Myassignment.live is not sponsored or endorsed by this college or university
The banking system in Australia plays a major role in the economy of Australia. Apart from the primary and fundamental roles of the banking system, banks also provide insurance, trading in ASX financial markets, business banking, stockbroking, insurance and management of funds. In Australia, the banks are 53 in total in which 14 of them are government owned. However, four banks dominate the banking sector in Australia. They are called the big four and include, the commonwealth bank, National Australian Bank (NAB), Australian and New Zealand Banking Group (ANZ) and Westpac Bank (Alam, 2018).
Australian banking system according to Moody’s is very stable due to rising household debt, strong home prices and a wage growth that is moderate. The ANZ Bank was founded in 1835 and offers banking services to corporate, high net worth, commercial and small business. It operates in 34 countries across the world. It has more than 50,000 employee and a reported total assets of $726 billion dollars.
The ANZ Bank was founded in 1835 and offers banking services to corporate, high net worth, commercial and small business. Due to the vibrancy of the banking sector, financial record are well kept and in an organized manner. It is one of the big four banks in Australia with a combined market share of 80%. They are called the big four and include, the commonwealth bank, National Australian Bank, Australian (NAB), New Zealand Banking Group (ANZ) and Westpac Bank (Bai’Bithaman Ajil, 2018).
Australia was the first country in the world to abandon paper banknotes and switch to polymer money. Very strange to the touch, but it's a matter of habit, because such an innovation protects banknotes from fakes. They have a long lifespan, but new, they stick to each other, so be careful when calculating.
Australian dollars can be found everywhere because the currency is quoted on world markets. If you want to buy an AUD before you leave, at home, or wait until you arrive in Australia, the exchange rate will not change much. Just in case, many travelers keep a little cash in their pocket, in most cases, hoping for cards and ATMs already in the destination country.
If you are one of them, then upon arrival, it is usually best to exchange a small amount at the airport. The exchange rate is often the most unsuccessful at hotels and airports, so buy as much currency as you need for the first time and look for the best rate later. AUD can always be cashed at ATMs with a reasonable commission and exchange rate. Even if you see “No commissions”, the benefits are derived from the proposed exchange rate. Learn about the fair rate using the online currency converter and compare the average market rate with the offer that was offered to you. Despite the constant fluctuations in the exchange rate, the currency converter will help you navigate. In the end, if you need to exchange cash, then make sure that the bills are free from defects and crunching. Foreign exchange offices refuse to accept damaged money, which can create additional problems for you if the bills are dirty or crumpled. So, the commission will be high and you will have to tie your trip to the working hours of the bank. For these reasons, many travelers have forgotten travelers checks and use ATMs, credit cards or debit cards (Block, Colombo, Cumming, & Vismara, 2018)..
Most cards are universally accepted in Australia. However, just in case, a little cash in your pocket will not hurt. If you can’t pay by card, try to find the nearest ATM through the online search engine to withdraw cash. Warn your bank that you are going on a trip so that they do not suspect card fraud. They can freeze your account until you contact them. If you pay by credit or debit card abroad, then you should be aware of the dynamic currency conversion. The system displays the price in your local currency, but converts at a disadvantageous exchange rate. Do not select your local currency, but click on the currency of the country where you pay.
Finding ATMs in Australia is a snap: at banks, shops, even bars and restaurants. If you can’t find it quickly, search the Internet: ATM cash withdrawals are Australia's favorite travel option. They are very affordable, which allows you not to carry large amounts of money. Check your bank fees before traveling on cash withdrawals. As mentioned earlier, if you withdraw cash from a foreign card, you will be offered a dynamic currency conversion (Chang, & Wu, 2015). The conversion option will be visible on the screen:
Just remember the rule: charge a fee in the currency of the country in which you are located, or choose the exchange rate of your local currency. This way you will get an honest exchange rate and not overpay.
Many banks are part of a worldwide network, so you may be lucky and you will save on cash withdrawals if your bank is one of them. Worldwide banks such as HSBC in Australia work similarly and offer great deals to their customers at their branches around the world. Before the trip, check if your bank offers such favorable conditions or cooperation with Australian banks. Despite the fact that the Australian banking market is absorbed by the so-called "Big Four" nationally
The Australian Financial Forum is a key event of the fiscal year at which a complex discussion of general financial issues, industry topics and specific issues of contact between various financial market participants will traditionally take place.
The discussion focuses on summarizing the outgoing year, forecasts for the financial sector in the near future, identifying general and industry trends that may affect the country's financial system, proposals for new legislative initiatives to regulate the financial sector, best practices and best practices of the best Australian and international financiers. The vocation of the Forum is to bring up for discussion the problems facing various segments of the financial market of Russia and propose solutions to these problems. The objective of the Forum is to contribute to the coordinated development of the Australian financial system as a whole and its individual segments: banking and insurance sectors, pension and mutual funds, management companies, corporate financing (Hassan, & Rashid, 2018)..
The capital formed by the enterprise is heterogeneous in origin and has a certain structure. In understanding the term “capital structure”, we adhere to the point of view of most domestic and foreign economists, who regard it as the ratio of own and borrowed capital of an enterprise. The structure of capital plays a crucial role in the formation of its value. The cost of capital of an enterprise is that amount of money in which it attracts resources attracted in the financial market, both its own and borrowed.
The cost of equity is determined from the position of lost profit that is, from the point of view of alternative options for the allocation of funds, when the own funds of the enterprise can be invested by the owner in any objects and bring a certain income, which would be the price of this capital. But since these funds are invested in their own enterprise, their price is the net profit per unit of invested capital:
Where: SCS - the value of the operating equity of the enterprise,%;
PC - the amount of net profit, dollars ; COP - the average amount of equity of the enterprise in the period, dollars.
The mobilization of equity is not accompanied by payments for its use, which indicates the profitability of this source, despite its higher cost. The basic indicator of the cost of borrowed capital is the cost of servicing debt in the form of interest on a loan, as well as the coupon rate on corporate bonds, which we use as the “average estimated loan interest rate” (JV), calculated as the ratio of financial costs associated with attracting financial resources ( FN), to the very amount of attracted capital (KZ): Attracting borrowed capital always causes a reverse cash flow to pay interest and pay off the principal amount of the debt. Therefore, assets formed at the expense of borrowed capital generate a lower (ceteris paribus) rate of return, which decreases with increasing financial costs for loans of all forms (FN).
The main criterion indicator for assessing the effectiveness of the formation of financial resources of an enterprise is the weighted average cost of total capital as the sum of the weighted average cost of ownership. Now that we have decided on the methodology for calculating the cost of capital attracted by an enterprise, we can turn to considering the results of our studies of the capital structure of agricultural enterprises (hereinafter - SHP) of the Vologda municipal region. In the structure of the used capital in the agricultural holdings of the district (according to data for the last five years), borrowed funds make up on average 30% of the total capital, and profitability (Karianga, 2017)..
At the present stage of development of the Australian economy, characterized by increased uncertainty of the financial environment, the process of forming capital companies and optimizing its financial structure is gaining priority. The tasks of technological modernization, diversification of economic activity and increasing the competitiveness of companies with limited financial resources require improving capital formation policies taking into account promising and current development goals.
The optimal combination of these goals from the point of view of modern theories of financial management is achieved on the basis of the cost approach to company management, focused on the choice of the market value of the company as a priority criterion for the results of its activities. It is from these positions that the effectiveness of all financial decisions should be evaluated, including in the field of the formation of the financial structure of capital, which determines the particular importance of developing theoretical foundations and methodological tools for optimizing the financial structure of capital in the company's value management system.
The processes of market reorganization of the Australian economy necessitate the active introduction of modern models of capital structure formation and the development of a cost-based approach to company management into the country's economic life. At the same time, the forms and methods of managing the capital structure tested in foreign countries should be adapted to the characteristics of the national economy and financial markets. When forming the capital structure of Australian companies, it is important to take into account the specific conditions of their activities, the dynamism of factors of the external and internal environment (Hutabalian, et al,2016)..
Despite the theoretical and practical significance of the problem of the financial structure of capital and the intensification of the search for methods adequate to new tasks, there are no conceptual and applied developments in the economic literature that reflect the specifics of the formation of an optimal financial structure of capital from the standpoint of the cost approach. These circumstances require the deepening of theoretical research and the justification of effective methodological approaches to optimize the financial structure of capital in the company's value management system. The degree to which the problem is developed. Theoretical foundations and practical methods of forming the optimal financial structure of company capital have always been in the focus of attention of scientists and practitioners (John, 2017).
Management of capital formation and its financial structure, consistent with the goals and strategic areas of the company’s business, is a priority condition for its effective development. The company's capital, viewed from the point of view of combining the methodological capabilities of the economic, resource, operational and investment-financial approaches, is categorically characterized as the total cost of funds in cash, tangible and intangible forms invested in the assets of the company, with the aim of incrementing this value taking into account profitability, liquidity and risk. The financial structure of the company’s capital is the ratio of all forms of equity and borrowed funds used by the company to invest in assets in the course of business (LI, et al,2019)..
The vector of evolution of theories of the financial structure of capital consists in taking into account a growing variety of factors that determine this structure and reflect the influence of the external and internal environment; the totality of these factors includes institutional-legal, financial-economic and socio-administrative blocks (Suprayitno, & Soemitro, 2018).. Theories of financial structure in accordance with the starting methodological approaches can be subdivided into neoclassical theories based on conditions of market perfection and rationality of economic entities (traditional theory).
The company’s value management system is built on the basis of a selection of key cost growth factors, one of which is the financial structure of capital, which determines the relationship of its optimization with the increment of company value. The concept of optimizing the financial structure of capital is a system of scientifically based and generalizing practical experience views on the goals and principles that determine the process of forming the optimal financial structure of capital in the company's value management system (Pierre, 2017). From the point of view of the cost approach, the goal and priority criterion for optimizing the capital structure is to maximize the company's reasonable market value, the principles are scientific and practical validity; purposefulness; accounting for the ratio of “profitability - risk-liquidity”; taking into account the dynamism of changes in external and internal determinants; achievement of target parameters with rational use of available opportunities and resources. In accordance with the developed concept, the optimal financial structure of the company’s capital means such a ratio of all forms of equity and borrowed capital that maximizes the reasonable market value of the company, taking into account the required balance of “profitability - risk - liquidity”.
The process of capital formation of companies in the Australian economy is characterized by the following features: unequal opportunities for capital formation for companies with different assets due to differentiation of their financial situation and access to financial market resources; high dependence of large companies on global financial markets, which forms a factor of financial risks; insufficient potential and imbalances in the domestic financial market, limiting the possibilities of mobilizing external sources of capital formation of companies; a significant role of accounts payable in the formation of capital of domestic companies; the growing influence of the state on the processes of capital formation of Australian companies.
A study of the financial structure of capital, conducted on the example of telecommunications companies, revealed the following significant characteristics: companies as a whole have a positive dynamics of equity, achieved by increasing retained earnings; in companies with higher growth rates than the industry average, there is a tendency to lower growth rates of equity and increase debt, primarily in the form of bank loans and bonds loan loans; the level and dynamics of the debt burden of telecommunications companies vary significantly, but in general, long-term (permanent) capital prevails in the financial structure of their capital.
An analysis of the impact of the financial structure of capital on the performance of telecommunication companies using traditional methods has empirically confirmed the existence of a relationship between the ratio of equity and borrowed capital to effective indicators. At the same time, despite certain results, traditional methods within the framework of accounting and financial approaches do not make it possible to establish the optimal financial capital structure from the point of view of maximizing the company's reasonable market value, which necessitates the development of more efficient models.
The practical implementation of the cost approach to optimizing the financial structure of capital involves the selection of an analytical tool for managing the value of the company. A comparative analysis of the methodological capabilities of the main valuation approaches made it possible to justify the need to use an economic profit model as such an instrument based on the EVA and MVA indicators, which provides a synthesis of accounting and financial approaches by combining the standard financial statements of companies and the requirements of a cost management concept.
Optimization of the financial structure of the company’s capital in the future and current periods can be carried out using a model aimed at maximizing the reasonable market value and taking into account the profitability – risk – liquidity ratio using matrix tools. The model provides the choice of the optimal financial structure of the company’s capital based on the establishment of strategic and operational indicators of market value, highlighting key financial leverage of value, the formation of scenario options that take into account the impact of external and internal factors and the development of flexible mechanisms of managerial impact. The scientific novelty of the dissertation research consists in substantiating conceptual approaches and developing methodological tools for the formation of an optimal financial capital structure in the value management system of Australian companies at the current stage of economic development. The increment of scientific knowledge obtained in the thesis is represented by the following elements:
A classification of theories of capital structure has been developed, which differs from the existing ones in that it is based on fundamental methodological principles from which these theories proceed; this made it possible to distinguish neoclassical theories based on the principles of market perfection and rationality of economic entities (traditional, Modigliani-Miller, stationary correlation) and institutional theories based on the principles of information asymmetry and irrationality of economic agents (signal, conflicts of interest, behavioral);
The concept of the formation of the optimal capital structure in the company's value management system by identifying the target optimization series - maximization of reasonable market value based on the creation of economic profit, establishment of optimization principles (scientific and practical justification of financial decisions on the choice of financial capital structure, target orientation, accounting for the “profitability – risk – liquidity” ratio, taking into account the dynamism of changes in external and internal factors, achievement of target parameters with the rational use of available resources), which allowed to deepen the scientific understanding of the process of optimizing the financial structure capital tours from the point of view of the cost approach;
Clarified the concept of the optimal financial structure of the company’s capital as the ratio of all forms of equity and borrowed capital, which maximizes the reasonable market value of the company taking into account the balance “profitability - risk - liquidity” which, unlike traditional definitions, reflects the whole range of investment qualities of capital (profitability, risk, liquidity), which allows linking the target criterion for optimizing its financial structure with the system of necessary restrictions (Schaeffer, & Matt, 2016).
Identified trends in the financial structure of capital in companies with different growth rates, manifested in an increase in the share of equity, formed mainly from profit, in companies with lower growth rates and an increase in the debt burden in companies with higher growth rates; the relationship between the financial structure of capital and the performance indicators of the company is established, which characterizes the increased volatility of profit and profitability with an increase in the share of borrowed capital;
A model has been developed that allows to practically implement the concept of optimizing the financial structure of capital in the company’s value management system in the future and current periods, its algorithm is developed, taking into account the identification of strategic and operational indicators of market value, highlighting key financial leverage, retrospective analysis, a promising choice for based on multifactor scenario options and the formation of mechanisms of managerial influences, an effective methodological s toolkit matrix modeling in strategic and tactical cuts (Tsofa, Goodman, Gilson, & Molyneux, 2017).
The theoretical significance of the study lies in the fact that the provisions, conclusions and suggestions obtained during the dissertation research develop and supplement a number of aspects of the theory of finance and financial management and can serve as a theoretical basis for developing company policies in the field of managing the financial structure of capital and the value of the company. The practical significance of the work. The main conclusions and recommendations contained in the work can be used in economic and financial benefit.
Alam, M. K. (2018). Personal Finance Management System.
Bai’Bithaman Ajil, B. B. A. (2018). Management of Islamic Finance: Principle, Practice, and Performance. policy, 80, 81.
Block, J. H., Colombo, M. G., Cumming, D. J., & Vismara, S. (2018). New players in entrepreneurial finance and why they are there. Small Business Economics, 50(2), 239-250.
Chang, D., & Wu, Z. (2015). Stochastic maximum principle for non-zero sum differential games of FBSDEs with impulse controls and its application to finance. Journal of Industrial & Management Optimization, 11(1), 27-40.
Hassan, M. K., & Rashid, M. (Eds.). (2018). Management of Islamic Finance: Principle, Practice, and Performance. Emerald Publishing Limited.
Hutabalian, R., Razak, A., Arie, M., & Ruslan, A. (2016). The Transparency of the Local Finance Management of Papua Province in the Framework of the Establishment of the Good Financial Governance. JL Pol'y & Globalization, 48, 1.
John, S. (2017). Administration of the Public Finance Management Act 1999 in the North West Provincial Administration in South Africa (Doctoral dissertation, University of Pretoria).
Karianga, H. (2017). The Essence of Public Participation in Regional Finance Management: Good Governance Perspective. JL Pol'y & Globalization, 65, 90.
LI, S. W., & SUN, M. N. (2019). The Principle of Behavioral Finance behind the Double-killing of Wanda Group’s Stocks and Bonds. DEStech Transactions on Economics, Business and Management, (ssemr).
Pierre, J. M. (2017). BiB-Core Courses-(Anglophone) S2-Finance 2: Value and investment. COURSE CATALOGUE, 6.
Suprayitno, H., & Soemitro, R. A. A. (2018). Preliminary Reflexion on Basic Principle of Infrastructure Asset Management. Jurnal Manajemen Aset Infrastruktur & Fasilitas, 2(1).
Schaeffer, V., & Matt, M. (2016). Development of academic entrepreneurship in a non-mature context: the role of the university as a hub-organisation. Entrepreneurship & Regional Development, 28(9-10), 724-745.
Tsofa, B., Goodman, C., Gilson, L., & Molyneux, S. (2017). Devolution and its effects on health workforce and commodities management–early implementation experiences in Kilifi County, Kenya. International journal for equity in health, 16(1), 169.
To export a reference to this article please select a referencing stye below:
My Assignment Help. (2022). Accounting Principles II. Retrieved from https://myassignment.live/free-samples/acct2023-accounting-principles-ii/financial-statements-of-the-business-file-A1D39FE.html.
"Accounting Principles II." My Assignment Help, 2022, https://myassignment.live/free-samples/acct2023-accounting-principles-ii/financial-statements-of-the-business-file-A1D39FE.html.
My Assignment Help (2022) Accounting Principles II [Online]. Available from: https://myassignment.live/free-samples/acct2023-accounting-principles-ii/financial-statements-of-the-business-file-A1D39FE.html
[Accessed 06 September 2022].
My Assignment Help. 'Accounting Principles II' (My Assignment Help, 2022) < https://myassignment.live/free-samples/acct2023-accounting-principles-ii/financial-statements-of-the-business-file-A1D39FE.html> accessed 06 September 2022.
My Assignment Help. Accounting Principles II [Internet]. My Assignment Help. 2022 [cited 06 September 2022]. Available from: https://myassignment.live/free-samples/acct2023-accounting-principles-ii/financial-statements-of-the-business-file-A1D39FE.html.
Are you confident that you will achieve the grade?
Our best Expert will help you improve your grade
If you are the original writer of this content and no longer wish to have your work published on Myassignment.live then please raise the content removal request.