Principal of Financial Market

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Principal of Financial Market
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Table of Contents
Executive Summary........................................................................................................................ 3
Introduction..................................................................................................................................... 4
Section A: Top Down Analysis ...................................................................................................... 5
Economic Analysis ..................................................................................................................... 5
Industry Analysis........................................................................................................................ 8
Forecast changes impact companies’ performances................................................................... 8
Section 2: Bottom Up Analysis....................................................................................................... 9
Current Financial Situation of AMA Group ............................................................................... 9
Current Financial Situation of Woolworths.............................................................................. 11
Comparing need to industry and company history ................................................................... 14
Summary and Recommendations ................................................................................................. 15
Reference List ............................................................................................................................... 16
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Executive Summary
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. 
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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). 
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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