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Discuss the Credit Suisse’s working capital practices and current issues/problems.Give suggestions or recommendations to the Credit Suisse in terms on how they can manage their working capital.

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Instructions for Submission
Please state the following details on your cover page of your assignment:
Module Leader: Navin Kuma
Module title: Financial Management
Module Number: PSB6005CL
Word limit: Maximum 1,500 words
Any penalties for not complying with word limits will be in accordance with university and faculty policy.
Learning Outcomes Assessed
The following learning outcomes are being assessed.
1. Critically discuss the role and purpose of the financial management function.
2. Examine and apply working capital management techniques and to advise on the profitable and efficient utilisation of the company's assets.
COURSEWORK QUESTION:
(1) Discuss the Credit Suisse’s working capital practices and cu
ent issues/problems.
address 1 working capital problem will do. Credit suisse used far too much capital for far too little return and dragged down the whole group's profits. It consistently destroyed value for investors. This is part of the working capital issue, can discuss and evaluate this point and provide the relevant information.
a) need to have at least 3 years of financial report to discuss/evaluate.
) maybe can apply ROA formula in the report
(2) Give suggestions or recommendations to the company in terms on how they can manage their working capital.

Annual Report XXXXXXXXXXConsolidated financial statements – Credit Suisse (Bank)
429
VIII – Consolidated
financial statements –
Credit Suisse (Bank)
Controls and procedures 431
Report of the Statutory Auditor 432
Report of the Independent Registered
Public Accounting Firm 432-IV
Consolidated financial statements 433
Notes to the consolidated financial statements 440

430 Consolidated financial statements – Credit Suisse (Bank)
Notes to the consolidated financial statements
1 Summary of significant accounting policies ....................................................... XXXXXXXXXX440
2 Recently issued accounting standards............................................................... XXXXXXXXXX440
3 Business developments, significant shareholders and subsequent events ............ XXXXXXXXXX441
4 Segment information ....................................................................................... XXXXXXXXXX441
5 Net interest income ......................................................................................... XXXXXXXXXX442
6 Commissions and fees..................................................................................... XXXXXXXXXX442
7 Trading revenues ............................................................................................. XXXXXXXXXX442
8 Other revenues ............................................................................................... XXXXXXXXXX442
9 Provision for credit losses ................................................................................ XXXXXXXXXX442
10 Compensation and benefits ............................................................................. XXXXXXXXXX443
11 General and administrative expenses ................................................................ XXXXXXXXXX443
12 Restructuring expenses ................................................................................... XXXXXXXXXX443
13 Revenue from contracts with customers ........................................................... XXXXXXXXXX444
14 Securities bo
owed, lent and subject to repurchase agreements ........................ XXXXXXXXXX445
15 Trading assets and liabilities ............................................................................. XXXXXXXXXX445
16 Investment securities ....................................................................................... XXXXXXXXXX445
17 Other investments ........................................................................................... XXXXXXXXXX447
18 Loans............................................................................................................. XXXXXXXXXX448
19 Financial instruments measured at amortized cost and credit losses ................... XXXXXXXXXX449
20 Goodwill ......................................................................................................... XXXXXXXXXX456
21 Other intangible assets .................................................................................... XXXXXXXXXX457
22 Other assets and other liabilities ....................................................................... XXXXXXXXXX457
23 Leases .........
Answered 12 days After Aug 08, 2024

Solution

Khushboo answered on Aug 18 2024
5 Votes
Module Leader: Navin Kuma
Module title: Financial Management
Module Number: PSB6005CL
Brief introduction about Credit Suisse
Credit Sussie Group AG is a global financial services and investment banking firm and it was founded in 1856. The company is headquartered in Zurich, Switzerland and has been acquired by UBS group in June 2023 to avoid bankruptcy. The company is mainly providing services related to private and investment banking, shared services and assets management. The group was also a primary dealer and forex counterparty of the Federal Reserve of United States. The company was also least affected bank in world at the time of global crisis and it had CHF 1.3 trillions assets under management by end of year 2022.
Detailed analysis of working capital crisis and history
Credit Sussie was the second largest global financial services and investment banking firm in Switzerland after UBS group. The main reason for distressed sale of Sussie was withdrawal of $10 billion approximately by investors or depositors in year 2023. The bank was facing financial crisis from last 2-3 years and its audited financial statements were also under scrutiny. The bank also announced its material weakness in financial reporting and Saudi National Bank (SNB) one of largest investor of bank also ruled out to provide further financial assistance due to regulatory issues (Axhelm, Min 2023). The cost of insuring Credit Sussie Group’s bonds also put bank in lot of stress and it was not able to manage its working capital in efficient manner. The working capital management of the entity was very poor and it has put lot of funds in risky ventures which resulted in facing issues related to short-term liquidity and poor working capital position (Rossi S 2023). The detailed working capital analysis and efficiency of the entity to generate revenue by utilizing the assets can understood from below ratios:
    Ratio Name
    Formula
    2023
    2022
    2021
    
    
    Figures
    Ratio
    Figures
    Ratio
    Figures
    Ratio
    Total assets to liabilities
    Total assets
    452507
     1.09
    530039
     1.10
    759214
     1.07
     
    Total liabilities
    414391
     
    481563
     
    711127
     
     
     
     
     
     
     
     
     
    Debt Equity ratio
    Total Liabilities
    414391
     10.87
    481563
     9.93
    711127
     14.79
     
    Total equity
    38116
     
    48476
     
    48087
     
     
     
     
     
     
     
     
     
    Return on Assets
    Net income
    -4114
    -0.91%
    -7304
    -1.38%
    -1029
    -0.14%
     
    Total assets
    452507
     
    530039
     
    759214
     
     
     
     
     
     
     
     
     
    Return on capital employed
    Operating income
    -3260
    -0.72%
    -3331
    -0.63%
    -91
    -0.01%
     
    Total liabilities and equity
    452507
     
    530039
     
    759214
     
     
     
     
     
     
     
     
     
    Net income margin
    Net income
    -4114
    -20.68%
    -7304
    -48.01%
    -1029
    -4.47%
     
    Net revenue
    19890
     
    15213
     
    23042
     
     
     
     
     
     
     
     
     
    Operating margin
    Operating profit
    -3260
    -16.39%
    -3331
    -21.90%
    -91
    -0.39%
     
    Net revenue
    19890
     
    15213
     
    23042
     
The business is having high total assets to liabilities ratio in all the years which states that it is having huge amount of debt. It is indicative of fact that the business has taken huge amount of loan and made risky investment with very low or no return. Further, the business is also having high debt-equity ratio which indicates that the business is having high proposition of liabilities as compared to equity of the entity (FINMA, 2023). The entity is having such working capital practice which lead to non-availability of the funds in the business as they have invested in non-value-added activities which is not producing return to the business. Furthermore, return on assets shows the return...
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