Discuss about the Coca-Cola Amatil (CCA) Limited.
For this paper, I would like to select Coca-Cola Amatil (CCA) Limited as a non-financial company that is listed on ASX (Australian Stock Exchange). CCA is one of the biggest bottlers of non-alcoholic ready-to-drink beverages in the world. Along with this, CCA runs its business mainly in six countries Australia, Fiji, Indonesia, New Zealand, Papua New Guinea, and Samoa (CCA.2016). Moreover, the diversified portfolio of products of CCA takes in sports & energy drinks, carbonated soft drinks, flavoured milk, spring water, coffee, tea, fruit juices, packaged ready-to-eat fruit & vegetable, snacks, and so on. In addition to this, CCA distributes a number of sparkling and non alcoholic beverages such as: Coca-Cola, Sprite, Diet Coke, Bisleri, Nestea, etc. Along with this, this paper would be helpful to describe the three general areas of responsibility of the chief financial officer (CFO) of the firm.
The chief financial officer (CFO) of a business firm is obliged to perform some important roles and responsibilities for the overall success and growth of the organization. The CFO also plays a critical role in order to accomplish the strategic as well as competitive goals and objectives of the organization in an effective and a more comprehensive manner (Bragg, 2011). Moreover, the three general areas of responsibility of the chief financial officer (CFO) of Coca-Cola Amatil Limited are described as below:
Financial Planning & Control: The chief financial officer of Coca-Cola Amatil Limited is responsible to do effective financial planning to make effective utilization of the available funds.
In other words, it also can be said that, the CFO of Coca-Cola is fully responsible for all the financial activities of the organization. For case, the CFO of Coca-Cola plays a significant role in order to control the cash flow of the firm in an effective way. The CFO is responsible to use the cash or funds and to maintain the honesty of funds in a proper and an appropriate manner (Lapovsky and McKeown-Moak, 2010). Along with this, the CFO is also liable to pay the taxes and securities of the organization in order to improve the overall effectiveness of the firm. The chief financial officer also plays a critical role in order to establish accounting policies as well as procedures for credit & collections, payment of bills, purchasing, and other financial obligations.
On the other hand, the CEO of the organization also plays a significant role to raise the capital or funds of the firm in an effective way. Moreover, in order to raise capital, the CFO of the firm establishes and carries out programs for the provision of capital requisite by the business. For case, the CFO makes negotiation on the procurement of debt & equity capital and also maintains the essential financial arrangements in an effective and an appropriate way (Ferguson, 2006). In addition to this, the CFO is also responsible to manage the long-range plans of the business, evaluate the financial requirements that are inherent in these plans, and to build up alternative ways by which financial necessities of the firm can be fulfilled. In this way, the CFO of Coca-Cola Amatil Limited is responsible to control and manage all the financial activities of the firm in an effective and a more comprehensive manner.
Understand & Mitigate Risk: The chief financial officer of Coca-Cola is also responsible to understand and reduce financial risks that are faced by the organization. This is also considered as a major area of concern to the CFO of the firm. Along with this, the CFO is obliged to have in-depth knowledge of the system of the firm in order to ferret out any risk that may occur in the financial areas of the organization. The CFO also develops risk mitigation strategies to save the company from financial risks effectively (Fabozzi, Drake and Polimeni, 2008). On the other hand, there are numerous risks that the CFO of Coca-Cola mitigates in an appropriate way. These risks are as below:
Risk Related to Loss of Business Partners: The CFO reduces this type of risk by lining up different sources of supply and by thinning out sales to a wide range of customers (Dergel, 2014). Moreover, with the help of this, the CFO becomes able to retain the key supplier and customer of the firm in an effective way.
Risk Linked to Loss of Brand Image: The CFO of the firm also plays a critical role in order to mitigate this type of risk in an effective way. Moreover, to reduce the risk, the CFO implements a strong focus on management, creates advanced strategies and also focuses on the brand quality in order to improve the brand image of business firm (Bragg, 2012).
Risk Related to Commodity Price Changes: The CFO of the firm is also responsible to reduce the risk linked to the commodity price changes. Moreover, the CFO makes long-term fixed price contracts and also uses cost cutting methods to diminish the risk and to maintain the changes in the price of commodities effectively (Moeller, 2007).
Foreign Exchange Risk: The CFO also plays a major role in order to mitigate foreign exchange risk. For case, in order to diminish this type of risk, the CFO makes out the size of foreign trading, identifies the potential losses and also implements hedging tactics in an appropriate way (Kasunic and Kasunic, 2009).
Risk Linked to Contract Failures: The CFO also responsible to mitigate the risk associated with the contract failures. The CFO verifies the contents of all the existing contracts and also checks up new contracts in order to ensure that the firm is fulfilling all the terms and conditions of the contracts in an effective and a proper manner (Oakes and Galagan, 2011).
Develop Accounting & Financial Functions: The CFO of Coca Cola is fully responsible to develop accounting as well as financial functions in order to improve the overall financial performance of the firm in an effective and an appropriate manner. Along with this, the CFO of firm also creates an ongoing system of improvements within the accounting & finance functions of the organization (Cannon, Bergmann and Pamplin, 2006). Moreover, the CFO understands the company business model to generate customer value and to perform all the accounting & financial functions in order to improve the overall performance of the organization. The CFO of the firm also uses effective methods such as: dashboards, balanced scorecard, and financial statement ratio analysis to improve both the expected as well as actual financial performance of the organization. In addition to this, the CFO is also responsible to establish and keep up lines of communication with shareholders, investment bankers, and financial analysts of the firm.
On the other hand, to clean up the major accounting and financial functions, the CFO of Coca-Cola focuses on several goals (Hitt, Ireland and Hoskisson, 2006). These goals are as below:
On the other hand, it should also be noted down that the above discussed responsibilities can have an effect on the ultimate objective of the company. These responsibilities will affect the goals and vital objective of the company in a positive way. The main reason behind it is that, the CFO of the firm is an important person that plays a critical role in the success and growth of the organization. Moreover, a firm faces a lot of difficulties in order to manage and invest its funds in an appropriate way. In this situation, the CFO of the firm executes an effective financial planning to manage the funds in a proper way (Lapovsky and McKeown-Moak, 2010). Also, the CFO has a close eye on all the financial transactions in order to control the cash flows of the firm effectively. Along with this, the CFO of the firm mitigates all the financial risks to improve the financial performance of the organization. The CFO focuses on the financial goals and objectives of the firm and also allocates funds in view of that. The CFO gives instructions and guidelines to the members of the firm, so they can perform all the accounting & financial functions in an accurate way (Ferguson, 2006).
Conclusion
On the basis of the above discussion, it can be said that, the responsibilities performed by the CFO of the firm play an essential role to accomplish the ultimate goals and objective of the company in a specified time period. In this way, it can be assumed that, the CFO of Coca-Cola Amatil Limited plays a critical role for the success and growth of the firm.
At present, the efficient markets hypothesis has become the central part of all the financial information. Moreover, the efficient markets hypothesis expresses that the prices of scurrilities always reflect the available financial information of business organizations. The hypothesis also affirms that the realâ€Âworld financial markets like the U.S. bond as well as stock market are efficient in fact. On the other hand, the efficient market hypothesis reveals that all the financial information is represented in the course of the price (Brealey, Myers, Allen and Mohanty, 2012). Moreover, it should also be noted down that, if the efficient-market hypothesis is true and securities are priced well in that case fund manager must maintain a portfolio at the proper risk level for the patron. It is because of choosing a portfolio with a pin would not be able to provide customer satisfaction in an effective way. Also, any specific portfolio will not work within the satisfaction of customers.
Along with this, it should also be noted down that, the efficient markets hypothesis does not stand to select a portfolio with a pin. The pension fund manager should not select a portfolio only on the basis of the efficient markets hypothesis. It is because of a large number of stocks in the similar industry are not enough diversified. For that reason, the pension fund manager must select well diversified portfolio to reduce risk and to increase returns on the investments in an effective and a more comprehensive manner (Graham and Dodd, 2008). In this way, the fund manager must focuses on the low level of risk and high level of returns before selecting a portfolio.
On the other hand, it should also be noted down that, the efficient market hypothesis does not portray that selection of portfolio should be done with a pin. The manager must follow some important rules and policies in order to make a selection of portfolio effectively. First of all, the manager must make certain that the portfolio is well diversified. The manger should note down that a large number of stocks are not sufficient to make sure diversification of a portfolio. Furthermore, the fund manager must ensure that the risk level of the diversified portfolio is suitable for the patrons (Tyson, 2016). Also, the manager must modify the portfolio to take benefit of special tax laws to get high returns on the pension funds. Consequently, all these rules as well as policies would be helpful to increase the projected return on the portfolio.
As a result, it can be assumed that if the efficient-market hypothesis is true, the pension fund manager might not choose a portfolio with a pin. The main reason behind it is that a portfolio with a pin would not be able to increase customer satisfaction level. Moreover, it would not be helpful to reduce the risk and to increase the returns on the investors. Hence, the pension fund manager must select a portfolio on the basis of appropriate level of risk and returns of the customers.
References
Bragg, S.M. (2011). The New CFO Financial Leadership Manual. UK: John Wiley & Sons.
Bragg, S.M. (2012). Accounting Policies and Procedures Manual: A Blueprint for Running an Effective and Efficient Department. Australia: John Wiley & Sons.
Brealey, R.A., Myers, S.C., Allen, F. and Mohanty, P. (2012). Principles of Corporate Finance. NY: Tata McGraw-Hill Companies Inc.
Cannon, D.L., Bergmann, T. S. and Pamplin, B. (2006). CISA Certified Information Systems Auditor Study Guide. UK: John Wiley & Sons.
CCA. (2016). About Us. Available At: https://www.ccamatil.com/ [Accesses On: 25th August 2016]
Dergel, S. (2014). Guide to CFO Success: Leadership Strategies for Corporate Financial Professionals. USA: John Wiley & Sons.
Fabozzi, F.J., Drake, P.P. and Polimeni, R.S. (2008). The Complete CFO Handbook: From Accounting to Accountability. UK: John Wiley & Sons.
Ferguson, M.R. (2006). The Executive Branch of State Government: People, Process, and Politics. Australia: ABC-CLIO.
Graham, B. and Dodd, D.L.F. (2008). Security Analysis (6th ed.). USA: Tata McGraw-Hill Companies Inc.
Hitt, M., Ireland, R.D., and Hoskisson, R. (2006). Strategic Management: Concepts and Cases. USA: Cengage Learning.
Kasunic, T.K.F.T., and Kasunic, F.T. (2009). Supersize Your Small Business Profits!: How to Survive the Current Recession and Manage Your Small Business Profitably During Turbulent Economic Times. Australia: Trafford Publishing.
Lapovsky, L. and McKeown-Moak, M.P. (2010). Roles and Responsibilities of the Chief Financial Officer: New Directions for Higher Education, Number 107. Australia: John Wiley & Sons.
Moeller, R.R. (2007). COSO Enterprise Risk Management: Understanding the New Integrated ERM Framework. USA: John Wiley & Sons.
Oakes, K. and Galagan, P. (2011). The Executive Guide to Integrated Talent Management. USA: American Society for Training and Development.
Schneider, S., and Scanlon, B. (2011). The Board Game: Survival and success as a company board member. Australia: LID Editorial.
Tyson, E. (2016). Investing For Dummies. John Wiley & Sons.
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