. By formulation of income statement as well as
balance sheet, financial system can be forecast.
These includes, sales forecasting, measuring of dividend rate by calculating value of
dividend ratio as well as retain earning ratio. For finding out internal as well as external funds
source balance sheet has been formulated which showcase future expected, assets and liabilities of
institutions as well as income statement are use for predict future expenditure and rate of generate
profit.
Question 4: Explain the difference between budget and forecast? Write your answer in 50-70 words.
Budget is document which express financial plan and result in numerical or quantitative
terms on the other side, forecasting estimate future business outcomes by analysis past data.
Budget is define sale target which organization want to attain in future and on the other side,
forecasting is predict profit value which will be achieve in future.