Financial Performance Analysis of AMP Limited and Macquarie Group: A Comparative Study
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This report provides a comprehensive analysis of the financial performance of AMP Limited and Macquarie Group, examining key financial ratios, profit margins, and their overall financial positions. The report aims to assist in making investment decisions based on their performances over the past five years.
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Running head: ACCOUNTING FOR MANAGEMENT
Accounting for Management
Name of the Student:
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Author Note:
Accounting for Management
Name of the Student:
Name of the University:
Author Note:
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1ACCOUNTING FOR MANAGEMENT
Table of Contents
Introduction:....................................................................................................................................3
Discussion:.......................................................................................................................................3
Financial Performance Analysis of AMP Limited:.....................................................................3
Financial Performance Analysis of Macquarie Group:...............................................................5
Financial Position Analysis:........................................................................................................6
Profit margin:...............................................................................................................................7
Liquid ratio:.................................................................................................................................7
Du-Pont analysis:.........................................................................................................................8
Dividend payout ratio:.................................................................................................................9
Key Factors behind fluctuations in AMP’s performance:...............................................................9
Downfall in their Advisory services:...........................................................................................9
Political Factors:........................................................................................................................10
International Expansion:............................................................................................................10
Super Concepts:.........................................................................................................................10
Present Market Situation and Future potentials of AMP Limited:................................................11
Conclusion:....................................................................................................................................13
Table of Contents
Introduction:....................................................................................................................................3
Discussion:.......................................................................................................................................3
Financial Performance Analysis of AMP Limited:.....................................................................3
Financial Performance Analysis of Macquarie Group:...............................................................5
Financial Position Analysis:........................................................................................................6
Profit margin:...............................................................................................................................7
Liquid ratio:.................................................................................................................................7
Du-Pont analysis:.........................................................................................................................8
Dividend payout ratio:.................................................................................................................9
Key Factors behind fluctuations in AMP’s performance:...............................................................9
Downfall in their Advisory services:...........................................................................................9
Political Factors:........................................................................................................................10
International Expansion:............................................................................................................10
Super Concepts:.........................................................................................................................10
Present Market Situation and Future potentials of AMP Limited:................................................11
Conclusion:....................................................................................................................................13
2ACCOUNTING FOR MANAGEMENT
Reference.......................................................................................................................................14
Reference.......................................................................................................................................14
3ACCOUNTING FOR MANAGEMENT
Introduction:
Aim of the report is to analyze two companies for taking investment related decision. For
the purpose of this report, two entities those will be considered for comparison are AMP Limited
and Macquarie Group. Here, the main company is AMP Limited and the competitor is
Macquarie Group. Based on their performances for past 5 years that is over the period from 2013
to 2017 the decision for investment will be taken (Williams and Dobelman 2017).
AMP limited is engaged in providing wealth management related services in New
Zealand, Australia and internationally. The entity operates its business through six segments -
AMP Capital, Australian Wealth Management, Australian Wealth Protection, New Zealand
Financial Services, AMP Bank and Australian Mature. It offers various services including
superannuation, financial advices, retirement income, superannuation services for the business
and investment products (Amp.com.au 2019). On the other hand, the competitor of AMP Ltd that
is Macquarie Group is diversified financial group that provides the clients with finance, asset
management, advisory, capital solutions, equity, commodities and debt services. The entity’s
diversified operation combined with the strong financial position as well as robust framework for
risk management has contributed towards unbroken profitability records for 49 years
(Macquarie.com 2019).
Discussion:
Financial Performance Analysis of AMP Limited:
Looking into the profit and loss statement of AMP Ltd it can be recognized that the major
source of revenue for the company is the income earned through premium and the expenses
Introduction:
Aim of the report is to analyze two companies for taking investment related decision. For
the purpose of this report, two entities those will be considered for comparison are AMP Limited
and Macquarie Group. Here, the main company is AMP Limited and the competitor is
Macquarie Group. Based on their performances for past 5 years that is over the period from 2013
to 2017 the decision for investment will be taken (Williams and Dobelman 2017).
AMP limited is engaged in providing wealth management related services in New
Zealand, Australia and internationally. The entity operates its business through six segments -
AMP Capital, Australian Wealth Management, Australian Wealth Protection, New Zealand
Financial Services, AMP Bank and Australian Mature. It offers various services including
superannuation, financial advices, retirement income, superannuation services for the business
and investment products (Amp.com.au 2019). On the other hand, the competitor of AMP Ltd that
is Macquarie Group is diversified financial group that provides the clients with finance, asset
management, advisory, capital solutions, equity, commodities and debt services. The entity’s
diversified operation combined with the strong financial position as well as robust framework for
risk management has contributed towards unbroken profitability records for 49 years
(Macquarie.com 2019).
Discussion:
Financial Performance Analysis of AMP Limited:
Looking into the profit and loss statement of AMP Ltd it can be recognized that the major
source of revenue for the company is the income earned through premium and the expenses
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4ACCOUNTING FOR MANAGEMENT
include claims, tax expenses. It can be identified that the revenue earned through premium was
in increasing trend till the year 2016 and reached to 26,40,000,000 from 20,70,000,000, and it
was significant with the increase in their volume of business. However, in the next year that is in
2017 it has been dropped to 23,62,000,000. After charging the expenses the pretax profit of the
company was in increasing trend till the year 2015 and reached to 21,60,000,000 from
14,86,000,000 (Robinson et al. 2015). However, it significantly fell to 11,88,000,000 in the year
2016 and reason behind this significant fall was underwriting of the profits. The company was
however able to increase the pretax profits to 17,48,000,000 during the year 2017. The tax
expenses of the company till the year 2016 has been dropped to 166,000,000 from 782,000,000
in the year 2013 due to a drastic fall in their pretax profit. However, in the next year that is in
2017, the tax expenses of the entity went up significantly to 763,000,000 with the increase in
their pretax profit. Net profit of the company after tax but before adjusting the abnormal
activities was in increasing trend till 2015 and started falling after that. If the abnormal activities
are considered for the company it can be identified that, the net abnormal are in significantly
increasing trend and reached to 112,000,000 from 12,000,000 over the last 5 years period and
830,000,000 was the highest amount of abnormal transaction in the yeas 2016 (Wahlen, Baginski
and Bradshaw 2014). Recorded net profit of the company after giving effect of abnormal
activities were in increasing trend till the year 2015 however, it fell considerably in 2016 to
192,000,000 from 1713,000,000 in 2015 which was caused by the huge amount of abnormal loss
in that year. However, the situation improved in the next year that is in 2017 and the NPAT after
adjusting abnormal activities amounted to 873,000,000. Finally, if the adjusted EPS of the entity
is considered, it can be identified that from the year 2013 to 2015 the EPS has been increased
from 22.49 cents to 38.79 cents. In the year 2016 the EPS significantly dropped to 16.59 cents
include claims, tax expenses. It can be identified that the revenue earned through premium was
in increasing trend till the year 2016 and reached to 26,40,000,000 from 20,70,000,000, and it
was significant with the increase in their volume of business. However, in the next year that is in
2017 it has been dropped to 23,62,000,000. After charging the expenses the pretax profit of the
company was in increasing trend till the year 2015 and reached to 21,60,000,000 from
14,86,000,000 (Robinson et al. 2015). However, it significantly fell to 11,88,000,000 in the year
2016 and reason behind this significant fall was underwriting of the profits. The company was
however able to increase the pretax profits to 17,48,000,000 during the year 2017. The tax
expenses of the company till the year 2016 has been dropped to 166,000,000 from 782,000,000
in the year 2013 due to a drastic fall in their pretax profit. However, in the next year that is in
2017, the tax expenses of the entity went up significantly to 763,000,000 with the increase in
their pretax profit. Net profit of the company after tax but before adjusting the abnormal
activities was in increasing trend till 2015 and started falling after that. If the abnormal activities
are considered for the company it can be identified that, the net abnormal are in significantly
increasing trend and reached to 112,000,000 from 12,000,000 over the last 5 years period and
830,000,000 was the highest amount of abnormal transaction in the yeas 2016 (Wahlen, Baginski
and Bradshaw 2014). Recorded net profit of the company after giving effect of abnormal
activities were in increasing trend till the year 2015 however, it fell considerably in 2016 to
192,000,000 from 1713,000,000 in 2015 which was caused by the huge amount of abnormal loss
in that year. However, the situation improved in the next year that is in 2017 and the NPAT after
adjusting abnormal activities amounted to 873,000,000. Finally, if the adjusted EPS of the entity
is considered, it can be identified that from the year 2013 to 2015 the EPS has been increased
from 22.49 cents to 38.79 cents. In the year 2016 the EPS significantly dropped to 16.59 cents
5ACCOUNTING FOR MANAGEMENT
however, in 2017 the company was able to improve the situation and EPS increased to 32.94
cents. It can be said in conclusion that, the performance of the company in the year 2016 was
considerably poor and its effect can be observed in all of their financial parameters (Amp.com.au
2019).
Financial Performance Analysis of Macquarie Group:
On the other hand, if the performance of the competitor that is Macquarie Group is
considered it can be identified that the operating revenue of the entity was in increasing trend till
the year 2016 and reached to 48,62,000,000 from 34,22,000,000. However, in the next year that
is in 2017 it has been dropped to 43,31,000,000. In the same way, other revenues of the company
was in increasing trend till the year 2016 and reached to 45,06,000,000 from 18,19,000,000
(Macquarie.com 2019). However, in the next year that is in 2017 it has been dropped to
43,43,000,000. The same trend is followed by the operating expenses of the company and till the
year 2016 it increased to 75,75,000,000 from 50,16,000,000 in 2013 and dropped to
68,88,000,000 in the year 2017. After charging the expenses the EBITDA of the company was in
increasing trend till the year 2016 and reached to 17,93,000,000 from 225,000,000. However, it
slightly fell to 17,86,000,000 in the year 2017. As their noncurrent assets increased from 2013 to
2017, their depreciation and amortization expenses were in increasing trend and reached to
876,000,000 in 2017 from 187,000,000 in 2013 (Macquarie.com 2019). EBIT of the company till
the year 2016 was in increasing trend and reached 958,000,000 from 38,000,000 in 2013, it was
due to increase in depreciation and amortization expenses with the increase in the noncurrent
assets. However, during the year 2017 it fell slightly to 910,000,000. Net interest expenses of the
company followed the same trend and reached to 22,79,000,000 in 2016 from 13,67,000,000 in
2013. However, during the year 2017 it fell slightly to 21,85,000,000, as they had repaid a huge
however, in 2017 the company was able to improve the situation and EPS increased to 32.94
cents. It can be said in conclusion that, the performance of the company in the year 2016 was
considerably poor and its effect can be observed in all of their financial parameters (Amp.com.au
2019).
Financial Performance Analysis of Macquarie Group:
On the other hand, if the performance of the competitor that is Macquarie Group is
considered it can be identified that the operating revenue of the entity was in increasing trend till
the year 2016 and reached to 48,62,000,000 from 34,22,000,000. However, in the next year that
is in 2017 it has been dropped to 43,31,000,000. In the same way, other revenues of the company
was in increasing trend till the year 2016 and reached to 45,06,000,000 from 18,19,000,000
(Macquarie.com 2019). However, in the next year that is in 2017 it has been dropped to
43,43,000,000. The same trend is followed by the operating expenses of the company and till the
year 2016 it increased to 75,75,000,000 from 50,16,000,000 in 2013 and dropped to
68,88,000,000 in the year 2017. After charging the expenses the EBITDA of the company was in
increasing trend till the year 2016 and reached to 17,93,000,000 from 225,000,000. However, it
slightly fell to 17,86,000,000 in the year 2017. As their noncurrent assets increased from 2013 to
2017, their depreciation and amortization expenses were in increasing trend and reached to
876,000,000 in 2017 from 187,000,000 in 2013 (Macquarie.com 2019). EBIT of the company till
the year 2016 was in increasing trend and reached 958,000,000 from 38,000,000 in 2013, it was
due to increase in depreciation and amortization expenses with the increase in the noncurrent
assets. However, during the year 2017 it fell slightly to 910,000,000. Net interest expenses of the
company followed the same trend and reached to 22,79,000,000 in 2016 from 13,67,000,000 in
2013. However, during the year 2017 it fell slightly to 21,85,000,000, as they had repaid a huge
6ACCOUNTING FOR MANAGEMENT
amount of their long-term debts. The pretax profit of the company was in increasing trend till the
year 2016 and reached to 32,37,000,000 from 14,05,000,000 (Batta, Ganguly and Rosett 2014).
However, it slightly fell in 2017 and reached to 30,95,000,000 in the year 2016. The tax
expenses of the company till the year 2016 has been increased to 927,000,000 from 533,000,000
in the year 2013, which was in consistent with the pretax profit (Brigham et al. 2016). However,
in the next year that is in 2017, the tax expenses of the entity dropped to 868,000,000 with the
fall in pretax profit of the company. Net profit of the company after tax but before adjusting the
abnormal was in increasing trend till 2016 and dropped in 2017. If the abnormal are considered
for the company it can be identified that till the year 2015 the company did not record any
abnormal and the same for the year 2016 amounted to 222,000,000 and for the year 2017
amounted to 9,000,000. Recorded net profit of the company after giving effect of abnormal were
in increasing trend and reached to 22,36,000,000 from 872,000,000 in 2013, though there was
some significant amount of abnormal loss in the year 2016. Finally, if the adjusted EPS of the
entity is considered, it can be identified that from the year 2013 to 2016 the EPS has been
increased from 238.81 cents to 645.26 cents. In the year 2017 the EPS slightly dropped to 641.88
cents, because the weighted average number of shares increased in the year 2017 (Sridharan
2015).
Financial Position Analysis:
After a close look to the balance sheet of AMP Limited, it can be identified that the
equity of the company were in increasing trend till the year 2015 and reached to 88,95,000,000
in 2015 from 82,00,000,000 in 2013. However, after 2015 it started falling and reached to
72,83,000,000 in 2017. The fall in their total equity was the subsequent effect of their fall in
retained earnings with poor operating performance. It is further found that the total liabilities are
amount of their long-term debts. The pretax profit of the company was in increasing trend till the
year 2016 and reached to 32,37,000,000 from 14,05,000,000 (Batta, Ganguly and Rosett 2014).
However, it slightly fell in 2017 and reached to 30,95,000,000 in the year 2016. The tax
expenses of the company till the year 2016 has been increased to 927,000,000 from 533,000,000
in the year 2013, which was in consistent with the pretax profit (Brigham et al. 2016). However,
in the next year that is in 2017, the tax expenses of the entity dropped to 868,000,000 with the
fall in pretax profit of the company. Net profit of the company after tax but before adjusting the
abnormal was in increasing trend till 2016 and dropped in 2017. If the abnormal are considered
for the company it can be identified that till the year 2015 the company did not record any
abnormal and the same for the year 2016 amounted to 222,000,000 and for the year 2017
amounted to 9,000,000. Recorded net profit of the company after giving effect of abnormal were
in increasing trend and reached to 22,36,000,000 from 872,000,000 in 2013, though there was
some significant amount of abnormal loss in the year 2016. Finally, if the adjusted EPS of the
entity is considered, it can be identified that from the year 2013 to 2016 the EPS has been
increased from 238.81 cents to 645.26 cents. In the year 2017 the EPS slightly dropped to 641.88
cents, because the weighted average number of shares increased in the year 2017 (Sridharan
2015).
Financial Position Analysis:
After a close look to the balance sheet of AMP Limited, it can be identified that the
equity of the company were in increasing trend till the year 2015 and reached to 88,95,000,000
in 2015 from 82,00,000,000 in 2013. However, after 2015 it started falling and reached to
72,83,000,000 in 2017. The fall in their total equity was the subsequent effect of their fall in
retained earnings with poor operating performance. It is further found that the total liabilities are
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7ACCOUNTING FOR MANAGEMENT
much higher as compared to total equity that signifies that the company is highly leveraged and
is exposed to interest risks on borrowing (Cao, Chychyla and Stewart 2015).
The balance sheet of Macquarie Group reveals that, the total liabilities of the company
were in increasing trend and reached to 165,607,000,000 in 2017 from 138,830,000,000 in 2013,
though they had repaid a significant part of their long-term debts in the year 2017. On the other
hand, it is identified that the equity of the company were in increasing and reached to
17,270,000,000 in 2017 from 11,948,000,000 in 2013. Hence, the total liabilities are much
higher as compared to total equity that signifies that the company is highly leveraged and is
exposed to interest risks on borrowing (DeFusco et al. 2015).
Profit margin:
Profit margin states the proportion of sales revenue remains with the firm after paying the
expenses. Looking into the profit margin of AMP Ltd it can be identified that the same for the
company were in increasing trend till 2015 and increased from 7.3% to 18.2% (Amp.com.au
2019). However, it significantly dropped to 2.2% in 2016 and in 2017 in increased to 8.6%
again. On the other hand, if the profit margin of Macquarie Group is considered it can be
identified that its profit margin throughout the period under concern are in increasing trend and
increased from 13% to 21.6%. Hence, the profitability position of Macquarie Group is better as
compared to AMP Ltd (Macquarie.com 2019).
Liquid ratio:
If the balance sheet of AMP Ltd is considered it can be identified that the current assets
of the company was in increasing trend and reached to 58,50,000,000 in 2017 from
57,89,000,000. The current liabilities of the entity were also in increasing trend and reached to
much higher as compared to total equity that signifies that the company is highly leveraged and
is exposed to interest risks on borrowing (Cao, Chychyla and Stewart 2015).
The balance sheet of Macquarie Group reveals that, the total liabilities of the company
were in increasing trend and reached to 165,607,000,000 in 2017 from 138,830,000,000 in 2013,
though they had repaid a significant part of their long-term debts in the year 2017. On the other
hand, it is identified that the equity of the company were in increasing and reached to
17,270,000,000 in 2017 from 11,948,000,000 in 2013. Hence, the total liabilities are much
higher as compared to total equity that signifies that the company is highly leveraged and is
exposed to interest risks on borrowing (DeFusco et al. 2015).
Profit margin:
Profit margin states the proportion of sales revenue remains with the firm after paying the
expenses. Looking into the profit margin of AMP Ltd it can be identified that the same for the
company were in increasing trend till 2015 and increased from 7.3% to 18.2% (Amp.com.au
2019). However, it significantly dropped to 2.2% in 2016 and in 2017 in increased to 8.6%
again. On the other hand, if the profit margin of Macquarie Group is considered it can be
identified that its profit margin throughout the period under concern are in increasing trend and
increased from 13% to 21.6%. Hence, the profitability position of Macquarie Group is better as
compared to AMP Ltd (Macquarie.com 2019).
Liquid ratio:
If the balance sheet of AMP Ltd is considered it can be identified that the current assets
of the company was in increasing trend and reached to 58,50,000,000 in 2017 from
57,89,000,000. The current liabilities of the entity were also in increasing trend and reached to
8ACCOUNTING FOR MANAGEMENT
16,028,000,000 from 19,713,000,000 over the last 5 years. However, it is identified that the
amount of current liabilities were significantly higher as compared to the current asset that
signifies the company is not solvent in terms of liquidity of the company and they are not able to
meet their short-term obligations with the available short-term assets (Nobes 2014). On the other
hand, if the balance sheet of Macquarie Group is analyzed it can be identified that the current
assets of the company was in increasing trend till 2015 and reached to 124,906,000,000 in 2015
from 91,720,000,000 in 2013. However started falling after that and reached to 89.961,000,000
in 2017. The current liabilities of the entity were also in increasing trend and reached to
108,410,000,000 from 87,919,000,000 over the last 5 years (Coates 2014). However, it is
identified that though initially the current assets were marginally sufficient for paying off the
current obligations, it fall short in the later years to meet the current liabilities. It concludes that
also the Macquarie Group is not that much solvent in meeting their short term obligations.
Du-Pont analysis:
If the du-pont analysis is considered for AMP Limited, it can be identified that the ROE
of the company has been increased from 8.7% to 12.0% over the 5 years period though there was
a drastic fall in it in the year 2016 due to poor operating performance and high amount of their
abnormal loss. The increase in their ROE over the years, were mainly contributed by the increase
in their profit margin and assts to equity ratio (Amp.com.au 2019). On the other hand, if the
same for Macquarie Group is considered, it can be identified that the ROE of the company
increased from 7.1% to 12.8% over the period of last 5 years which was due to increase in their
asset turnover ratio and profit margin of the company. However, if the overall financial position
of both the companies is compared, it can be considered that the Macquarie Group is in a better
position (Macquarie.com 2019).
16,028,000,000 from 19,713,000,000 over the last 5 years. However, it is identified that the
amount of current liabilities were significantly higher as compared to the current asset that
signifies the company is not solvent in terms of liquidity of the company and they are not able to
meet their short-term obligations with the available short-term assets (Nobes 2014). On the other
hand, if the balance sheet of Macquarie Group is analyzed it can be identified that the current
assets of the company was in increasing trend till 2015 and reached to 124,906,000,000 in 2015
from 91,720,000,000 in 2013. However started falling after that and reached to 89.961,000,000
in 2017. The current liabilities of the entity were also in increasing trend and reached to
108,410,000,000 from 87,919,000,000 over the last 5 years (Coates 2014). However, it is
identified that though initially the current assets were marginally sufficient for paying off the
current obligations, it fall short in the later years to meet the current liabilities. It concludes that
also the Macquarie Group is not that much solvent in meeting their short term obligations.
Du-Pont analysis:
If the du-pont analysis is considered for AMP Limited, it can be identified that the ROE
of the company has been increased from 8.7% to 12.0% over the 5 years period though there was
a drastic fall in it in the year 2016 due to poor operating performance and high amount of their
abnormal loss. The increase in their ROE over the years, were mainly contributed by the increase
in their profit margin and assts to equity ratio (Amp.com.au 2019). On the other hand, if the
same for Macquarie Group is considered, it can be identified that the ROE of the company
increased from 7.1% to 12.8% over the period of last 5 years which was due to increase in their
asset turnover ratio and profit margin of the company. However, if the overall financial position
of both the companies is compared, it can be considered that the Macquarie Group is in a better
position (Macquarie.com 2019).
9ACCOUNTING FOR MANAGEMENT
Dividend payout ratio:
From the sustainable growth analysis of AMP Limited, it can be observed that, their
Ordinary Dividend Payout ratio is moving around 74% to 85% whereas the same for Macquarie
Group is moving around 65% to 79%. Both the companies are paying a significant part of their
profit as dividend. The retention ration of Macquarie Group is more than the AMP limited,
which resulted in a high sustainable growth rate for Macquarie Group (Macquarie.com 2019).
Though the Macquarie group’s dividend payout ratio is lower than that of AMP limited, they are
having a significant sustainable growth, which ensures future profitability of the company.
Hence, an investor looking for a secure investment opportunity and a reasonable return will
definitely prefer Macquarie Group over the AMP Limited (Amp.com.au 2019).
Key Factors behind fluctuations in AMP’s performance:
AMP Limited has gone through various peak and tough situations and still they are
continuing their business efficiently with some strategic changes in their business model.
Throughout the last 5 years from 2013 to 2017, the year 2016 was a bad experience for them but
again they could manage to survive in the year 2017. Key driving forces behind their ups and
downs can be summarized as below.
Downfall in their Advisory services:
Their quality of advisory services was degrading day by day; even they were charging
fees to their customers for services not provided by them. Their ethical code of conducts were
being violated by their own staffs and management even they had given false statements to the
ASIC for several times. At certain point of time they were in such a situation that, they were
unable to continue serving their customers from whom they have already taken the fees. In 2015,
Dividend payout ratio:
From the sustainable growth analysis of AMP Limited, it can be observed that, their
Ordinary Dividend Payout ratio is moving around 74% to 85% whereas the same for Macquarie
Group is moving around 65% to 79%. Both the companies are paying a significant part of their
profit as dividend. The retention ration of Macquarie Group is more than the AMP limited,
which resulted in a high sustainable growth rate for Macquarie Group (Macquarie.com 2019).
Though the Macquarie group’s dividend payout ratio is lower than that of AMP limited, they are
having a significant sustainable growth, which ensures future profitability of the company.
Hence, an investor looking for a secure investment opportunity and a reasonable return will
definitely prefer Macquarie Group over the AMP Limited (Amp.com.au 2019).
Key Factors behind fluctuations in AMP’s performance:
AMP Limited has gone through various peak and tough situations and still they are
continuing their business efficiently with some strategic changes in their business model.
Throughout the last 5 years from 2013 to 2017, the year 2016 was a bad experience for them but
again they could manage to survive in the year 2017. Key driving forces behind their ups and
downs can be summarized as below.
Downfall in their Advisory services:
Their quality of advisory services was degrading day by day; even they were charging
fees to their customers for services not provided by them. Their ethical code of conducts were
being violated by their own staffs and management even they had given false statements to the
ASIC for several times. At certain point of time they were in such a situation that, they were
unable to continue serving their customers from whom they have already taken the fees. In 2015,
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10ACCOUNTING FOR MANAGEMENT
the banking royal commission exposed that fact, as a result their market share reduced largely in
the year 2016 (Australian Financial Review, 2019).
Political Factors:
The industry was generating significant amount of revenue for last couple years, but in
the period 2009 to 2014 so many financial institutions were collapsed and political pressure
increased. With the exposition of the Commonwealth bank of Australia’s misconduct, the
industry comes into more political and media scrutiny and pressure (Australian Financial
Review, 2019).
International Expansion:
Their international expansion and tie up with China Life the largest institutional investor
of China gave them the pace to overcome their hurdles and make the business profitable again.
After that their focus on
Super Concepts:
In 2016, they have announced a new business named as SuperConcepts. The schemes
were innovative and having numbers of sub brands including AMP SMSF, Ascend, JustSuper,
SuperIQ. That new service portfolio gave the company a new competitive edge to regain the
market share and perform better.
the banking royal commission exposed that fact, as a result their market share reduced largely in
the year 2016 (Australian Financial Review, 2019).
Political Factors:
The industry was generating significant amount of revenue for last couple years, but in
the period 2009 to 2014 so many financial institutions were collapsed and political pressure
increased. With the exposition of the Commonwealth bank of Australia’s misconduct, the
industry comes into more political and media scrutiny and pressure (Australian Financial
Review, 2019).
International Expansion:
Their international expansion and tie up with China Life the largest institutional investor
of China gave them the pace to overcome their hurdles and make the business profitable again.
After that their focus on
Super Concepts:
In 2016, they have announced a new business named as SuperConcepts. The schemes
were innovative and having numbers of sub brands including AMP SMSF, Ascend, JustSuper,
SuperIQ. That new service portfolio gave the company a new competitive edge to regain the
market share and perform better.
11ACCOUNTING FOR MANAGEMENT
Present Market Situation and Future potentials of AMP Limited:
Currently the stock of AMP ltd is overvalued by 38.66% and is trading at AU$2.51 in the share
market as compared to its intrinsic value of AU$1.81. The stock price is expected to fall in
future.
A drastic fall in their EPS can be observed in the year 2017, but again it has increased to
a large extent. Their shares are very much volatile and a future growth in their EPS is expected
by the experts (St, 2019).
Present Market Situation and Future potentials of AMP Limited:
Currently the stock of AMP ltd is overvalued by 38.66% and is trading at AU$2.51 in the share
market as compared to its intrinsic value of AU$1.81. The stock price is expected to fall in
future.
A drastic fall in their EPS can be observed in the year 2017, but again it has increased to
a large extent. Their shares are very much volatile and a future growth in their EPS is expected
by the experts (St, 2019).
12ACCOUNTING FOR MANAGEMENT
Experts suggest that, AMP’s earnings will grow at over 20% pearly but their revenue will
be decreasing in next 1 – 3 years.
From these above graphs and research, it can be observed that the company has struggled
a much in the past to keep themselves in the race irrespective of different odd market situations.
There are still have some expectations and growth potentials for the company but they need to
focus more on their revenue aspect.
Experts suggest that, AMP’s earnings will grow at over 20% pearly but their revenue will
be decreasing in next 1 – 3 years.
From these above graphs and research, it can be observed that the company has struggled
a much in the past to keep themselves in the race irrespective of different odd market situations.
There are still have some expectations and growth potentials for the company but they need to
focus more on their revenue aspect.
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13ACCOUNTING FOR MANAGEMENT
Conclusion:
From the above analysis of two companies’ financial performance over the past 5 years
that is 2013 to 2017 it is identified that the performance of Macquarie Group that is the
competitor is better as compared to the concerned entity AMP Ltd. The reason behind that is the
investors are generally concerned regarding getting return on their investment and considering
this it can be identified that Macquarie Group is providing higher return to its shareholders
through EPS. Further, the liquidity position of Macquarie Group is better as compared to AMP
Ltd. Further, the profitability position as well as ROE is better for Macquarie Group as compared
to AMP Ltd and Macquarie Group’s sustainable growth rate is significantly high as compared to
AMP Ltd. Hence, it is recommended that the investor shall invest in the competitor company that
is Macquarie Group.
Conclusion:
From the above analysis of two companies’ financial performance over the past 5 years
that is 2013 to 2017 it is identified that the performance of Macquarie Group that is the
competitor is better as compared to the concerned entity AMP Ltd. The reason behind that is the
investors are generally concerned regarding getting return on their investment and considering
this it can be identified that Macquarie Group is providing higher return to its shareholders
through EPS. Further, the liquidity position of Macquarie Group is better as compared to AMP
Ltd. Further, the profitability position as well as ROE is better for Macquarie Group as compared
to AMP Ltd and Macquarie Group’s sustainable growth rate is significantly high as compared to
AMP Ltd. Hence, it is recommended that the investor shall invest in the competitor company that
is Macquarie Group.
14ACCOUNTING FOR MANAGEMENT
Reference
Amp.com.au. 2019. Transaction Accounts for Everyday Banking - AMP Bank. [online]
Amp.com.au. Available at: https://www.amp.com.au/personal/banking/products/everyday-
accounts [Accessed 7 Mar. 2019].
Australian Financial Review. (2019). Banking royal commission: The remarkable hypocrisy of
AMP. [online] Available at: https://www.afr.com/news/politics/national/banking-royal-
commission-the-remarkable-hypocrisy-of-amp-20180420-h0z14g [Accessed 12 Mar. 2019].
Batta, G., Ganguly, A. and Rosett, J., 2014. Financial statement recasting and credit risk
assessment. Accounting & Finance, 54(1), pp.47-82.
Brigham, E.F., Ehrhardt, M.C., Nason, R.R. and Gessaroli, J., 2016. Financial Managment:
Theory And Practice, Canadian Edition. Nelson Education.
Cao, M., Chychyla, R. and Stewart, T., 2015. Big Data analytics in financial statement
audits. Accounting Horizons, 29(2), pp.423-429.
Coates IV, J.C., 2014. Cost-benefit analysis of financial regulation: Case studies and
implications. Yale LJ, 124, p.882.
DeFusco, R.A., McLeavey, D.W., Pinto, J.E., Anson, M.J. and Runkle, D.E., 2015. Quantitative
investment analysis. John Wiley & Sons.
Macquarie.com. 2019. Macquarie Group. [online] Available at:
https://www.macquarie.com/in/corporate [Accessed 7 Mar. 2019].
Nobes, C., 2014. International classification of financial reporting. Routledge.
Reference
Amp.com.au. 2019. Transaction Accounts for Everyday Banking - AMP Bank. [online]
Amp.com.au. Available at: https://www.amp.com.au/personal/banking/products/everyday-
accounts [Accessed 7 Mar. 2019].
Australian Financial Review. (2019). Banking royal commission: The remarkable hypocrisy of
AMP. [online] Available at: https://www.afr.com/news/politics/national/banking-royal-
commission-the-remarkable-hypocrisy-of-amp-20180420-h0z14g [Accessed 12 Mar. 2019].
Batta, G., Ganguly, A. and Rosett, J., 2014. Financial statement recasting and credit risk
assessment. Accounting & Finance, 54(1), pp.47-82.
Brigham, E.F., Ehrhardt, M.C., Nason, R.R. and Gessaroli, J., 2016. Financial Managment:
Theory And Practice, Canadian Edition. Nelson Education.
Cao, M., Chychyla, R. and Stewart, T., 2015. Big Data analytics in financial statement
audits. Accounting Horizons, 29(2), pp.423-429.
Coates IV, J.C., 2014. Cost-benefit analysis of financial regulation: Case studies and
implications. Yale LJ, 124, p.882.
DeFusco, R.A., McLeavey, D.W., Pinto, J.E., Anson, M.J. and Runkle, D.E., 2015. Quantitative
investment analysis. John Wiley & Sons.
Macquarie.com. 2019. Macquarie Group. [online] Available at:
https://www.macquarie.com/in/corporate [Accessed 7 Mar. 2019].
Nobes, C., 2014. International classification of financial reporting. Routledge.
15ACCOUNTING FOR MANAGEMENT
Robinson, T.R., Henry, E., Pirie, W.L. and Broihahn, M.A., 2015. International financial
statement analysis. John Wiley & Sons.
Sridharan, S.A., 2015. Volatility forecasting using financial statement information. The
Accounting Review, 90(5), pp.2079-2106.
St, S. (2019). Is Now The Time To Look At Buying AMP Limited (ASX:AMP)?. [online] Simply
Wall St. Available at: https://simplywall.st/stocks/au/diversified-financials/asx-amp/amp-
shares/news/is-now-the-time-to-look-at-buying-amp-limited-asxamp/ [Accessed 12 Mar. 2019].
Wahlen, J., Baginski, S. and Bradshaw, M., 2014. Financial reporting, financial statement
analysis and valuation. Nelson Education.
Williams, E.E. and Dobelman, J.A., 2017. Financial statement analysis. World Scientific Book
Chapters, pp.109-169.
Robinson, T.R., Henry, E., Pirie, W.L. and Broihahn, M.A., 2015. International financial
statement analysis. John Wiley & Sons.
Sridharan, S.A., 2015. Volatility forecasting using financial statement information. The
Accounting Review, 90(5), pp.2079-2106.
St, S. (2019). Is Now The Time To Look At Buying AMP Limited (ASX:AMP)?. [online] Simply
Wall St. Available at: https://simplywall.st/stocks/au/diversified-financials/asx-amp/amp-
shares/news/is-now-the-time-to-look-at-buying-amp-limited-asxamp/ [Accessed 12 Mar. 2019].
Wahlen, J., Baginski, S. and Bradshaw, M., 2014. Financial reporting, financial statement
analysis and valuation. Nelson Education.
Williams, E.E. and Dobelman, J.A., 2017. Financial statement analysis. World Scientific Book
Chapters, pp.109-169.
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