Financial Management Report: Financial Management of AMP Limited

This report delves into the realm of financial management, focusing on the pivotal roles and responsibilities of a Chief Financial Officer (CFO) within AMP Limited, an Australian financial services company. It meticulously outlines the core duties of a CFO, including controllership, treasury functions, and economic strategy development, while also analyzing the impact of these responsibilities on key company objectives such as growth, shareholder wealth, brand image, and sustainable financial positioning. Furthermore, the report explores the efficient market hypothesis (EMH) and its implications for pension fund managers, discussing the limitations of the hypothesis and the importance of active portfolio management. The report also provides insights into how a pension fund manager should manage the portfolio to meet the needs of the clients. Through a comprehensive analysis, the report provides a detailed overview of the complexities of financial management within a corporate context.

Running head: FINANCIAL MANAGMENT
AMP LIMITED
Financial Management
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Table of Contents
Introduction......................................................................................................................................2
A. Chief Financial Officer Roles and its Impacts.........................................................................2
Three responsibilities of CFO......................................................................................................2
Impact of responsibilities on the Company’s objective...............................................................4
B. Pension Fund Manager and EMH............................................................................................6
Efficient market hypothesis.........................................................................................................6
Conclusion.......................................................................................................................................8
References......................................................................................................................................10

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Introduction
In this present paper, we will discuss the roles and responsibility of chief financial officer and the
impact of their responsibilities on the objective of the company. The company is AMP limited
which is a non-financial company in Australia since 1849. The company provides financial
services with superannuation and investment products, financial advice, insurance, loans such as
home loan and others. The paper also describes the case in which is the efficient market is true,
the pension still not select a portfolio with a pin.
A. Chief Financial Officer Roles and its Impacts
The AMP limited is a non-financial Australian stock exchange listed public company. The
company has largest stockholders register. The Chief financial officer plays a vital role in the
non-financial company. The company is having four main areas of business, namely, advice and
banking, insurance and superannuation, customer solution and AMP capital (AMP et al., 2016).
The CFOs roles and responsibilities are continues which includes stretched and scrutinized for
maintaining the high-level view of an organization, balancing short-term activities such as
liquidity management, business integrity, strategic leadership, managing innovations and others.
Three responsibilities of CFO
Following are the principles of CFO:
a. Create value: The value creation is done through developing a sustainable strategy
which helps to create the value in the organization.

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b. Enable value: The CFO enables the value in the organization through supporting the top
level management and government bodies in decision making and strategy formulation
which is directed towards the goals and objective of the company.
c. Preserve value: The value is preserved through managing the risk, asset and liability
management which helps to achieve the goals and objectives of the organization. The
internal control system is implemented and monitor for the effective system.
d. Report value:
The business reporting should be used for an internal and external system which helps to
ensure relevant and useful reporting in the organization.
Following are the three major responsibilities of chief financial officer:
1. Controllership duties
The Chief finance officer is responsible for presenting and reporting accurate historical
financial information timely which helps to take a decision and developing strategies of
the company. The investment decisions are based on the information presented by CFO
so it should be accurate because the crucial decisions are based on the reports presented
by CFO (McKinney et al., 2015). It is one of the main responsibilities of CFO to present
the reporting which is used by the stakeholders for taking financial decisions.
2. Treasury duties
The CFO is responsible for the financial condition of the company which is based on the
strategy formulation and decision making by CFO. The CFO is responsible for the
liquidity, risk management, capital structure, debt-equity ratio and others financial
aspects which directly impacts on the profitability of the company. The CFO acts as a
backbone of the company because the financial conditions directly impact on the

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profitability, growth, mission and vision of the company. It is a very important
responsibility of the company because it directly impacts on the wealth of the
shareholders.
3. Economic strategy and forecasting
The responsibility of the CFO includes developing an economic strategy which directly
impacts on the future financial position of the company. The future financial decision is
based on the financial decisions taken by CFO such as investment of capital, forecasting
of business areas to increase the efficiency of resources which directly impacts on the
profitability of the company. The forecasting includes analysis of business resources
which help to increase the efficiency and financial position of the company.
Impact of responsibilities on the Company’s objective
The Chief financial officer’s major responsibilities include controllership duties, treasury duties
and economic strategy and forecasting which directly impacts on the company’s objective. The
objective of the company include achievement of mission and vision, a growth of the company,
sustainable financial position, maximize the wealth of shareholders, maximum utilization of
resources, create a unique brand image in the eyes of the consumers.
Following are the impacts of CFO’s responsibilities on the company’s objective:
a. Growth of the company
The growth of the company is one of the objectives of the company. The formulation of
strategy and the financial decision taken by the Chief financial officer, directly impact the
growth of the company. The growth depends on various factors such as the financial
projection of the company which is taken on the basis of the historical report presented by

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the chief financial officer. The financial forecasting of the company helps to take a financial
decision by the chief financial officer who helps to increase the profitability of the company
that enables the growth of the company.
b. Wealth of shareholders
The wealth of the shareholders depends on upon the profitability of the company which is
derived from the implementation of strategy and decision making by the chief financial
officer. The responsibilities of decision making such as investment decision, capital
budgeting, allocation of financial resources, and others which impact on the objectives of
the company (Paul et al., 2013). The wealth of shareholders is the main objective of the
company which directly impacts by the responsibilities of taking investment and capital
budgeting decisions by the chief financial officer of the company.
c. Mission and vision
The mission and vision achievement is the direct objective of the company. The mission and
vision create the path which is followed to achieve the success of the company. The mission
and vision are impacted by the chief financial officer’s responsibility of economic strategy
and forecasting. The economic strategy includes the strategy to increase the efficiency of
business areas which helps to achieve the objective of the company.
d. Brand image
The brand building and creating goodwill is another objective of the company which is
impacted by the chief financial officer’s responsibility of allocation of resources. The proper
allocation of resources helps to achieve the sustainable profit which enables the brand image
in the eyes of the consumers.
e. Sustainable financial position

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The sustainable financial position is enabled by getting the sustainable profits which help to
achieve the objective of the company. The sustainable financial position objective is
impacted by the chief financial officer’s responsibility of treasury duties. The treasury duties
include risk management, liquidity, capital structure, debt-equity ratio, and which directly
impacts on the financial position of the company which is another objective of the company.
f. Customer service
The objective of the company is to serve best consumer service which is impacted by the
chief financial officer’s responsibility of strategy formulation. The strategy formulation
includes the strategy to provide consumer services which help to retain consumers (Songini
et al., 2013).
g. Productivity
The productivity is impacted by the decision taken in purchasing the raw material and the
strategy to increase the productivity. The efficient productivity includes using of least cost
strategy which helps to increase the profit margin of the company.
B. Pension Fund Manager and EMH
Efficient market hypothesis
The efficient market hypothesis states that the price of assets reflects all the relevant information.
The implication of hypothesis states that it is impossible to beat the market consistently on the
basis of risk-adjusted because the market price only shows the change in the risk new
information such as the change in discount. There are three types of variants, namely, weak,
semi-strong and strong hypothesis. Following are three efficient market hypotheses:

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1. Weak market efficiency: The weak form explains that all the past publicly information
is reflected from the prices of traded assets. The price can’t be predicted by analyzing
current market price. The technical analysis does not help to analyze the trend of the price
whereas the fundamental analysis helps to identify the trend and patterns of the returns
(Boboc et al., 2013).
2. Semi-strong market efficiency: The semi-strong hypothesis explains that the price
reflects the change in the new public information. It implies that the study of fundamental
and technical analysis does not generate more returns.
3. Strong market efficiency: The strong hypothesis explains that the price reflects all the
information even the inside information. The information includes public information,
private information, laws of trading and others. The market needs to exist where the
excess returns can be received to the investors. The portfolio managers constantly watch
to beat the market, but they can’t refute the strong market efficiency (Barnes et al., 2016).
The role of pension fund manager is to manage the portfolio of an investor to increase the
returns by hedging the risk. The portfolio is a combination of two or more securities
which are more or less related. The securities include mutual funds, trusts funds, and
pension funds. Even the securities are efficiently priced the pension fund manager has to
manage the portfolio with the specified level of risk for the particular client. It reflects
that the position of the portfolio does not work according to the satisfaction of the client.
The risk can be reflected by using the difference between the types of funds such as index
funds, utility funds, and others. The picking of the portfolio with a pin does not give
satisfaction to the consumers. The optimal portfolio provides the combination of risk and

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returns according to the consumer's desire. The optimum portfolio is very difficult to
change because of unpredicted movement of securities in the capital market. A random
portfolio does not provide desirable outcomes and satisfaction to the investor. The
portfolio should be made according to the needs and desire of an individual who helps to
achieve the satisfaction to the consumers. The financial analysis acts as an engine which
helps to analyze the trend and movement in securities. The efficient market hypothesis
must not be correct always because of the fluctuations in the prices. The majority of
investors are not trained due to which the efficient market hypothesis may be incorrect
due to which fund managers need to constantly watch the movement of stock market
price (Jung et al., 2015).
Conclusion
The chief finance officer plays an important role for the achieving the goals and
objectives of the company. The major three responsibilities of chief finance officer
include controllership duties, treasury duties, and economic strategy and forecasting. The
controllership duties include the responsibility of presenting and reporting the financial
information of the company which is used for taking the financial decision of the
company such as capital budgeting, asset management, and others. The treasury duties
include the responsibility of financial condition of the company through risk
management, liquidity, allocation of resources and others. The economic strategy and
forecasting include the formulation of strategy through estimating and financial analysis.
The forecasting helps to take a financial decision which impacts on the long-term profit
sustainability of the company. The responsibilities impact on the objectives of the

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company such as growth objective of the company is impacted by the decision-making
the responsibility of chief financial officer. The efficient market hypothesis is not always
correct because of unpredicted movement of market price in the stock market due to
which portfolio manager needs to watch the market index. The portfolio with a pin is
unable to satisfy the investor.

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References
McKinney, J. B. (2015). Effective financial management in public and nonprofit agencies. ABC-
CLIO.
Paul, M. (2013). Avoiding the costs of making the wrong senior-level hire: a bad hiring decision
at the senior level can have far-reaching implications that could impact the direction, strategy
and operations of the company causing profound pain to the company's bottom line. Financial
Executive, 29(10), 60-64.
Personal Banking, Home Loans, Super & Insurance - AMP. (2016). Amp.com.au. Retrieved 1
September 2016, from https://www.amp.com.au/
Boboc, I. A., & Dinică, M. C. (2013). An algorithm for testing the efficient market hypothesis.
PloS one, 8(10), e78177.
Jung, J., & Dobbin, F. (2015). Agency Theory as Prophecy: How Boards, Analysts, and Fund
Managers Perform Their Roles. Seattle UL Rev., 39, 291.
Barnes, P. (2016). Stock market efficiency, insider dealing and market abuse. CRC Press.

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Songini, L., Gnan, L., & Malmi, T. (2013). The role and impact of accounting in family business.
Journal of Family Business Strategy, 4(2), 71-83.