Commonwealth Bank of Australia (CBA) has been considered for this report to present the managerial financial activities of the respective organisation. This study is going to figure out the risks, financial performances, sources of funds, and the time value of money for the business. In addition to that, the payout policy for CBA and its competitors, the respective sector, and the general market are to be determined.
CBA is a banking organisation; therefore, it operates with numerous financial operations that are commonly related to businesses. Principal activities of CBA have been identified as follows (Finder.com.au, 2019):
a) Marchant services
The Australian banking industry has commonly been considered under the sector of ADIs (Authorised Deposit-taking Institutions). In line with the characteristics of the ADIs, it can be said that the banking businesses of Australia are used for funding different types of businesses (Financialservices.royalcommission.gov.au, 2019). To be precise, the Australian banking sector uses to help the businesses that are ranging from national to international level with huge assets.
Major competitors of the Commonwealth Bank of Australia have been identified as Westpac, ANZ, Bank of Queensland, and many more.
Being the leading retail bank of Australia, CBA’s main goal is to offer a range of services and products such as credit cards, loans, savings accounts, and transactions to the customers, especially, to the businesspersons.
In a banking organisation, it is obvious to face some kinds of risks, as it operates with different types of financial products and services. In accordance with the risks, it can be said that the financial risks are segregated into two types. These are as follows:
The market risks that are not diversifiable have been known as systematic risks. These risks have commonly appeared from the returns related to the macroeconomic factors. The risks that are related to services such as loans, asset management, and many more can be considered as systematic risks (Waemustafa & Sukri, 2016). In relation to that, it can be said that in the case of interest rates, managing assets, and commodity management; the systematic risks appear.
Unsystematic risks are generally known as the risks that are largely known as industry-specific risks. In that case, it can be said that the investments made in the respective organisation by the investors may have created the unsystematic risks or residual risks. In accordance with the words of Waemustafa & Sukri (2016), it has been known that the unsystematic risks be largely reduced with the assistance of diversification. Henceforth, it has been understood that the unsystematic risks can be avoided if the financial distribution and the resource allocation of that company are made conveniently.
The Annual Report, 2018 of CBA has been presenting the net interest income of CBA is $18336, the revenue is $18928.24, and the diluted EPS has been determined as $517.7 at the end of the relative financial period. On the other hand, in the case of 2017, it has been seen that the revenue is $25190, net income is $17543, and the Diluted EPS is $558.8. By taking into account the financial outcomes of the respective organisation for the years 2017 and 2018, it can be said that the financial growth rate of CBA is a little less in 2018. In relation to that, it can be said that CBA has to face a decrease in the cases of revenue and diluted EPS (Commbank.com.au, 2018).
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