Principal of Financial Market

The current report has focused on discussing overall economic environment of Australia and its retail industry through conducting top down analysis. After performing economic and industry analysis, it has been learnt that the Australian economy has been slightly hit, but it is anticipated that it shall improve in future. It is also expected that Australian financial market and retail industry would also become stronger. On the other hand, two retail companies, AMA Group Limited and Woolworths Limited have been considered for this report. Through bottom up analysis, current financial situation of both the organizations have been carried out. It has been found that their performance has degraded, which requires making a change in their approach of doing business in order to sustain in the market or industry.
Introduction
A financial market allows investors or other people to trade commodities, financial securities and other fungible items of value at low cost of transactions and at prices that would reflect demand and supply. It is a broad term which describes any marketplace where securities comprising currencies, equities, bonds and derivatives takes place. In this paper, an industry and two ASX listed organizations from the same industry would be taken in account for conducting fundamental analysis more specifically, top down analysis and bottom up analysis. It would help in understanding and analyzing overall economic environment and financial situation of the companies. Therefore, retail industry of Australia has been considered for this paper. Australian retail industry has shown significant rise over the years. Like other major industries in Australia, retail industry too largely contributes in the economic development of the nation. The retail industry in Australia is driven by technological changes which range from the exercise of plate glass windows to the advent of the internet that effectively offers a similar customer service.
According to the report of Australian Bureau of Statistics Retail Trade figures, the turnover of retail industry has increased by 3.7% between 2014 and 2015 (Editor, 2016). It is also reported that average retail sales year-on-year in Australia attained is 5.97% from 1983 until 2016 (Tradingeconomics, 2016a). Therefore, Australian retail industry is growing at a significant pace. The companies that have been selected from considered industry are Woolworths Limited and AMA Group Limited. The mission Statement of Woolworths Limited is to deliver and offer to the consumers a satisfactory shopping experience (Woolworthslimited, 2016). On the other hand, the mission statement of AMA Group is to give high commitment to excellence in cost effective operations, customer service and sector leading brands. The firm is intensely focused on investing in its customers and people, maintaining focus on shareholder value and delivering growth (Amagroupltd, 2016).
Section A: Top Down Analysis
Economic Analysis
The monetary policy of Australia is formulated and implemented by the Reserve Bank of Australia. Monetary policy entails the management of short-term interest rates for attaining domestic policy objectives in accordance with the floating exchange rates. The bank maintains an inflation target and seeks to hold consumer price inflation in the economy to 2% to 3% so that price stability, economic prosperity, full employment and welfare of people could be maintained (RBA, 2016). On the other hand, the current inflation rate in Australia is 2.1% in 2016 which has slightly increased from 1.53% in 2015. It is also expected that the inflation rate would further increase to 2.49% till 2020.


Principal of Financial Market

Type: Report
Domain: Financial Market
Words: 3500
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