Financial Market Analysis, Capital Budgeting, and ASX Listing

This report provides a comprehensive analysis of the Australian financial market, focusing on key financial institutions like commercial banks, insurance companies, and investment banks, comparing their characteristics and market sectors. It delves into capital budgeting, capital structure, and working capital management, explaining their significance in financial decision-making. The report then examines the requirements for listing on the Australian Securities Exchange (ASX), including the advantages, eligibility criteria, and the step-by-step listing process. Furthermore, it explores risk analysis and project evaluation within the financial context. The report concludes with a summary of the key findings and their implications for financial management and investment strategies. The content also includes a comparison of financial institutions in Australia, and an overview of the listing process of ASX for companies like Royal Sunshine. The report is a student assignment available on Desklib, a platform offering study resources.

Research on Financial market
and Capital Budgeting Analysis
1

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Comparison of four key financial institutions.............................................................................3
Explanation of the meaning of capital budgeting, capital structure and working capital
management.................................................................................................................................3
TASK 2............................................................................................................................................3
Fact finding of the listing on ASX...............................................................................................3
Fact Finding of requirements on Financial advisory service registration in Australia................3
TASK 3............................................................................................................................................4
Risk analysis and project evaluation............................................................................................4
CONCLUSION................................................................................................................................4
REFRENCES...................................................................................................................................4
2

INTRODUCTION
Financial market is a market which provides trade facilities to business organizations. It
provides investors can able to buy or sell securities for first time and buy existing securities.
This report is prepared on the basis of deep research of financial market of Australia, elements of
financial market. Procedure of their work. This report also includes the way an organization
able to list within the Australia Security Exchange and all the essential procedure, documents
and stapes required for being listed in the stock exchange. This report also contain the meaning
of financial advisers, requirement duties of financial adviser, it also define use of capital
budgeting ,capital structure for formulating of organization and importance of working capital
regarding management of current assets.
TASK 1
Comparison of four key financial institutions
Portfolio investor: Portfolio is a collection of investments all owned by the same individual or
organization (Venmans, 2014). Theses investment often included stocks, which are investments
in individual business bonds which are investment in debts that are designed to earn interest and
mutual funds . The person who invest in the portfolio is known as portfolio investor. They are
invest in various gripou of securities of financial institutions which describe below in order to
enhance their return.
Financial institutions: These can be describing as business organizations that act as mobilise and
depositors of saving and as purveyors of credit of fiancé. They also provide various financial
services to the community. Portfolio investors invest their money in financial institutions as they
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can able to spread risk and maintain liquidity and provide higher rate of return as compare to
other financial system elements. Financial institutions of Australia include banks, finance
companies, superannuation funds, life insurance unit trust companies and investment banks
(Garg and Dua, P., 2014).
Commercial banks: A commercial banks is an institution that operates for profit. It accepts
deposits from general public and extends loan to the households. In Australia the banking sector
is run by 4 big banks, National Bank o Australia, ANZ, Common wealth banks and Westpac
commercial bank. In this report for comparison Australia bank has been taken,
Insurance companies: Insurance may be described as financial device or contract to mitigate or
eliminate risk of loss to life and property. The companies who provide the facilities of insurance
to investors are known as insurance companies. Australia market of insurance is divided into 3
major parts. Life insurance companies, general insurance companies and heath insurance
companies.
Investment banks: These are the banks that aid companies and acquiring funds. In addition to
the accusation of new funds, knew investments banking also offer advice for a wide range of
transaction of companies. Allianz organization has been taken for comparison purpose in this
report.
Investment funds: These are the organizations which managed funds of investors with other
people. In this money is applied together with the other individual money and organizations
invest it for aching common investment goals. Intermeddle global equities fund has been taken
for comparison.
COMAPRISION BETWEEN FINANCAIL INSTITIUTIONS OF AUSTRSLIA
Particular Australia bank ANZ
investment
bank
Allianz organization Australian
Ethical
investment
Group of
financial
institution
Authorised
deposited taking
institution
Authorised
deposited
taking
institution
Non Authorised
deposited taking
institution
Non Authorised
deposited
taking
institution
Market sector Oligopoly Monopolistic Perfect Monopolistic
business Accept deposits Theses bank This organization They help in
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activities and provides
loan facilities to
their customers.
They also
provides various
types financial
services to their
customers.
helps in capital
raising d merger
and accusation
of business
activities they
provide
merchant
banking service
to their
customers.
provides insurance
service to their
customers(Beckmann,
and Czudaj 2017).
beneficial
portfolio
investment of
their investors.
source of
income
they generate
income from
loans, and
provides
advance, to their
clients.
they get income
from providing
financial
service and
investing clients
money in
various
financial
securities.
Get income from
insurance money of
client.
Get sorc of
income by
investing
portfolio
securities of
clients.
chairmen and
ceo of the
company
Damien Walsh
is the ceo of the
bank. and Philip
chronic an is
selected as next
chairman.
Shayne Elliott
is ceo and
David Ganske
is chairman of
the
organization.
Richard Feledy is ceo
of the company
John McMurdo
is ceo of the
company
current
capitalization of
stock
31.25 billion 44.22 billion 70.93 billion 376. 9 million
Total shares
outstanding
3196.22 2.84 billion 446.10 122
Objective To earn profits To provides Provides best Achive the first
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and become top
commercial
bank
best investment
services
insurances services. position in
financial
market.
Risk Low risk Comparably
high
Low risk Higher risk
Profit return Comparatively
higher low
return
Higher return Low return Higher return
Explanation of the meaning of capital budgeting, capital structure and working capital
management
Capital budgeting: It can be define as process hat helps in planning the investment projects of an
organization in long run. It used various methods and this method will used in decision taken
process of business organization also. With the uses of payback period, discount payback period,
net present vale and internal rate of return technique financial institution ad portfolio investors
can easily understand which project is more beneficial for them.
Capital structure: It can be refers as a systematic format of organization which shoe how
mangers set the combination of equity and debt for solving their business operational activities
and able to pay all the debt liabilities and fulfil the limitations f monetary resources.
Working capital management: It is essential part of every business institutions. Working
capital is used for pay day to day legalities. Working capitals the total of visibility of current
assets within the organization. It show the liquidity position within the organization. It essential
for manger the working capital in order to increase the profit through future activities.
Nation Australia Bank is one of the most popular banks of Australia. It is famous for its
capitalization, earnings and customers sustainability rate with the target market area,. According
to the CNN business report the bank operate their business activities in a significant way
(Dewandar Rizvi, Masih, Masih and Alhabshi, 2014).
They used internal relate of return methods for capita budgeting process through which they can
easily recognized which project and alternatives is beneficial for them. As per the report oath
new cannel it sit e 50 hitch largest bank within the world with having more than 1600 branches
with the world. The capitals truest of this bank also have in strong potion they use a strong
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combination of debt and equity .They also uses effected working capital mange system through
which they can maintain though level of liquidity within the organization as they need to give
major part of liquidity to their customers still they manger everything is effective manner. O the
other side as per the research of the Dow Jones Financial News they also prepared report on the
bank’s Woking style. SAs this bank will attract not only the investors but also news ns
government organizations for its effective working panning system. The bank has 4400 serum
and ser more then 12. 7miilion customers thigh their services. It has net income of more than
19.101 billion and Total assets value is 809.51 billion. National Australia Bank have more than
35000 employers and the organization formulate effective working capital mangement and
mineral strategies through which they can easily pay their day to day liable and mange their
capital structure of the organization even though the bank provide loan for many investors.
TASK 2
Fact finding of the listing on ASX
Australian Stock Exchange also defined as Sydney Stock Exchange or Australia Securities
Exchange. It was establish in 1st April 1987 and it merge with Sydney Future Exchange in
2006.Every organization which fulfil the criteria must need to listed in the Australia Stock
Exchange for their trading system . It is act as market operator of Australian impairment rules
regulation so supervise overall the securities market sector of Australia. Royal Sunshine is a
small footwear retailers organization and prepared for listed within the stock exchange of
Australia. ASE is included within the top 10 stock exchanger group f world. And it is also
known as the heart of financial market of Australia. Following are the advantages of being a
listed organization in Australia Stock Exchange (Yoshino and Taghizadeh-Hesary, 2014).
Listing with the securities exchange without change the future of an organization as its provides
various benefits to the investors which are describe below
Access to capital for growth: Being a listed firm within the stock exchange gives various
opportunities, Royal Sunshine will be able to offer share in primary as well as secondary market
and through initial public offering.
Provides foreign currency for future growth: Government provides help for those
organizations which is listing within the securities exchange as they are more reliable then non
listed organization they provide them financial assistance and help for foreign trade and offers
for currency which is more diversified and help in increasing capital.
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Higher public and investor profit: It will help for Royal Sunshine to build strong positing the
market as media also analysis and investigate for the company and provides platform to attract
more customers.
Help in improving the value of firm: Securities listed firm will be to value their assets and
liabilities at in depended valuation with the information availed within the market.
Enhancing efficiency: Austrian Securities Enhanced helps business organizations to generate
more effectively by their ogling reports and more rigors disclosures (Erdem and Varli, 2014).
Requirement needs for listing within the Australian Securities Exchange
Following are their requirement Royal Sunshine needs to fulfil in order to listing for the stock
exchange. These criteria are made as it will help organizations to meet the level and
responsibilities of the stock exchange and able them to work at international al level. These
criteria are formatted manly to stop the case of fraud, scandal and corruption within the financial
market of Australia.
Shareholders number Minimum number of shareholders 300 and non
affiliated investor 2 A$2000
Size of organization Aggregate profit value is 1 million Australian
Dollar with the past 3 consecutive running
years and 500000 value consolidate profit
generated from operational activities from past
12 months.
Value of asset must be 4 million Australian
dollar and capitalization market value will be
not less than 15 million Australian diallers.
Shareholders requirement
Royal Sunshine must have 300 non affiliated shareholders whom have share worth %2000 each.
Rules regarding dual listing
8

Organization which is listed within the foreign exchange can easily listed within the ASX as
exempt listing. The organization needs to company within the all the rues and procedures of
ASX. IF Royal Sun Shine would be listed as dual listing organization within the ASX then this
organization must be expect for all the rues of ASX but if it trade in New Zealand market area
then it is not considered as expert listing organization.
Working capital: The company does not need to fill creates related to working capital it listed on
the basis of profit requirements (Samet and Jarboui, 2017).
Ongoing report
Royal Sunshine need to present their financial report on half yearly ad annually basis. It is
essential for the company o show their audited accounts in each financial ear to the securities
exchange of Australia.
The process of listing within the ASX is competed within 7 steps.
 Which is started with appointment of advisers. They can be lawyer, financial adviser or
investment banks .They help in providing information regarding the whole procedure and
document .
 In the second step the organization need to collect all the relevant documents they stated
due diligence procedure it is also started at the time when the document is collected. The
process is guided by committees
 In this step certain marketing activities is striated by organization, advertisement for
initial public offering.
 In 4th step, exposure period of 7 days is started within the date of lodgement. Applications
of the inventors should be proceed after completion of the exposure period. It
 In the week of 11 to 16th process of listing application with ASX is stated it should be
competed within the 6 weeks.
 In this step Royal Sunshine will be able to offer retail investors.
 In the last stage which is commence in between 18 to 19 week, offers are close and share
will be allocated, and trading will be commence.
Australian Securities Exchange organization chare fee from companies who newly listed within
the stock exchange and chare annually fees to existing companies.
Royal Sunshine is newly invests company thus this needs to be pay initial fee. And also pro rate
away fee for security. The Value of fee depends on the capital structure of the organization. ASX
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will be raise the annual fee if organization grows on annual basic and converts itself into small
from large organization.
The initial fee for Royal Sunshine organization will be $105000 and annual fee $32823 as the
capitalization value of the company is $ 50 million. Australian stock exchange charge fee on the
basic of their market capitalization structure.
Australian Securities and Investment Commission is established as the regulator body of
Australia .It control and regulate all the corporate sector activities of Australian trading market. It
protect and regulate the companies in ethical manner.
Financial advisers is a personal who provides information regarding the securities and stock
exchange. Financial adviser registered is maintain by the financial adviser , it is a public record
document. And consumers can easily found it on the Money smart website the registered is
management by the regulatory board for Australia.
The financial register allows customers to check that financial adviser is provide them
authenticity information or the personal is reliable for the post. This register also provides
facilities to the investors to find out the qualification, working experience and employment
history of the financial advisers.
Financial adviser is on the register. Financial adviser is a personal who has license of Australian
financial services, or he is an authorised director or representative of Australian financial
services.
Financial advisers are a personal who have rights to provides advice regarding financial services
to their clients. Relevant financial products do not included baking products, insurance product
or credit insurance products.
The personal that is not able to fulfil the criteria of the definition of financial adviser is not able
to be on the register. A personal who provide general advice or individual who provide advice
related to non relevant financial products.
Te financial registered is updated by AFS licensees. It is the duly of this perusal to update the
registered. It they not do so then they will liable to pay penalties.
The financial advise registered will be provide information regarding name, work history,
qualification training and relevant financial products information.
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For become a facial adviser, personal must have all the relevant qualification and skills
regarding being an financial adviser.
They must be passed FASEA examination.
They should have capabilities fin 40 hours work on their professional development skills. They
must be competed a full time training session of financial adviser .They have code of conduct
regarding financial adviser. And personal also company with all the code of ethics and company
with financial planners (Kosov and et.al.2016).
TASK 3
Risk analysis and project evaluation
Risk analysis is a process through which manager can be easily recognized the value and risk
return of future business policies. It will help in providing essential information regarding
business organization. It is the duty of financial adviser for portfolio investors to provide them
accurate information regarding the risk and securities.
YEAR ANNUAL CASH FLOW CUMULATIVE CASH
FLOW
1 2.4 2.4
2 4.278 6.678
3 4.095 10.773
4 4.975 15.748
5 5.406 21.154
5+22.8-15.748/5.406= 5.30
Net presents value can be refers as the amount of differences of initial cost and the present value
of cash inflows
Net present value: current value of money inflow of software project – current value of original
outlay cost of software
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CONCLUSION
From the above analysis it has been concluded that for being every investors need to understand
the criterion of investing in portfolio, and take information regarding various financial institution
of Australia through which they invest money and invest within their strongest portfolio. They
also concern regarding procedure of listing within the Australian stock exchange as they need to
follow systemic procedure but it proved benefits and future growth for listed companies. A
personal need to identify all the requirements through which they are able to become financial
adviser of Australia and fulfil their responsibilities in effective manner. Investor also use various
capital budgeting technique through which they can easily recognize which alternative or
portfolio group proved them benefits.
REFRENCES
Books and journals
Venmans, F., 2014. Triggers and barriers to energy efficiency measures in the ceramic, cement
and lime sectors. Journal of Cleaner Production, 69, pp.133-142.
Hauk, S., Knoke, T. and Wittkopf, S., 2014. Economic evaluation of short rotation coppice
systems for energy from biomass—a review. Renewable and sustainable energy
reviews, 29, pp.435-448.
Garg, R. and Dua, P., 2014. Foreign portfolio investment flows to India: determinants and
analysis. World development, 59, pp.16-28.
Beckmann, J. and Czudaj, R., 2017. Exchange rate expectations and economic policy
uncertainty. European Journal of Political Economy, 47, pp.148-162.
Dewandaru, G., Rizvi, S .A. R., Masih, R., Masih, M. and Alhabshi, S.O., 2014. Stock market
co-movements: Islamic versus conventional equity indices with multi-timescales
analysis. Economic Systems, 38(4), pp.553-571.
Yoshino, N. and Taghizadeh-Hesary, F., 2014. An analysis of challenges faced by Japan’s
economy and Abenomics. The Japanese Political Economy, 40(3-4), pp.37-62.
Erdem, O. and Varli, Y., 2014. Understanding the sovereign credit ratings of emerging
markets. Emerging Markets Review, 20, pp.42-57.
Samet, M. and Jarboui, A., 2017. How does corporate social responsibility contribute to
investment efficiency?. Journal of Multinational Financial Management, 40, pp.33-46.
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Kosov, M .E., Akhmadeev, R. G., Bykanova, O.A., Osipov, V .S., Ekimova, K. V. and Frumina,
S. V., 2016. Economic practicability substantiation of financial instrument
choice. Journal of Applied Economic Sciences, 11(8), pp.1613-1623.
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