Financial structure and macroeconomic stability Research Paper

Financial structure and macroeconomic stability - Research Paper Example However the ability of the policy makers and financial regulators to implement different rules depends upon the control they have upon reducing inflation and output volatility. The transmission of interest rate fluctuations to output levels and prices depends upon a country’s policies regarding banking and management of financial markets. For most policy makers, in majority of the nations, controlling the interest rates in the short run is considered to be most important. Policy development and interest rate changes are however effective only when they lead to an increase the level finance available to firms and individuals who are willing to invest in projects or shift consumption. In many nations it is observed that the banking system is guarded from the impact caused by monetary policies through barriers which are created by the government (Iakova & Wagner, 2001). Monetary policy which gets transmitted to the real economy and thereby impacts the lending policies of the bank requires to be altered as they hinder growth. When the government sheds the assets of the bank, they indirectly create scope for the central banks to bring about stability in output and inflation rates. Therefore establishing a control over the assets possessed by the bank is a suitable way by which it is possible to manage the macro-economic environment. The deposit insurance system is also identified as a crucial factor in the financial regulatory system which affects the economy. The absence or the presence of a deposit regulatory system affects the readiness of bank managers to undertake risks. Subsequently the access available to firms to raise finance through equity and bonds may also get affected. Financial regulators are frequently seen to use bank loans as a tool to implement monetary policies. Therefore if firms are more dependent upon banks, then the efficient implementation of

Finance for Manager (Finance) Assignment Example | Topics and Well Written Essays - 5000 words

Finance for Manager (Finance) - Assignment Example Here the study also involves a detailed insight into the duties of the financial manager in the company and again recommendations have been developed on the basis of three main factors, i.e. aid planning, control and performance management in the future. The report also discusses the possible source of finance for the recent investment proposal that the company is currently considering. Here the main focus is on loans as a source of finance; however two more sources of finance have also been included as alternatives for the company. Before moving into the current financial condition of the company and analysis of the company, it is crucial to discuss in brief the overview of the company. Overview of Company: Jool’s Furniture was started twenty one years ago and in 1995, the company went on to becoming manufacturers of kitchen and bedroom furniture and within ten years since then, the company went on to expand and have almost 150 different furniture products. The company has gr own since then and now it majorly consists of four main divisions, i.e. Kitchen, Bedroom, Quality and Office departments. The company employs as many as over 500 employees. Although the company has received a number of options to go public, the owner Smith – Brown prefers to keep the company under his complete control hence the public offers have been declined. The next section will detail an analysis of the current financial condition based on which recommendations have been developed for the company. Jool’s Current Financial Condition: In order to conduct an analysis of the company’s financial position, ratio analysis has been adopted here. The ratios analysis has been conducted in four main types, i.e. profitability ratios, efficiency, liquidity, and financial structure. Each of these has been discussed in detail below. Profitability: Considering the net profit margin of the divisions, it has been noted that each of the divisions has shown immense difference. The table below provides a clear insight into three main ratios here, i.e. gross profit margin, net profit margin, and return on equity (Broadbent & Cullen, 2003). Profitability Ratios Year 2009 2008 2007 Â   Quality Products Division Gross Profit Margin 41.37% 40.45% 38.91% Net Profit Margin 3.36% 1.98% -9.90% Return on Equity 9.99% 5.63% -26.30% Â   Kitchen Division Gross Profit Margin 37.61% 36.20% 39.22% Net Profit Margin 3.51% 3.27% 4.97% Return on Equity 11.54% 11.65% 16.73% Â   Bedroom Division Gross Profit Margin 29.78% 31.44% 26.37% Net Profit Margin 3.22% 3.27% 2.48% Return on Equity 11.86% 13.35% 12.85% Â   Office Supplies Division Gross Profit Margin 36.97% 33.64% 38.90% Net Profit Margin 4.86% 4.64% 5.53% Return on Equity 13.38% 12.05% 13.55% Considering the return on equity, it is evident from the results that the Quality products division has seen an improvement as compared to 2007 (-26.30%), the division seems to be stabilising itself currently. The Kitchens Div ision on the other hand has been facing a decline in all of the ratios which does not provide a good insight into the performance of the division