Written Research on the Australian Financial Market | Desklib

Running head: WRITTEN RESEARCH ON THE AUSTRALIAN FINANCIAL
MARKET
Written research on the Australian financial market
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WRITTEN RESEARCH ON THE AUSTRALIAN FINANCIAL MARKET
Table of Contents
1. Industry description:...............................................................................................4
2. Company description:............................................................................................4
3. Financial instrument analysis.................................................................................4
4. Financial structure analysis....................................................................................4
5. Financial market analysis.......................................................................................4
6. Finding, conclusion and recommendation.............................................................4

WRITTEN RESEARCH ON THE AUSTRALIAN FINANCIAL MARKET
1. Industry description:
a. Mining and metal sector of Australia is considered the largest industry as a
significant number of companies are involved in the development, exploration
and production across hundred countries. Some of the largest diversified
resources companies of the world are involved in the sector and the capital
required for the intensive development of the mineral resources are sourced
from the equity markets by the sector. The operation of the mineral industry of
Australia is considered to be profitable for over second century and during the
last 30 years, it has witnessed the greatest growth. The industry is
internationally competitive when it comes to marketing and the production of
most of the industrially important minerals of the world. However, it is
apprehended that the essential degree of competitiveness is not generated by
the Australia mining sector because of intensification of the competition in the
world market (Yakovleva 2017).
b. For the process of mineral extraction, there are three level of government
comprising the regulatory framework. The exploration of petrol and mineral
from offshore in Australia is regulated by the policy designed by the common
wealth government of Australia. This involve federal government of Australia,
state and territories and local government. Each of the state provide primary
mining regulatory authorities (Walters et al. 2016).
c. The mining industry of Australia is also regulated by some other industrial
group’s side from the government regulatory frameworks. Such groups
include corporate service group and strategic business innovation group.
2. Company description:
a. The development and discovery of metallurgical deposits of coal is the main
business activities of Aspire mining limited with its focus on Mongolia as it is
the largest consumer of metallurgical coal. Some of the other sources of
business for the company is undertaking of coking coal projects, coal projects
and investment in rail infrastructure. The main service of the company is to
focus on the development of coking coal deposits of world class premium in
Mongolia. In addition to this, the company has also made investment in the
strategic infrastructure and has significant interest in Nuurstei Coking Coal
Project and in the region of Northern Mongolia, it is the holder of large coal
tenement (aspiremininglimited.com 2019).
b. The management team and board of Aspire mining limited involves a
combination of exploration, project acquisition, resource management,
corporate and financial experience with the capability of development and
identification of resource assets of world class. The structure of the board of
Aspire mining limited comprise of four non-executive director, two executive
director, one managing director and chairman and one company secretary. It
is the responsibility of the board that there is alignment between the risks and
the activities of the company and moreover, the oversight and management of
the management of risk framework is the overall responsibility of the board
(Fuisz 2015).
c. Many of the projects undertaken and the construction of the railway
infrastructure is done by the company by funding from the right issue. The pre
development expenditure of the project such as Erdenet to Ovoot railway was
done by funding received from CGGC. Exercising of the option also results in

WRITTEN RESEARCH ON THE AUSTRALIAN FINANCIAL MARKET
generation of then fund which should meet the rail and coal evaluation
activities (Bekaert and Hodrick 2017).
3. Financial instrument analysis
a. This section provides a description of the financial instruments of the firm and
it has been retrieved from the financial report of the company that the capital
structure comprise of the equity and retained earnings reserves. Earning
maximum amount of interest at low risk is the main objective of the financial
instrument of the group. The principal financial instruments in which the group
deals with short term deposits and cash. Creditors and receivables are some
other financial instruments which arise directly from the operations. Financial
liabilities comprised of borrowings and trade and other creditors and financial
assets comprised of cash and cash equivalents and receivables. Trade and
other payable include accrued expenses, trade payables, corporate credit
card, borrowing fees payable and interest payable. Equity section include
reserve, issued capital and accumulated losses. Assets comprised of current
and non-current assets. Under current assets, trade receivables and cash and
cash equivalents and non-current assets include intangible assets, evaluation
expenditure and intangible assets. The policy of the Aspire mining limited for
the financial year 2016 and 2017 has been not to trade in the financial
instruments. Furthermore, there is a limited credit risk associated with the
derivative financial instruments as the banks are the counterparties that are
assigned with higher credit rating (Zhang et al. 2015).
b. The understanding of off balance sheet financing helps in assessing the
financial position of the entities and include all such items for which the
recognition on the balance sheet is not necessary. These includes debt
guarantees, leasing transaction, contingent obligations and securitization.
From the analysis of the financial report of Aspire mining limited, it is observed
that the organization has engaged in off balance sheet for some items as they
have not been recorded in the balance sheet. The details of the joint venture
has not been recognized in the financial statement and a separate discussion
of the same has been made in the joint venture. In addition to this, the
information about lease has not been recognized in the balance sheet,
however the new lease standard is yet to be adopted by the company. It can
be seen that some of the information related to income tax such as deferred
tax assets in respect to the loss concerning tax in Australia, issuing of shares
and some other costs have not been recognized in the balance sheet and
forms another off balance sheet item (deloitte.com 2019).
4. Financial structure analysis
The evaluation of whether the company should issue new share or borrow for
financing the new project has been done by identifying different financial ratios for
the creditors and investors.
a. The three financial ratios important to creditors include debt to equity ratio,
current ratio and return on assets. Computation of these ratios are shown in
the table below:
2018 2017 2016