Increase in Aggregate Demand Essay Example for Free

Increase in Aggregate Demand Essay In order to address this question it is first necessary to define both inflation and aggregate demand. Aggregate Demand is the total amount demanded by the whole economy, ie it is not related to one single market. Inflation is the persistent increase in the average level of consumer prices compared to the same time the previous year. This is a natural occurrence over time as wages rise and so the quantity demanded increases, which activates the incentive price function and causes prices to rise, thus causing inflation. There are numerous types of inflationary pressure but nearly all can be subdivided into demand-pull or cost-push inflation. Demand-pull inflation is inflation caused by an extension in total demand, which is sufficiently big so that it exceeds total supply, this happens because of a huge increase in aggregate demand. As a result all factors that lead to large increases in aggregate demand can also cause demand-pull inflation. Thus, a main cause of demand-pull inflation could be a reduction in the levels of direct taxation. By reducing the level of direct taxation consumers have more real income and therefore greater disposable income to spend on goods and services, this leads to increased consumption and thus an extension in demand in all markets. Due to this extension in aggregate demand, firms will increase prices within each market leading to average price rises and inflation. Another factor which would cause demand-pull inflation would be a boost in consumer confidence such as the one which occurs when an economy reaches the recovery stage after emerging from recession. Due to the boost in consumer confidence and increasing amount of money is spent on goods and services which in turn raises the demand and thus firms increases prices, leading to inflation. Several further factors which also cause demand-pull inflation are a decrease in indirect taxation, rapid consumer borrowing in times with low interest rates and depreciation in the exchange rate. Cost-push inflation is inflation which occurs when firms increase prices in  order to maintain a profit margin. They did this because of an increase in cost productuion. For example the price of cars will be increased by firms if there is an increase in demand for and therefore and increase in the price of steel. A main cause of cost-push inflation is increasing labour costs. Labour costs may be increased by the government introducing a higher minimum wage or by a union led workforce negotiating a higher wage. Due to this increase in overall costs profits are reduced and it is necessary for firms to increase their prices to increase the amount of profit they are making so it reaches the previous level. In this case average prices will rise compared to the previous year even though there has been no increase in aggregate demand, as cost-push inflation is not linked to demand. A secondary cause of cost-push inflation is higher rates of indirect taxation which may be imposed by the government on certain products such as alcohol and tobacco or by increasing VAT. This is generally done in a free market economy to reduce the popularity of what are seen as negative goods which may harm peoples health. This happens because some firms feel that there is elastic demand for the products they supply and so pass on the increase in costs to their customers in the form of higher prices to maintain profitability. In this case aggregate demand has not grown but there has been an average price level increase. There is no doubt that inflation can be caused by an increase in aggregate demand, in the form of demand pull inflation, however cost plus inflation also exists where inflation occurs without an increase in aggregate demand and thus this view is incorrect.

The Conflict Media vs. Internet Essay -- Web Cyberspace News Essays

The Conflict Media vs. Internet Throughout our lives we learn new things and acquire new information. Many sources can give us these things to continue on with our lives. Almost all of us either wake up with the radio, listens while driving to wherever we are going, or even at work during our day. Wherever we are or wherever we are going this is a source of information. Another yet stronger more persuasive possession would be from the media. What they tell us and show us impacts our actions and what we think about. From weather to spot stories we usually believe what they are telling us as the viewer. If the weather person says it will rain the next day we will dress accordingly. Everything we are usually told or shown we take into consideration for our daily customs. All affect us one way or another in the long run. In a close yet difficult relationship between the online word and the off line world or cyber space and real time these two places can conflict as well and combine to form our society. Each one influen cing us equally. The media can influence us in both aspects. Through the television news where Internet issues are discussed and argued and also on the web where each and almost every major station has a web site. This aspect you can read it yourself with little outside influence and come up with your own conclusions. Every person on an evening news show has a personal opinion, they only reveal it when you least expect it. This rarely happens, because they are reading what the writers and reporters have written off of a TelePrompTer and adding some of their own opinion as they are talking. Most of the time we have to believe what they are saying, because they are the ones that research the topics and stories that... ...rmation in the online communities, because I would be able to have my own opinion about the particular topic I am reading about. No person on television would be able to tell me one way or another about what I should think or side myself to. I am my own person and have my own thoughts and feelings and all people should be the same way in where they can think for themselves and be their own person. A final thought, each of these two venues presented a good argument on which was better and the advantages and disadvantages towards both, yet one might always be better in one persons eyes and the other might be better in the person next to them. This gives each person a particular individuality and distinguishes them from the rest of the world. Works Cited Rory J. O'Connor. "Africa: The Unwired Continent." Richard Holeton. Singapore: McGraw Hill, 1998. 270-274.

Journal of my close friend

My Close Friend Who is that? Is that your best friend? I am sure everyone had been asked by those questions in their life. So do l. So, what it is close friend? Close friend is someone who always cheers you up in no matter what happened either in happiness or sadness. Hangout, gossiping, playing, studying, shopping, laughing, crying, and so on, all you do is together with them, your best friends. In my life, I do have a close friend. She is my sunshine. She also is my rainbow after heavy rain had passed. I laughed with her. I cried with her.She never left me, so do l. We are a best friend. Forever, I will cherish our friendship. I still remember how I met her in our first meeting. On the first day of my high school, I went to school early. When I stepped in my class, I saw someone was sleeping in the corner of my class. I got a little shocked when looking at her. For sure because I do think she might be a ghost or someone who are homeless. But somehow, I told myself to be brave, so I came near to her then I realize, she also a student, same as me. I woke her up and she is awake.She looked at me innocently with her puffy eyes. Suddenly she cried hard in front of me. I was so anxious with that unexpected scene. Did I hurt her when I woke her up? When I asked her, she told me everything. Nothing less but it was about her heartbreaking. I Just listen to her and comfort her. Although it was a little awkward since that was the first time I met her, still, I feel comfortable with her. The feeling want to be her friend were strongly linger in myself. After that, we always keep in touch and end up as a best friend. Sharing all story together.When I was in trouble, she is ready for me and I had never leave by her side when she needs me. Where is she, there is always me by her side. That is why everyone called us a twin. She is a thin girl with a sweet smile. She is so cool most of time but when something had troubled her, I easily recognized it. All of her feeling is sho wn at her beautiful face without barriers. That is why I as her only best friend will always cheer her up. I love to see her smile and her sorrow are my first thing I must vanish away. I love her, my only best friend, Siti Najihah†¦

Ask the Right College Tour Questions

College tours are excellent things. Your perky tour guide will show you all the campus landmarks, spout the important stats and answer any questions. So dont waste time asking frequently asked questions - FAQs are on the universitys website. Instead, ask questions that speak to your childs particular interests and concerns, the ones about real student experiences. Its best if your child, rather than you, puts together a list of questions that are important to him and does the asking, but if every teen on the tour is afflicted with a shyness attack, go ahead and get the ball rolling. Here are a few questions to get you started, whether youre on campus for a regular tour or Admit Day. Dont ask about average class size - its a slippery statistic that averages gargantuan lectures with tiny senior seminars. Ask your tour guide about the size of his freshman year classes.Is this a commuter college or do students hang around on the weekend? What did your tour guide do last weekend? And the weekend before that? How often do he and his friends go home?Whats the best class or most inspiring professor your tour guide ever had? Why? How well does he know his professors, and how did that happen?Whats the most impossible class to get into on campus? Why? Is it because the class and the professor are so darn wonderful, or because its difficult to get the classes your child will need? Does that vary by major?Who helps your child choose classes? Does he have the same faculty adviser for all four years? Or does a peer adviser - a sophomore or junior, for example - help him register the first time and then hes on his own?What are the general education requirements - the GEs requir ed for graduation? For some reason, tour guides think GEs are the same on every campus. They are most emphatically not. Some schools require five humanities, five lab science, and three math classes, beginning with calculus. Others require one of each, plus a world religions class. The differences can be a deal breaker for your child.Why did your tour guide pick this school? What other schools did he consider? What does he wish hed known then that he knows now?What are the biggest campus traditions? Does everyone go to the football or basketball games?What percentage of students go Greek? Are the fraternities and sororities residential or social only? When is rush and what’s it like?How difficult is it to find housing? On some campuses, frats and sororities are a big deal because its so difficult to get into the dorms. Did your tour guide live in a dorm freshman year? Which one? Which one does he like best?What was the most difficult thing to get used to here? (A University o f Puget Sound guide admitted it was the grey, drizzly weather, then rallied valiantly to say, â€Å"But it makes the sunny days seem all the sunnier!† Weather is a huge issue for many students.)Where does your tour guide study - in his room, the library, another favorite spot? How many hours a day does he study?Whats the favored campus hangout? How about off-campus (best pizza, coffee house, etc.)?If your child has health issues, youll want to ask questions about those concerns, of course. But everyone needs to ask what happens if a student has appendicitis or another health emergency - is there a hospital on campus or does campus security take you to a nearby hospital?Ask about academic support. Every campus has facilities to help students with learning disabilities, but most have tutoring help for anyone who needs it. What form does that take? Peer tutors or faculty support? Math and writing learning centers staffed 24/7? No matter how brilliant your child was in high schoo l, he may be unhappily surprised by the higher expectations of college professors.Ask about the college career center and internship opportunities – and don’t be fooled by â€Å"the college encourages†¦Ã¢â‚¬  answers. Internships are an essential, often overlooked way to test drive career paths and start building a resume long before graduation. Some schools have extensive internship opportunities. Some even require a certain number of internship hours. Others post opportunities in their career center but dont particularly solicit them.Ask about study abroad opportunities too. Nearly every college has some sort of international study program, but some majors are not conducive to study abroad - not if you want your child to graduate in four years, anyway. Some schools run their own satellite campus in a foreign country, so your child would be studying with University of Redlands faculty, for example, in Salzburg. Others tap into foreign university programs. (Do n ot be impressed by promises that a year abroad will cost no more than a regular year at your expensive private school or that the college will apply your scholarship to those months. All private colleges say that. State schools simply charge you whatever the international program charges. Hint: its not $45,000.)

Electronic Mail Acceptable Use Policy - 1054 Words

On December 16, 2003, Congress enacted the Controlling the Assault of Non-Solicited Pornography and Marketing Act (CAN-SPAM) of 2003, Pub. L. No. 108-187, 117 Stat. 2669 (2003) requiring the Federal Trade Commission to issue regulations defining the relevant criteria to facilitate the determination of the primary purpose of an electronic mail message, specifically commercial electronic mail messages. An electronic mail acceptable use policy is a document stipulating constraints and practices that users must agree to and comply with when accessing and using the organization’s network system and electronic mail servers. The electronic mail acceptable use policy is a component of the Individual Use and Operation of Information†¦show more content†¦L. No. 100-235 (H.R. 145), (Jan. 8, 1988) C. Electronic Communications Privacy Act of 1986 (ECPA), 18 U. S. C.  § 2510 et seq. D. Freedom of Information Act (FOIA), 5 U.S.C.  § 552 et seq. E. Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003(CAN-SPAM), 15 U. S. C.  § 103 et seq. The CAN-SPAM Act is a law that sets the rules for commercial email, establishes requirements for commercial messages, gives recipients the right to have entities stop emailing them, and sets forth the penalties for violations. However, the law does not apply just to bulk e-mail. â€Å"It covers all commercial messages, which the law defines as ‘any electronic mail message the primary purpose of which is the commercial advertisement or promotion of a commercial product or service† (Federal Trade Commission, 2009). If an entity is found guilty of violating the CAN-SPAM Act, each separate email in violation is subject to penalties of up to $16,000 and more than one person may be held responsible for violations. The CAN-SPAM Act has certain aggravated violations that may give rise to additional fines. The law provides for criminal penalties—including imprisonment—for:  · Accessing someone else’s computer to send span without permission.  · Using false information to register for multiple email accounts or domain names.  · Relaying or retransmitting multiple spam messages through a computer to mislead others about

A Solution to E-Waste Essay - 1566 Words

Over the past decade there was a profound development achieved in the sphere of high technologies production. Now the scale of electronics market becomes wider and spins up day by day with a cyclic launch of new electronic appliances with enhanced features. â€Å"According to the Consumer Electronics Association (CEA), consumers were expected to purchase 500 million units of consumer electronics in the US in 2008.† (Electronics Takeback coalition, 2010) Consequently, a clear tendency toward rapid substitution of electronic appliances can be observed. A high rate in electronics upgrading shortens their lifespan and results in following stockpiling of needless gadgets, which become a part of municipal waste. These end-of-life electronic devices†¦show more content†¦Now consumers are not supplied with enough opportunities for proper disposal of e-waste. Recycling management is not sufficiently developed. Consequently, instead of being recycled a growing number of end-of -life electronics with a variety of hazardous components in their structures, such as lead and mercury, is dumped in landfills or incinerated. Umesi and Onyia (2008) suggest that 20 acres of lake can be contaminated just with one-seventieth of a teaspoon of mercury’ so that the fish becomes unsafe to eat. Thus, such practices as disposal of e-waste in dumping ground or incineration substantially expose the whole environment to contamination with toxins, which in its turn leads to expansion of different human health problems. Binns (2006) reports that people’s exposure to mercury toxication through food, through eating fish in particular, may lead to the whole range of diseases such as impaired neurological development, kidney damage, respiratory failure and affection of cognitive abilities. Embryos and small children are at the largest risk to be affected with mercury toxins, especially their nervous system. Therefore, pregnant women are recommended to forgo eating fis h. (ibid, 2006) Hence, it is essential to take drastic measures concerning e-waste issue. However, it can be claimed that currently there is no any relevant approach being successfully developed and applied to the problem. One of the waysShow MoreRelated Solutions to E- waste problem Essay997 Words   |  4 Pagesdevices. Consequently, in our disposable age most apparatus turn into aged ones in a couple of years or even months. This is one of the reasons why electronic devices become waste. E-waste is discarded, surplus, obsolete, or broken electronic devices or apparatuses. Most environment protection organizations maintain that e-waste induces health and pollution problems. The primary reason for this view is that almost all of the electric devices contain hazardous substances which are toxic and are notRead MoreThe Impact Of E Waste And Potential Solutions3865 Words   |  16 PagesThe Impact of E-waste and Potential Solutions: An overview Jianyang Zhang Project 4 W credit Environmental Science and Resource Management 100 University of Washington jianyz@uw.edu Introduction Electronic waste (or E-waste) describes discarded electrical or electronic equipment (EEE), such as computers, Televisions, and cell phones. For the past decades, the global demands for electronic devices has increased exponentially while the life span for these equipment has been shortened sharply. GivenRead MoreThe Problem Of E Waste1718 Words   |  7 Pageselectronic waste commonly referred to as â€Å"e-waste† is one of the biggest challenges facing people all over the world for the production of the electrical and electronic equipment has been growing rapidly in the past decades. Therefore, the rise in demand for this equipment and the high obsolete rate has made e-waste of the fastest growing source of waste. For this reason, experts have come out to suggest various methods that can be used to contain this menace. In particular, the solutions include theRead MoreHuman Population Growing Every Day Essay1354 Words   |  6 Pagesresources, and what are we supposed to do with all of the waste we are producing? All of these are good questions to ask, because without these items the human population would not be able to survive. Some of these questions are less mentioned than others, which is why they are going to be brought to attention; these questions include: space, food/water, and e-waste. If people do not start using our recourses wisely or come up with some solutions to the existing problems, the Earth will not be able toRead More e-waste Essay1160 Words   |  5 Pagesal. 2008, 322). The problem of e-waste threatens the future environment of the modern society. E-waste or electronic waste means electrical and electronic equipment, which is not suitable for use and fills the dumps. Electronic equipment, such as mobile phones, computers, and televisions consist of hazardous materials, which pollute the environment and impact on human’s health. Obtaining of 1.6 billion pounds of lead and four times more pounds of plastic from e-waste had been foretold by the NationalRead MoreEvaluating The Performance Of E Waste Recycling Programs Using Fuzzy Multi Attribute Group Decision Making Model1522 Words   |  7 Pages Review of â€Å"Evaluating the Performance of E-Waste Recycling Programs using Fuzzy Multi-attribute group Decision Making Model† Haokun Li hli120@illinois.edu â€Æ' Contents Introduction 4 Performance Evaluation 5 (1) Define Criterions 5 (2) Score the Criterions 6 (3) Compute Weighting Factors 7 (4) Computing Weighted Matrix 8 (5) Find Positive and Negative Ideal Solutions 8 (6) Compute Overall Performance Index 8 Conclusions 9 References 10 â€Æ' Abstract: A fuzzy multi-attribute groupRead More Solutions to Electronic Waste Essay1179 Words   |  5 Pagesand make it faster.The majority of mankind has computer at home or at work. In recent years changing of electronic equipment become faster due to obsolescence and fashion(Deathe et al. 2008, 322 ).The problem of e-waste influence on the future environment hangs over the modern society. E-waste ^ also known as electronic waste.It means electrical and electronic equipment which is not suitable for use and fill the damps. Electronic equipment, such as mobile phones, computers, and televisions consist ofRead MoreE-Structors Disassembles and Safely Recycles Electrical Devices681 Words   |  3 PagesSummary of E Waste The video is about e waste and how it’s handled in the USA. Julie Keough is the co-founder of E-Structors, a company that handles, recycles, sorts, separates and dissembles electronic devices safely in the USA. E-Structors is a certified recycling company to meet EPA standard of handling e waste and just to be sure that they hold that standard, every year an inspector comes and asks a few questions. Around 80% of all e waste gets thrown away in the trash, that’s around 15 millionRead More E-waste Essay example1309 Words   |  6 Pagesmunicipal waste. These end-of-life electronic devices are often called ‘electronic waste, or e-waste’. Now approximately 20-25 million tons of e-waste is estimated to be produced worldwide every year with the largest number of electronics being discarded in Europe, the United States and Australasia. (Brett H. Robinson, 2009) Hence, there is a serious challenge of management of e-waste disposal appearing across the whole world . Figures show that a very small percentage of electronic waste undergoesRead MoreAssignment 2: Chain Management at Durham International Manufacturing Company (Dimco)1373 Words   |  6 Pagesimprove customer service. Supply Chain integration also gives a new set of capabilities which helps to the company to increase revenue and achieve a competitive advantage. In a supply chain management, sometimes the necessity to integrate actions is a solution to the supply chain processes, rather than simply managing individual functions. A successful integration effort requires group effort between buyers and suppliers, as well as teaming up on the development of new products, sharing information, and

Business Finance

Questions: Write report on the following companies: 1. Commonwealth bank of Australia. 2. National bank of Australia. Answers: Introduction The project report is prepared on the two companies listed in Australia stock exchange. The companies will be from the same industry. The Australian companies chosen in the project are banks: Commonwealth bank of Australia National bank of Australia These two banks i.e. the commonwealth bank of Australia and National bank of Australia are listed in the Australia stock exchange (ASX). The stock prices of the two banks will be obtained from the site of ASX. The stock prices will be collected from the 5 weeks i.e. from 2016 April 22nd to 2016 March 21st. The data will be analysed for the purpose of finding the movements in the prices. In addition to this ratio, analysis of the both banks will be done. By the help of ratio analysis it will be easy to examine the financial position and performance of the banks. The annual reports of the banks will be downloaded from the web site of banks. The data will be extracted from the annual reports of banks. Financial statements of banks are referred for collecting the information. Financial statements analysis will be done by taking information from the balance sheet and income statement of the company. Overview of company Overview of the commonwealth Australian bank and National Australia bank are given below: National bank of Australia National Australian bank works as the financial service organization. There are around 12,700,000 customers of the bank along with 42,000 people in the 1700 stores worldwide. The major operations of the company are undertaken in the Australia in addition to Asia, United Kingdom and New Zealand. The brands of the company are positioned uniquely. The Bank is built on a common commitment to offer quality products and services, fair charges and fees, and proper advice and guidance whenever required. The strategy of the company is to build great experience to the customers by being a most respected bank of the New Zealand and Australia (NAB, 2016). Australian banking inclusive of business banking and personal banking offers varied range of products and services to the business customers. The personal banking products of the company can be approached by the help of UBank, NAB broker, NAB and NAB trade. The banking product of the company has specialist expertise in property, education, health and government, and in agribusiness. Australian banks include currencies and commodities, debt markets, fixed income, specialized finance and asset servicing etc. NAB wealth offers t solutions to the retail, institutional and corporate clients along with providing investment and superannuation. The company operates with the largest networks of financial advisors under Plum, JANA, MLC, and JBWere, etc. (NAB, 2016) NZ banking is entailing the corporate, retail and insurance and business franchise in New Zealand under the brand Bank of New Zealand (BNZ). Market operations of BNZ are excluded from the same in which Australian banking is dealing (NAB, 2016). Commonwealth Australian bank The Commonwealth bank is one of the leading banks of Australia providing integrated financial services encompassing business, premium, institutional and retail banking. It also provides insurance, investment, funds management, superannuation, and products and services of share broking. The group of bank is one of the largest companies listed in Australian securities exchange and is also included in global index of Morgan Stanley capital. The strength of the company is around 52, 000 people. Almost 60 percent of the staff of bank consists of women (CAB, 2016). To keep total shareholder return in top quartile of Australian listed peers over the period of five years is one of the key financial objectives of the company. Calculation of total Shareholder Return is done in the company by taking into account the growth in the value of investment in share of the group. It is done on the assumption that the dividends of the company will be reinvested in shares (CAB, 2016). Top three strategic strengths of the company are: Brand Diversified business mix Scale The brand of the company is one of the most recognized brands in the industry of integrated financial services in Australia. The group has domestic presence with the largest customer base of Australian banks (CAB, 2016). The Commonwealth bank provides full range of retail services to the customers including personal loans, credit cards, demand deposits and term deposits, home loans and many more. Full range of commercial products is also provided by the company such as trade finance, equipment, business loan, agribusinessandruraproducts(CAB,2016). Technical Analysis of Performance of Banks in Stock Markets Technical analysis is pertaining to the study of actions of financial markets. The technician is supposed to notice the changes in stock prices that occur on day to day or week to week basis (Credit Suisse, 2009). The data related to the Commonwealth bank of Australia and National Bank of Australia is obtained from the Google finance. The data is collected for the 5 weeks. The change percent in data is calculated. The percent in change of the data is calculated for the purpose of making chart and showing the trend with the help of technical chart. NAB The table showing percentage of change and technical chart is shown below: Table 1: Table showing percentage change in stock prices of NAB Date Change 22-Apr-16 -0.44% 21-Apr-16 -1.33% 20-Apr-16 0.15% 19-Apr-16 -2.45% 18-Apr-16 0.78% 15-Apr-16 -0.11% 14-Apr-16 -2.45% 13-Apr-16 -2.07% 12-Apr-16 -2.53% 11-Apr-16 0.80% 08-Apr-16 1.53% 07-Apr-16 -0.08% 06-Apr-16 0.23% 05-Apr-16 1.01% 04-Apr-16 -0.55% 01-Apr-16 2.13% 31-Mar-16 -2.34% 30-Mar-16 -0.08% 29-Mar-16 2.44% 24-Mar-16 3.53% 23-Mar-16 1.98% 22-Mar-16 1.49% 21-Mar-16 - Figure 1: Technical chart showing percentage change in stock prices of NAB Figure 2: Technical chart showing stock prices of NAB Analysis The table is showing the percentage change in the stock prices. Figure 1 is depicting the change in the stock prices and percentage change in stock prices during the 5 weeks. Share price of the National Australia bank was down by 9.82 percent in the beginning of 2015. It was speculated that the company will be able to restore the confidence among the investors next year i.e. in 2016. The stock prices shown in the figure 1 and 2 given above are presenting that the performance of the company has fluctuated during March 2016 to April 2016. The performance of the company has gone up on 24th march and after that there is a slight decrease in the performance of the company. In the beginning of April there is a decrease in the share prices of the company and it has become negative. The table given above is showing that during this period, there is percentage change of 3.53 percent on March 24 and on 31st March the percentage change is -2.34. There are lots of fluctuations by mid-April in th e performance of the NAB. The performance has gone negative on 13th April, 15th April and on 21st April. The business survey on NAB is showing that despite of the global uncertainties in the Australian business environment the bank has maintained its performance. As per the results, the performance of March and April is showing improvement. Mining boom and regaining confidence in the investors are the causes of same (Credit Suisse, 2009). CBA The tables and figures showing the performance of the company are given below: Table 2: Table showing percentage change in stock prices of CBA Date Change 22-Apr-16 0.58% 21-Apr-16 -1.25% 20-Apr-16 0.20% 19-Apr-16 -0.70% 18-Apr-16 1.09% 15-Apr-16 -0.39% 14-Apr-16 -1.33% 13-Apr-16 -2.09% 12-Apr-16 -2.15% 11-Apr-16 0.08% 08-Apr-16 0.32% 07-Apr-16 0.22% 06-Apr-16 0.14% 05-Apr-16 2.29% 04-Apr-16 0.10% 01-Apr-16 2.58% 31-Mar-16 -2.20% 30-Mar-16 -0.26% 29-Mar-16 2.27% 24-Mar-16 2.45% 23-Mar-16 0.27% 22-Mar-16 0.30% 21-Mar-16 - Figure 3: Technical chart showing percentage change in stock prices of CBA Figure 4: Technical chart showing stock prices of CBA Analysis The performance of the CBA in stock market is showing fluctuations during the given period. From 22nd march the performance is stagnant which has suddenly gone up on March 24 2016. On this date the change percentage is observed to be 2.45 percent from 0.27 percent. During the end of March i.e. on March 30 and March 31st the performance is again showing negative values. On the beginning of April there is again the increase in the stock prices of the company. Stock prices reached to the zero level after few days. On April 12 there is a drastic decrease in the stock performance. Therefore, it is observed that during March and April the performance of CBA has shown ups and down. Reason of decrease in the stock prices is assumed to be the market conditions of markets of Australia. However, it is reported that there is improvement in the performance of the company by seeing the performance of January and February (Damodaran, 2016). Analysis of Risk and Return on Basis of Financial Reports The risk and return of both the banks of Australia will be determined based on the ratio analysis. With the help of ratio analysis it is easy to analyze the position and performance of the company. Ratio analysis Ratio analysis of both the banks is done with the help of annual reports of the banks. Ratio analysis is a financial tools used for analyzing the performance and position of the companies. Annual reports of the national Australia bank and common wealth bank are taken for collecting the financial information. The financial statement taken into consideration while performing ratio analysis is balance sheet statements and income statements (YAL, 2016). The ratios are classified into five parts: Liquidity ratios Activity ratios Profitability ratios Solvency ratios Market value ratios (Accounting for management, 2016) All the ratios will be explained one by one. Liquidity ratios are used to measure the short term solvency of the company. These ratios are important for ensuring the capacity of company to pay current liabilities occurring within one year. Current ratio, acid ratio and absolute liquid ratio are parts of the liquid ratio. Company should maintain liquidity in the company for paying the current liabilities (Accounting for management, 2016). Activity ratios are used to measure the ability of company to covert the assets into sales. The ratios measure the efficiency of the company to utilize its assets. Account receivable ratio, average collection period, inventory turnover, total assets turnover, fixed asset turnover are types of activity of efficiency ratios (Accounting for management, 2016). Profitability ratios are used to measure the profitability of company. These ratios are important from the point of view of creditors of the company. The high profitability of company ensures the company is earning high profits. Operating profit, gross profit, net profit, return on assets, return on equity, return on income, return on capital employed are some of the ratios that come under profitability ratios (Accounting for management, 2016). Solvency ratios are used for repaying the long term debts of the company. The ratio is beneficial from the point of view of the investors as the ability of company to pay the long term dues ensures chances of survival of the business. These ratios are helpful in measuring the capital structure of the company. The ability of company to pay interest on long term borrowings is judged with the help of this ratio (Accounting for management, 2016). Stock market ratios are intended for the investors specifically. These ratios are also known as market value ratios. The stock value ratios attract the investors when these ratios show high value of the company in market. Market value of stock market ratios indicates the value of the company in market in the eyes of investors (Accounting for management, 2016). The ratios computed in the project will be profitability ratios, solvency ratios and activity ratios. Following ratios are calculated in the project: Net profit margin ratio Total asset turnover Return on total assets (ROA) Return on common equity (ROE) Earnings per share (EPS) Pay-out ratio Financial leverage Fixed asset turnover Operating profit Ratio analysis of the National Australia bank and commonwealth bank of Australia Net profit margin ratio Net profit ratio is a popular ratio showing relationship between the net profit and sales of the company. The computation of the net profit is done by dividing net profit after the tax of the company with the net sales of the company (Accounting Tools, 2016). Formula: Net profit ratio = Net profit / Net sales Table 3: Net profit computation of NAB (NAB, 2015) Net Profit margin Year Net Profit margin 2015 22.65 Table 4: Net profit computation of CBA (CBA, 2015) Net Profit margin Year Net Profit margin 2015 33.56 Analysis and interpretation: Net profit of the NAB is 22.65 and CBA is having a net profit of 33.56. It can be observed from the given tables that net profit of CBA is more in comparison to the CBA. Net profit of the company is the indicator of the profitability of the company. It takes into account the profit of the company after deduction of expenses. Hence it is a good indicator of the profit. After observing the tables it can be stated that profitability of the CBA is more than the other banks of Australia. Total asset turnover The asset turnover ratio is an efficiency ratio. It measures the ability of company to produce sales from the assets. The ratio indicates the efficiency of the company in using assets for generating sales. The ratio is calculated by dividing net sales from the average total assets of the company. Computation of average total asset is done by taking assets of the beginning and ending of the company. The amount is divided by 2 (My accounting course, 2016). Formula: Return on assets = Net sales / Average total assets Average total assets = opening total assets + closing total assets /2 Table 5: Total asset turnover computation of NAB (NAB, 2015) Total Assets turnover Year Total Assets turnover 2015 0.03 Table 6: Total asset turnover computation of CBA (CBA, 2015) Total Assets turnover Year Total Assets turnover 2015 0.03 Analysis and interpretation: Total asset turnover of the company NAB and CBA is 0.03. Both the company are having same total asset turnover ratio. Total asset turnover ratio of 1 indicates that net sales of the company are equivalent to the average total assets of the company. The ratio of 0.03 is showing that for every Australian dollar the company is earning 0.03 cents. The total asset turnover ratio of both the companies is very low. It is clear that for every Australian dollar company is earning very less amount. Return on total assets (ROA) Return on asset ratio is also known as the return on total assets. The ratio is profitable in measuring the amount of net income generated by the total assets of the company. The ratio is calculated by dividing the net income from the average total assets. Average total assets are computed by taking ending assets and opening assets of the year and dividing by 2. This ratio helps the management in taking decision related to the investment as the main aim of the business is to earn profits (Drake, 2016). Formula: Return on assets = Net income / Average total assets Average total assets = opening total assets + closing total assets /2 Table 7: Computation of Return on total assets (ROA) of NAB (NAB, 2015) Return on Total Assets Year Return on total assets 2015 0.67 Table 8: Computation of Return on total assets (ROA) of CBA (CBA, 2015) Return on total assets Year Return on total assets 2015 1.09 Analysis and interpretation: Return on total assets is obtained by dividing the net income from the average total assets. The return on total asset of NAB is 0.67 in 2015. In the same year, return on total assets of the CBA is more than the NAB. The Return on total assets of the CBA is 1.09. The Return on total asset ratio shows the amount generated by the company over the amounts invested in assets. The return on total assets of the CBA bank is showing that CBA is able to generate around 1.09 of net income on the every Australian dollar spent on assets. On the other Side, NAB bank is getting very less profit on the every Australian dollar invested in assets. Return on common equity (ROE) Return on equity is a ratio measuring the profitability of company. It measures the ability of company to produce the profits from investment made by the shareholders in the company. In other words the ratio shows profit generated by each dollar of equity of common stakeholder (Drake, 2016). Formula is given below: Formula: Return on equity = Net income / Shareholder's equity Table 9: Computation of Return on common equity (ROE) of NAB (NAB, 2015) Return on Common Equity Year Return on common equity 2015 12.87 Table 10: Computation of Return on common equity (ROE) of CBA (CBA, 2015) Return On Common Equity Year Return on common equity 2015 17.9 Analysis and interpretation: Return on equity of the CBA is 17.9 in the year 2015. In the same year NAB bank has return on equity of 12.87. It can be observed from the table given above that Return on equity of the CBA is more in comparison to the NAB. The difference of around 5 percent is noticed. NAB has earned 12.87 dollar on every Australian dollar of common shareholders equity. On the other side CBA has earned net income of 17.9 dollar on every dollar of common shareholders equity. Earnings per share (EPS) Earnings per share are also known as income per share. The ratio is very important from the point of view of stock performance of the company. The earnings per share states the amount of share received by each share of the company in case profits will be allocated to the outstanding shares at the end of financial year. It shows the profitability of the company (Drake, 2016). It is calculated by the following formula: Formula: Earnings per share = net income preferred dividends / outstanding shares at the end Table 11: computation of Earnings per share (EPS) of NAB (NAB, 2015) Earnings per share Year Earnings per share 2015 2.45 Table 12: computation of Earnings per share (EPS) of CBA (CBA, 2015) Earnings per share Year Earnings per share 2015 5.29 Analysis and interpretation: Earnings per share of NAB are 2.45 and CBA is having earnings per share of 5.29. As it is clear from the figures itself that Earnings per share of the CBA are higher from that of NAB. There is twice the difference in the earnings per share of CAN from the NAB. It is clear that stock performance of CBA is better while comparing with the NAB. If NAB will be distributing the every Australian dollar of income to the shareholders than the portion of each share would be 2.45. Similarly, portion of each share of shareholder of CBA would be 5.29. Pay-out ratio Payout ratio is sometimes called as dividend payout ratio. The dividend payout ratio is used to measure the percentage of net income allocated among the shareholders as the dividends. The ratio shows how much Profit the Company is willing to retain and the portion distributed among the shareholders. The following formula is used to calculate the payout ratio (Drake, 2016). Formula: Dividend payout ratio = total dividends / net income The ratio can also be calculated by dividing the dividends per share by the earnings per share. Table 13: computation of Pay-out ratio of NAB (NAB, 2015) Payout ratio Year Pay Out ratio 2015 117.5 Table 14: computation of Pay-out ratio of CBA (CBA, 2015) Payout ratio Year Pay Out ratio 2015 71.5 Analysis and interpretation: Dividend payout ratio of CBA is 71.5 in the year 2015. On the flip side, NAB is having dividend payout ratio of 117.5. The dividend payout ratio of the NAB is very much higher in comparison to the CBA. The ratio of CBA is showing that CBA is dividing around 71.5 percent of the profits among the shareholders as the part of dividend. NAB is distributing very high percent of dividends to the shareholders. Financial leverage Financial leverage is a ratio used to find out the debt in the capital structure of company. These ratios are also known as equity ratios or debt ratios. The ratios are helpful in measuring the value of equity in the company by analyzing debt portion. In other words, these ratios measure the debt of the company and compare the same with the equity of asset of the company. It includes debt ratio, debt to equity ratio and equity ratio (Drake, 2016). Table 15: Computation of financial leverage of NAB (NAB, 2015) Financial Leverage Year Financial Leverage 2015 18.3 Table 16: Computation of financial leverage of CBA (CBA, 2015) Financial Leverage Year Financial Leverage 2015 16.66 Analysis and interpretation: Financial leverage of the NAB is 18.3 in the year 2015. On the flip side, financial leverage of the CBA is 16.66. It can be observed from the tables given above that financial leverage of the CBA is high in comparison to NAB. There is more debt in CBA in comparison to NAB. High financial leverage is not good from the perspective of company. High financial leverage shows that there is more financial risk in the company. There is more debt burden on the company. Therefore, it can be inferred that NAB is more exposed to the risk in comparison to CBA. Fixed asset turnover Fixed asset ratio is activity or efficiency ratio. The ratio is helpful in measuring the efficiency of company to use its fixed assets for generating revenue. The ratio compute the revenue earned in comparison to investment made in fixed assets (Drake, 2016). The formula of fixed asset turnover is as follows: Formula: Fixed assets turnover = net revenue / average fixed assets Average fixed assets = Opening fixed assets + closing fixed assets / 2 Table 17: Computation of fixed asset turnover of NAB (NAB, 2015) Fixed asset Turnover Year Fixed Asset Turnover 2015 14.74 Table 18: Computation of fixed asset turnover of CBA (CBA, 2015) Fixed asset Turnover Year Fixed Asset Turnover 2015 9.56 Analysis and interpretation: Fixed asset turnover of the NAB is 14.74 and CBA has fixed asset turnover of 9.56. The fixed assets turnover ratio of the CBA is lower in comparison to NAB. It is indicating that NAB is using its fixed assets efficiently in comparison to the CBA. The net revenue earned by the NAB is higher as a result of using fixed assets efficiently. The NAB is generating 14.74 Australian dollars on each and every dollar spent on the fixed assets of the company. On the other side, CBA is producing 9.76 dollars on the every Australian dollar invested in fixed assets of the company. Operating profit The operating profit is known as operating margin ratio of the company. It is a profitability ratio. It measures percentage of total revenue made up by the operating income. In other words, the ratio is helpful in letting the company know about the amount left after meeting all the variable expenses. It is important from the creditors as well as from the investors point of view as it reflects the profitability of company (My Accounting Course, 2016). Formula: Operating margin ratio = operating income / net sales Table 19: Computation of operating profit of NAB (NAB, 2015) Operating Profit margin Year Operating Profit margin 2015 33.4 Table 20: Computation of operating profit of CBA (CBA, 2015) Operating Profit margin Year Operating Profit margin 2015 46.7 Analysis and interpretation: Operating profit of CBA is 46.7 which are quite higher. Operating profit of NAB is 33.4. CBA is having higher operating profits in comparison to the NAB. It is indicating that profits left with the CBA after meeting all the variable expenses are more than the NAB. The operating profit ratio of CBA is showing that it is using around 53 cent on the dollar for paying variable expenses. On contrary to it, NAB is paying more part as the variable expenses hence its profit is reduced. Performance of the CBA is better as per the results of ratio analysis of the banks. Recommendation Based on the analysis of the top leading banks of Australia it is found that CBA is having good performance and position in comparison to NAB. Following recommendations can be given to the investors after analyzing the financial statements of the company: Profitability of the CBA is high in comparison to the NAB. Investors can invest in the CBA. However, ROE of the CBA was found to be less in comparison to the NAB. Net profit and ROA of CBA are higher. Moreover, operating profits of CBA are higher indicating that after meeting expenses more profits remain with the CBA. Efficiency of the NAB is found to be better rather than CBA. So NAB is utilizing the assets more efficiently. Investors should consider the efficiency factor while taking decision of investing in NAB. Financial leverage of NAB is high. It is not considered good to have high financial leverage. NAB will be more risky as it is having more debt and interest burden over it. So, investors should keep in mind the financial leverage of both the banks before investing in banks. Pay- out ratio and earnings per share ratio of the companies are showing the stock performance value of company. Earnings per share ratio of the CBA are twice more than that of NAB. Contrary to it, Payout ratio of NAB is higher. Considering the performance of both banks, company should invest in the CBA as it would be more beneficial to invest in CBA. CBA has higher profits, lower debts, high earnings per share and average efficiency. There is high financial risk in NAB as the debt is high. Conclusion The project report was aimed to examine the performance and position of the two banks of Australia, for the purpose of advising investors to invest in one of the banks. Ratio analysis was chosen to analyze the performance and position of the financial reports of the National Australia Bank and Commonwealth Bank of Australia. The analysis of 2015 was done computing ratios of the banks. In addition to that stock prices of both the banks were analyzed for the duration of 5 weeks taking from March 21st to 22nd April 2016. Technical chart analysis and change in percentage of stock prices of both the banks is shown. The stock prices of both the companies are highly fluctuating during the month of March and April. The performance was going up and down for many days. It was reported that there is improvement in the performance of both the banks during March and April in comparison to the performance of 2015 and initial months of the year 2016. Performance of CBA was found to be better in comparison to the NAB. Profitability of the CBA is higher than that of the NAB. Higher profitability is representing higher profits of the CBA. The investor should invest in CBA as risk in CBA is less in comparison to NAB and profits are higher. Less risk and high return will be a good combination for the investors of banks. Reference Accounting for management, 2016. Classification of financial ratios on the basis of function. Accounting Tools, 2016. Net Profit Ratio. CAB, 2016. Commonwealth Bank overview. Credit Suisse, 2009. Technical Analysis - Explained. Global Technical Research and Behavioral Finance. Damodaran, A., 2016. Smoke and Mirrors: Price patterns, charts and technical analysis. Stern. Drake, P.P., 2016. Financial ratio analysis. My Accounting Course, 2016. Operating Margin Ratio. NAB, 2015. Annual report. NAB. Conclusion