Macquarie Group

Abstract

The researcher selected Macquarie Group Limited for the case study. Macquarie Group Limited
is a multinational investment and financial management company of major multinationals. The
case study addresses the launch of the business, followed by the micro-elements, the micro-
elements that have positively influenced Macquarie Group Limited include primarily consumers,
organizations, the industry, rivals and distributors. There are 5 main concepts in the case study
that are preferred by the business i.e., optimizing utility, cost of opportunity, reducing marginal
utility, supply and demand. After reviewing these values, it is founded that in order for
Macquarie Group Limited to be successful, it must understand its clients, the global market and
business plans, know when to buy more inventories, provide ample time for the supply of raw
materials, or consider repairing machinery that has declined in value beyond acceptable
maintenance. Loaning debt and tax avoidance are the two major problems facing the firm.
Finally, the case study addresses the suggestion of Macquarie Group Limited as a successful
business to invest in when the company has not only revenue but also profits. In comparison, the
Macquarie Group has raised EPS by 15% a year over the last three years.

Introduction

The banking market in Australia has made a huge contribution over time to a tradition that is
closely connected to big past events. In 1817, the state's primary bank was founded as the Bank
of New South Wales. From that point on, numerous extra-local banks and several outside banks
have been set up, with mergers continuing to alter the scene of the market. At the beginning of
2020, the financial uncertainty caused by the coronavirus largely disrupted the banking sector in
Australia.

Macquarie Group Limited is a global investment and financial management company of major
multinationals. It employs more than 14,000 employees in 25 countries and is the world's largest
supplier of transport funds, along with Australia's top-ranking mergers and acquisitions partner
with handling funds of more than A$ 495 billion. Macquarie owns a variety of permits that allow
it to carry out operations in the jurisdictions in which it participates and is regulated globally by a
wide range of rules. As per Macquarie Group, the Holey Dollar has become Australia's first
example of financial ingenuity, which reflects the creation of practical strategies for successful
outcomes.

There are 5 existing Macquarie Group activities, i.e. Macquarie Wealth Management, which
covers Macquarie infrastructure and real estate. The second is finance and financial services, i.e.
personal banking, asset management and corporate financial institutions. Third operation is
Specialized and Asset Financing, i.e. leasing finance to consumers and borrowing properties to
companies, including 600,000 vehicles, commercial aircraft, medical equipment, etc. Fourth
activity is Commodities and the Global Economy, where the firm performs analysis on even
more than 2,300 stocks and market operations on more than 160 goods. The last activity is
Macquarie Finance, where the firm advises other firms on growth prospects, sources of venture
funding and negotiable deals.

Corporate Governance and Social Contribution

Macquarie's (Macquarie Group Limited and its subsidiary companies) approach to corporate
governance is to recognize opportunities and achieve them for consumers, families, shareholders
and the public, to foster Macquarie's long-term performance while responsibly managing risk,
and to create superior and stable shareholder value in the long run by aligning stakeholders'
interests. Macquarie's governance processes and procedures have evolved over time, guided by
frequent Board meetings to assess prospects for growth, systemic improvements and external
innovations. The emphasis on regulatory interaction from around world has been considerable
over the year. The Royal Commission on Corruption in the Finance, Superannuation and
Financial Services Industries focused primarily on the actions of financial advisory companies in
Australia.

In addition to Macquarie's lengthy governance structure for risk control, Board Committees
pursued increased reporting on such non-financial risks. Further changes to Macquarie's
corporate governance processes and procedures have been introduced and will continue to
happen to enhance the efficiency of the supervisory position of the Board, to respond to changing
environments and to strive to achieve sound customer and group results.
Every year, including some of the most recent year the Board reviews the execution of
Macquarie's risk management process to ensure that the framework appears to be robust and that
Macquarie works with due respect to the risk tolerance of the Board. The core components of the
system are evaluated by the respective sections of the Risk Management Department and the
findings are submitted to the Board. Both core components of the process – including all those
areas controlled by the Department – are checked by the Internal Audit Division over a rolling
three-year audit schedule. Over the course of the year, senior executives presented to the Board
on the efficacy of risk management and internal control processes in managing material threats.

The risk management process has been built on the principle that a structured strategy to risk
mitigation is better preserved with a single risk management process inside the Macquarie
Community that extends to both Macquarie Operational and Core Service Units (including Bank
Group entities). The Bank Group retains its own governance system, and is liable for the sound
and cautious operation of the Bank Group, taking due account of the needs of the deposit
holders.

The Board Charter outlines the position and duties of the Board and the issues specifically
designated for the Board of Directors, including the approval of the annual agenda and marketing
concept, the implementation of the yearly budget, the approval of Macquarie's funding and
investment management strategy, the approval of Macquarie's Risk Management Framework and
Risk Management Framework, the analysis of financial risks posed by Macquarie and the
manner in which they are presented. The Board's function is to support Macquarie's long-term
goals, taking into consideration Macquarie's particular and wider obligations to its owners,
funders, customers, employees and the societies in which it works.

Financial Statements

Investments in companies in the Company's financial statements are checked periodically for
failure signs or more regularly where incidents or adjustments in conditions suggest that the
carrying balance will not be retrievable. An injury is known for the degree for which the carrying
amount of the investment reaches its impairment losses, the higher the fair valuation is the lower
the cost of selling and the lower the value of use. Investment decisions in companies that have
been disabled are checked at each end of the reporting period for the reversal of injury. The sum
of any accepted disability reversal shall not allow the carried value of the company to surpass its
original expense.

Tax obligations are recognized in the statement from the financial condition statements as the
responsibility of the Merged Company has been terminated, canceled or expired. Losses and
gains arising from the non-recognition of debt capital instruments or total assets, which are
eventually calculated at amortized expense, are recorded in other sales as part of other operating
profit and charges, whereas those resulting from the non-recognition of debt capital instruments
or financial liabilities are recognized as capital gains as evidence of other operating income and
costs.

Analytical Review including ratio analysis in a table

Financial ratios can be a valuable metric for small business owners and management to assess
their success against the goals of the organization and to contend with larger businesses. Ratio
analysis, when carried out regularly over time, can provide assistance to small businesses who
understand and respond to trends that affect their operations. However, another explanation for
recognizing the financial ratios of small business owners is that they provide one of the most
profitable indicators of an organization from the perspective of the customers, financial analysts
and business inspectors. Regularly, the ability of a small business to receive a duty or worth
funding would depend on the discretionary proportions of the enterprise.

The four main ratios used are Return on Asset, Current Ratio, Debt-Equity Ratio, Inventory-
Asset Ratio.

1. Return on Assets Ratio

Return on Assets (ROA) is a measure of how good a business makes use of its resources
by determining how profitable a company is as it adds up to its assets. ROA is best used
to compare comparable firms or to compare a company with its past results. ROA takes
 into account the responsibility of the company, not at least like any other metric, such as
the return on equity (ROE). The equation for determining the return on assets is Net
Income/Total Assets.

2. Current Ratio
The current ratio measures all current assets of a corporation to its current liabilities.
These are generally defined as properties that are cash or will be translated into cash in a
year or less and liabilities that will be paid out in a year or less. In certain cases, the
current ratio is referred to as the percentage of working capital which makes the
difference to the speculation that the ability of a company to cover its short-term
liabilities with its existing capabilities is more or less adequate. Present ratio
shortcomings include the complexity of evaluating degrees over market packages, the
over-generalization of individual resource and duty equalizations, and the need for
trending results. Total assets/current liabilities are the method for determining the current
ratio.

3. Debt-Equity Ratio
The debt-to-equity (D/E) ratio measures the firm to its shareholder capital by adding
obligations that can be used to determine how much the company needs. Higher
consumption rates tend to indicate a corporation or a stock with improved shareholder
chances. However, the proportion of D/E is impossible to equate with that of business
bunches where ideal proportions of duty can differ. Investors will periodically adjust the
proportion of D/E in order to reflect on long-term commitments, as long as the
probability of long-term liability is distinguished from short-term obligations and
payables. The formula for the estimation of the D/E ratio is Gross Debt/Total Equity.

4. Inventory-Assets Ratio
 The inventory-asset ratio indicates the proportion of assets wrapped up in the inventory.
For even the most part, a lower ratio is perceived to be much healthier. The formula for
determining the I/A ratio is Gross Inventory/Total Assets.

Despite all the optimistic jobs of the financial ratios, in any situation, company managers are still
stimulated to know the ratio constraints and treat ratio analysis with an amount of skepticism.
Proportions alone do not have one of the data that is necessary for making choices. But decisions
taken without regard to monetary ratios are made without all the details available.

The return on assets for 2020 is 5.3 per cent, for 2018 is 6.0 per cent and for 2017 is 4.3 per cent,
which means that Macquarie Group was best off turning its expenditure into profit.

Going on to the current ratio, the current 2020 ratio is 2,165, which indicates that the Macquarie
Party is economically dominant and stable in 2020.

The Debt/Equity ratio tells that the D/E ratio for 2020 is 1.15, which suggests that Macquarie
Group used further debt funding in 2020.

Finally, when talking of Investment/Asset Ratio, the 2020 I/A ratio is 0.187, which informs us
that the Macquarie Group is stable in 2020 and the smaller the I/A ratio, the better for the firm
because the I/A ratio indicates the portion of the total assets locked up in the company's
inventory.

Elementary Theories

Keynesian Theory Keynesian is an economic theory concerning consumer investment as a whole and its
impact on productivity and development. Keynesian theory is to use proactive policy action
to regulate economic output to fight or prevent economic stagnation. Fiscal and monetary
advocacy are main materials Keynesian analysts predict to regulate the economy and
combat unemployment. Spending from one client becomes income for a business that then
has to invest on equipment, workers' wages, resources, supplies, services purchased, taxes
and shareholder returns.
Friedman Theory Friedman's theory, also recognized as shareholder principle or stockholder doctrine, is a
 common business morality hypothesis put forward by Milton Friedman that suggests that
investors are the primary burden of a corporation. This strategy describes owners as the
financial motor of the business and the only team that the company is fiscally mindful of.
Friedman argues that the shareholders should then decide for themselves whether public
programs should be of concern to them, rather than having the person specifically selected
by the shareholders for corporate purposes to resolve these issues.
Fisher Effect The Fisher Effect is an economic theory created by economist Irving Fisher that describes
both based on interest rates and inflation interactions. The Fisher Effect states that the real
interest rate is equal to the average interest rate, minus the expected inflation rate. The
Fisher equation indicates that the real interest rate will be derived from the expected interest
rate by subtracting the estimated inflation rate. The theory was extended to the study of
capital flow and foreign currency trade.

Government Policies

Fiscal policy is a policy of government spending that affects economic conditions. Government
expenditure, interest rates and taxation policies are the primary issues of the monetary policy. On
average, it allows the organization to maintain inflation between 2-3 per cent over time.
Increasing real interest rates will also lead to lower long-term capital stock and lower production
levels due to decreased levels of spending for the firm. Cash-rate is an instrument to regulate
inflation, such that the organization reduces the cash rate. With the rate of unemployment
growing from 5.0 per cent at the beginning of the year to 5.3 per cent in August, and the latest
GDP figures show slow change and a regressive climate, adjusted for population growth, the
organization is seeking to hire more workers to decrease the unemployment rate.

However, with inflation growth still below the 2%-3 per cent target, the question is whether the
Macquarie Group Limited is doing too much or whether more needs to be done by the State.

Conclusion
In order to excel in any form of business operation, it is important to examine the micro-elements
of the enterprise. Macquarie Group Limited has succeeded in pleasing its clients and rivals with
new source finance schemes for Macquarie Group Limited customers. In addition to be ever
more market-leading, Macquarie Group Limited can consider the desire and request of its
consumers by better observing their behavior. The organization has maintained the difficulties it
has faced in recent years. Government actions have also played a crucial role in the growth of the
company.

Speaking about the suggestion, the analyst recommends that Macquarie Group Limited is a good
company to invest in after-study, as it has not only revenue but also profits. Although this does
not make the shares worth buying at any cost, one cannot deny that, essentially, efficient
capitalism requires profits. In the last three years, Macquarie Group has raised EPS by 15% a
year. Although, although shares are still heavily valued, most investors would see their profits as
a symbol of steady income generation. In the case of Macquarie Group Bulls, the good news is
that buyers (collectively) have a large interest in the portfolio, in addition to investing internally.
Yeah, the insider investor has put in it a sparkling property pyramid, currently valued at AU$
378 million. This suggests that leadership should be especially aware of the needs of clients to
make decisions.