Classical And Modern Domestic And Global Operations Of Money And Capital Markets

Answer to Question No.1

This report contains study on the three questions which reflects how global and domestic risk could be forecasted and mitigated. In the starting of this question, global financial crises have been analyzed which reflects that financial institutions and commercial banking sector were not only sector which were affected by the global financial crises. The money and capital market is highly dependent upon the success and failure of financial institutions and banking organizations. In the next question, top down analysis and bottom up analysis have been used to evaluate the particular condition of market. These analyses have been used by Evan and Partner to make investment decision on behalf of clients. There are various financial analyses which could be used by Evan and Partners to gauge the performance of company. After that in the end, conclusion has been farmed that provides minimum requirement to get companies share listed on the stock exchange. However, company has to follow several rules and regulation for making compliance with the regulatory requirement of listed company.

The money market could be described as international financial market for short term borrowing and lending for the corporation and creating value for capital of investors. It is used by organizations internationally for short term and long term liquid for global financial system. Money market is the market where short term obligations such as commercial paper, treasury bills, and securities are bought and sold in market (Webster, 2014).

Failure of Financial institutions and banks played very critical part in the happening of Global financial crisis of 2007- 2009. It was the leading financial crises since the time when it last occurs as depression of 1930. This Global financial crisis of 2007- 2009 results into failure of several business and provided sluggish economic condition throughout the time. The biggest impact of Global financial crisis of 2007- 2009 was seen on the capital losses of several financial institutions and banks that faced losses of more thantrillion of U.S dollars. Money capital market also resulted into high decrease in the market capitalization and index turnover of various stock exchanges around the globe (Gotze, Northcott and Schuster 2015).

There are numerous countries affected by Global financial crisis such as Australia, India, Russia, China and USA. It was observed that India had downfall in its rupee value due to its negative balance of trade, GDP rate of Australia also went down by 3%. (ConstantinC?runtu, &MihaelaLoredanaL?p?du?i,2012).The main reason behind happening of Global financial crisis of 2007- 2009 was related with failure of several international financial institutions and banks around the globe. The main impact of Global financial crisis was seen on developing countries growth and downward slope of their GDP that increased foods prices and knock- on- effect from the financialconstancy and failure business operations of various multinational companies.It is evaluated that various countries came up with the procedure of liberalizations and privatization in commodity sector and increased cap of foreign direct investment in various sectors which failed and did not provide greater constancy of international commodity market. Security market of various countries is exposed to substantial external shocks stemming from the high fluctuation in their underlying assets (Cui, & Li 2014).

International Financial Crisis and Developing Countries

Business Risk management is related with the management of risk related with uncertainty of business in the global business market criteria. Multinational companies around the globe had reduced the output due to the less demand of the products and goods in market due to global financial market. Nonetheless,German, Britain, France, and Japan have been affected by industry growth turn down in several sectors e.g. automotive, Airline, Building and Foods and beverage sectors. Throughout the time, data collected summaries that in the month of Oct, 2008 GM Ford, Toyota reported 45%, 30% and 30% fall in their turnover respectively.  Companies and government had to move forward with business continuity risk management plan to overcome the depressing effect of Global financial crises. This business risk management plan could be defined as plans prepared to overcome negative outcomes and prepare disaster recovery, security, health and crises management plan to reduce the uncertainty of business. There are several organizations who have used this risk management plan e.g. Tesco, Rio Tinto, Wesfarmers, Woolworths (Lee and Epstein, 2012).

Core components of disasters recovery planning process

.Disasters recovery planning process could be defined as subset of process used to recover the affected business including resumption of discontinued business. This disaster planning should be taken before during and after a disaster

Disasters recovery planning process

Approval from authority- This is related with taking approval from the higher authority for preparing disaster recovery plan.

Preparation of planning committee- This committee will be indulged in implementation of disaster recovery plan

Arrangement of resources- Companies affected by disaster should make efforts to collect required amount of resources so that better functioning could be established for future business plan.

Organizing the team- This would consist with the number of employees engaged in disaster recovery process.

Assessment of risk involved- In this all the uncertain factors and its negative outcomes would be gauged by the disaster team.

Testing and rehearsal team- This team will engaged in taking follow up of all the standard set of disaster process system.

Core components of disasters recovery responses process

Preparedness- It is related with the consistent developed actions plans which should be prepared by the organization for managing disaster and implementing actions for disaster recovery.

Responses- In this process all the business organizations that suffered from global financial crisis should indulged in gauging the losses that have occurred and responsive plan which could be used to overcome its effects.

Mitigation- Organizations need to prepare proper recovery plan which should be managed by organization for making effective use of its resources and mitigating the uncertainty and negative outcomes in determined approach

This case consists of financial analysis which could be used by Evan and Partner for making investment decisions on the behalf of investors.  In this investment decision plan bottom up analysis have been used by Evan and Partner for gauging the performance of particular company in particular market segment irrespective of the external factors (Mumbai, 2013).

Why Evan and partners would use Bottom up and Top down analysis in investing decisions

Business Continuity Risk Management

These analyses provide certainty of business which could be used to determine the future value outcomes.  The fundamental analysis used by Evan and partnersinclude two approaches such as top down analysis and bottom up (Jiang, & Kim, 2013).

Bottom up analysis has been used to evaluate the financial performance of Morrison Plc. It is observed that fundamental analysis will start from the microeconomic level which will gauge the business functioning of Morrison Plc. This ratio focus on the performance of Morrison plc irrespective of the fact of industrial factors (Stickney, et al. 2009). 

1. E. Ratio

This ratio provides relation between Market share price and earnings per share.  Morrison Plc has been taken into consideration and PE ratio of company is .83 which reflects that Morrison has good earning capacity.

Investment Ratios	2012	2013	2014	2015	2016
Price Earnings Ratio	0.37	0.37	0.25	0.92	0.83

Dividend payout ratio

It provides relation between dividend distributed and earning of company. Morrison Plc has increased its Dividend payout to throughout the time and paid 50% of its earning to its shareholders (Bragg, 2012).

Investment Ratios	2012	2013	2014	2015	2016
Dividend payout ratio	27.38%	30.44%	32.50%	110.09%	41.67 %

Efficiency ratio

This ratio of Morrison Plc provides how company manages its cash blockage. It is assumed that company has increased its efficiency to manage its receivable turnover ratio. After evaluating financial performance of company it is observed that company has been reducing its working capital to decrease its overall cost of capital (Kiran& Singh, 2014).On the other hand creditor turnover ratio has also decreased to 6.80% which shows that company has reduced increased its creditor and buying more raw materials on credits (Weygandt, Kimmel and Kieso, 2010).

Working Capital Analysis	2012	2013	2014	2015	2016
Debtor’s Turnover	110.39	59.30	58.25	60.60	74.81
Creditor’s Turnover	17.44	8.72	8.03	7.49	6.80

Debt equity ratio- This reflects the relation between equity and debts structure of Morrison Plc. Company should make effort to reduce its overall cost of capital. However, interest coverage ratio of company has gone down which is posing threat to sustainable business functioning of Morrison plc(Ehrhardt and Brigham, 2013). 

Debt Equity ratio	2012	2013	2014	2015	2016
Debt to equity ratio	0.400037058	0.566539197	0.674339301	0.919309961	0.744408946
Interest coverage ratio	20.70212766	12.65333333	-1.091954023	-6.628571429	2.803571429

These ratios divulge that Morrison Plc has reduced its overall profit. Return on capital employed of company has also gone down to 4.79% in 2016 which is not even enough to cover overall cost of capital. Company has this type of downward graph due to the sluggish market conditions (Gibson, 2012).

Profitability Ratios	2012	2013	2014	2015	2016
Operating Profit Margin	5.51%	5.24%	-0.54%	-4.14%	1.95%
Net Profit Margin	3.52%	3.52%	-1.35%	-4.53%	1.38%
Return on Capital Employed	12.88%	11.58%	-1.21%	-10.09%	4.79%
Return on Equity	11.51%	12.18%	-5.07%	-21.17%	5.91%

Top Down analysis

The top down analysis is implemented to identity macro-economic factors to investigation the industry trend and evaluate its impact on the business performance. There are factors such as inflation, interest rates of Global economy, GDP, and other international factors (Bierman, 2012).

Recommendation

After evaluating all the financial tools, it is observed that investors should indulge in using both approaches top down analysis and bottom up analysis. Top down analysis helps investors to analysis external factors of organizations and bottom up analysis focus on the performance of company. Therefore, both analyses is required to be used by investors for their rational investing decision making.

Forecasting of economy

These both analyses help investor’s helps investors to analyse market factors and other external factors. It helps investors to make effective use of their capital and analysis the best suitable options available for the investors for investment.

With the help of Top down analysis, it is observed that during the last five years supermarket business grow by 14%. Other economic factors such as interest rate and fiscal policies were also not in the favour of Morrison plc. Inflation rate of UK is rising at the normal rate of 1.53% since last four years. Nonetheless, Interest rate is used by government of country to manage the inflation in economy (National Institute Economic Review, 2011).

Core Components of Disaster Recovery Planning Process

Other performance measures

It is observed that there is other several performance measures which could be used by investors before their investment decisions.

Share price analysis- This analysis shows that company has increased share price effectively irrespective of the performance of company.

Trend analysis

This analysis shows how company has been performing throughout the time.

Financial Data of Morrison’s Plc.	2012	2013	2014	2015	2016
Particulars	€ Millions	€ Millions	€ Millions	€ Millions	€ Millions
Total Revenue	17663	18116	17680	16816	16122

There are several listing requirement of Australian stock exchange has been discussed which are need to be complied by Freelancer Ltd a new listed public company.  Freelancer Ltd is a worldwidemultitude sourcingopen marketwhere freelancing Job to potential employees Re provided by employers. Employees make bids accordingly to get that particular job (Nottage and Aoun, 2017).

Responsibilities, Right and role of various stakeholders of Freelancer Ltd

Stakeholders	Right	responsibilities	Role
Shareholders	They have right to get dividend and give consent for particular resolutions passed in general meeting.	They would follow all the rules and regulation of company.	It depends upon the active and passive functioning. If shareholders are also directors of the company then they would take care of all the operational and management functions.
Debenture holders	They have right to take back their money at the time of redemption.	They will follow all the rules and regulation of company.	They will provide loan amount to organization and will allow organization to deploy their money.
Directors	They are the Key managerial person who will take all the strategic decision.	They will be liable for all the acts they have done on the behalf of company.	They will take all the decisions in the best interest of organization.
Executive	They have right to take salary for their work.	They will be liable to provide best quality services.	The entire executive will be indulged in providing services in value chain activities of organization.

There are several requirements which would be followed by Freelancer Ltd to get its share listed on Australian stock exchange.

Freelancer Ltd need to have at least 300 non-affiliated investors @ AUD $ 2,000 and free float of stock around 20% (Wilkinson, 2014).

In addition to this there will be following test would be required for the listing of shares.

Profit test

In this case, Freelancer Ltd will have AUD $ 1 million accumulate profit from its business operation over past 3 years. Nonetheless, consolidated profit would be around AUD $ 5, 00,000 over the last 12 Months (Nottage and Aoun, 2017).

Assets test

In this test, Freelancer Ltd will havearound AUD $ 4 million net tangible assets or AUD $ 15 million market capitalisation (Nottage and Aoun, 2017).

Annual and periodic reporting will also be required.

Why these rules are in place

Australian stock exchange rules and regulation will control the initial and ongoing listing company.  These entire requirements are used to curb the high variation in price and provideassertion to stakeholders that company will not go in liquidation. The minimum level of capital requirement is imposed with a view to increase the liquidity position of company (Nottage and Aoun, 2017).

Requirement to continue reporting

It is observed that all the regulation and listing rules imposed by ASX provides continuous disclosure of financial performance of company. The ASX listing rules manage the initial listing of Freelancer Ltd and list out the ongoing requirements which all listed company must meet for continuing listing (Nottage and Aoun, 2017).

Conclusion

In this report various financial analysis has been used which provides the financial performance of company. In addition to this, there has been shown several regulatory listing requirements which would be followed by organizations for getting their share listed on stock exchange. Now in the end it would be inferred that investors should use fundamental analysis before making investing decision in company. Companies should also follow listing rules very carefully to curb fluctuation in their share price.

References

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Kiran, R. S., & Singh, V. K. 2014. How to make the financial analysis an easy task – A comparative analysis between the traditional and the modern approach? International Journal of Engineering Research and Applications, 4(8), 61-66.

Lee, J.Y. and Epstein, M.J. 2012.Advances in management accounting. Bingley: Emerald Group Publishing.Edwards, J.R. 2013. A history of financial accounting. New York: Routledge.

Mumba, C. 2013. Understanding accounting and finance: Theory and practice. USA: Trafford Publishing.

National Institute Economic Review, 2011, Vol.218(1), pp.F3-F3

Nottage, L.R. and Aoun, F., 2017. Corporate Governance, Corporate Responsibility and Law: Independent Director Requirements in Australia and the Asian Region.

Stickney, C.P., Weil, R.L., Schipper, K., and Francis, J. 2009. Financial accounting: an introduction to concepts, methods and uses. London: Cengage Learning.

Webster, A. 2014.Introduction to accounting. 2nd ed. Applied Finance.

Weygandt, J.J., Kimmel, P.D. and Kieso, D.E. 2010.Accounting principles. 10th ed. USA: John Wiley & Sons.