Business Finance Assignment 2022

Running head: BUSINESS FINANCE
Business Finance
Name of the Student:
Name of the University:
Author’s Note

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BUSINESS FINANCE
Table of Contents
Brief description of AMP:...............................................................................................................2
Explaining the purposes of financial statement:..............................................................................2
Analysing the current operations of AMP using the financial statements, while analysing its
supply and demand factors:.............................................................................................................3
Calculating the rate of return for S&P/ASX 200:............................................................................9
Calculating the required rate of return using CAPM:......................................................................9
Calculating the value of AMP as per the Dividend Valuation Model:..........................................10
Drawing the graph of AMP, while analysing the results:..............................................................11
Identifying the areas of cash flows where the firms need to pay attention:..................................12
Suggesting relevant investment and financing strategies for improving the cash flows position: 13
Justifying the recommendation in terms of shareholder’s wealth maximisation:.........................13
References and Bibliography:........................................................................................................15

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BUSINESS FINANCE
Brief description of AMP:
AMP Limited is one of the financial service companies that operate in New Zealand and
Australia while providing facilities such as investment products, insurance, superannuation,
banking products and financial advice. The company has been operating since 1849, where
majority of the services is related to finance and financial products provided to individuals,
institutions and companies. The Australian Mutual Provided Fund society was demutualised and
listed in Australian and New Zealand index is 1998, as it became a public limited organisation.
AMP has been four major business areas, which are advice and Banking, Insurance and
Superannuation, Customer solution and AMP Capital1. The diverse operations of the
organisation have mainly allowed the company to secure their relevant investments in the
Australian and international market to generate high level of income from investment. Therefore,
the organisation main aims to provide financial service that could increase investment scope.
Explaining the purposes of financial statement:
The main purpose of the financial statement analysis is to understand the current and past
financial data of the organisation, as it helps in depicting a clear picture of the company financial
health. Therefore, an investor by using the financial statement is able to detect the historical
performance of the company and anticipate the level of improvement that would be conducted in
future. Thus, the financial statement of the organisation analyses three specific positions, which
can be used for understanding future trajectory of the company. The financial statement
evaluates the profitability, financial position and cash flow conditions of the organisation for
1 Asx.com.au. “Asx.com.au”. 2019. Asx.Com.Au. Accessed October 3 2019.
https://www.asx.com.au/asx/share-price-research/company/AMP.

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BUSINESS FINANCE
detecting the current solvency levels of the company2. Thus, the analysis of the profit and loss
statement helps in understanding the growth in revenues and net profits of the company, while
analysing the overall expenses that have been conducted for achieving the targeted profit levels.
Therefore, the information in the balance sheet is mainly used for understanding the level of
improvements, which has obtained in form of assets over the period of time. In addition, the
financial statement is also used for fuelling the financial ratios, which helps in understanding the
financial performance of the company, while analysing the historical performance.
Analysing the current operations of AMP using the financial statements, while analysing its
supply and demand factors:
The financial performance of the AMP has can be evaluated for analysing the financial
statements of the organisation, as it would help in determining the appropriate positions of the
company. The current operations of AMP can be evaluated by analysing the financial report such
as Balance Sheet, Profit & loss statement and Cash flow statement, which are depicted as
follows.
Balance Sheet:
2 Beisland, Leif Atle. "Equity valuation in practice: The influence of net financial expenses."
In Accounting forum, vol. 38, no. 2, pp. 122-131. Taylor & Francis, 2014.