Accounting Principles Group Company Analysis Project Bond University

Overview of organisations

Wesfarmers

Core Business

Wesfarmers deals in supermarkets, hotels, liquor and convince stores for office suppliers departmental stores and an industrials division with business in chemicals, fertilisers and energy and industrial and safety products and coal. Wesfarner is one of the Australia's largest private sector shareholder and employee organisation which has employee strength of approx 550,000.

History

This is a diversified organisation which was established in 1914 as western 'Australian farmers' cooperative. Deane Hammond was the first chairman of the organisation. It was established due to demand of the rural workers union for finer pay and less hours. Basically organisation was formed to enhance and develop living standards of rural workers and farmers. Empowering rural farmers and workers for their rights were main objectives of this Wesfarmers. In 27 June 1914 the organisation get registered and started working with farmers. Soon association started working with various companies under the Western Australian Farmer Act and began trading form two small rooms at 13 Howard Street, Perth. It moved its new head office just after establishment of three years at 569 Wellington street, Central Perth.

Journey

As per growth perspective organisation grown up tremendously. In 1924 it launched first commercial radio station subject to improve lives and livelihood to western farmers. In 1927 it expand organisation with super phosphate Cuming Smith and Mt Lyell Farmers Fertiliser. In 1950 it acquired GASCYNE trading which introduced air conditioned trailers for better condition. It expansion in to collection of art collection in 1977 and launched a takeover bid for CSBP. In 1984 Wesfarmer becomes a public listed company. It acquired 50% shares of Gresham partners. It acquired 100% of CSBP in 1986. there are two major steps was taken by organisation in terms of business expansion plans. It take over Western Colliers which was a mine industry with a new commission and contract.

In 1993 it acquired Dalgety farmers which was 147 years old corporation with $78 million. The major work of Wasfarmers stared after this merger. It started in capital management and securities from acquisition of Lumley insurance. Company expanded its insurance business further in 2006, with the take over of New Zealand insurance broker Crombie Lockwood and OAMPS LTD with the $700 million. OAMPS was the largest public listed insurance broker. It acquired Cole group in 2007 investing $19.3 billion. This was the time of global financial crisis and Cole's shareholders withdrawal investments from organisation.

It introduced first reconciliation action plan in 2009 and $4.6 billion equity. In 2013 capital return subject to improve insurance business. It sold insurance underwriter business in Australia and New Zealand to insurance Australia group. Sale was completed in June 2014.

Performance of Organisation

Operating performance organisation is also in adequate manner such as return on assets for the year 2017 is 7.10%. return on equity is calculated as 12.25% and return on invested capital as 8.48%. return on capital invested decreased from last year which was recorded as 9.25 % overall effect fall upon organisation as .77% change in equal growth.

Woolworths Group

Core Business

this organisation is one of the largest online supermarket business chain. Which deals in multiple customer products and segments. It mostly deals in vegetables, fruit, meat, packaged foods etc. it sells magazines, household products, DVDs and healthy and beauty products. At present organisation is dealing 1000 stores across Australia. It also supplies pet and baby and stationary procures too. It has multinational brand image across the world in respect of providing fresh foods and customer products. Its loyalty scheme contains the number of incentives for acquiring products. One of it's subsidiary provides reasonable petroleum products at Caltex Woolworths petrol stations.

History

Organisation was funded on 5 December, 1924. it opened its business segment in Sydney's Imperial Arcade in the basement. Woolworths opened its second store in 1927 at queen street in Brisbane in rare conditions. It opened first store in New Zealand in 1930, at that time organisation had 16 stores across new South Wales, Queensland and western Australia. In 1937 it introduced its brand image through media channels. This also indicates towards enhancing sustainable growth of organisation. In 1939 it launched staff assurance scheme by giving the team security in their retirement. Till 1940 organisation became able to develop its own warehouse and space for better advancement and growth. Its first ware house was established in 1929 but the size was store was not enough to store products.

Its core business started form the year 1957 when it put steps towards food industry. It launched first food store in Sydney's Dee why in 1957. grocery range was limited but included fresh vegetables. It major food items are packaged fresh meat sold out of refrigerated cabinets. Till 1959 Woolworth able to inaugurate 300^thstore in Wentworthville NSW. In 1960 organisation become first Australia's first nationwide retailer. Company achieved its mission to deliver quality and value to every state and territory in the country.

Market Condition And Economic Diverse

This is one of the largest retail sector in Australia. Tesco PLC, Wesfarmers Ltd., Seven & I holdings Co. Ltd and the Kroher Co is most near competitors of organisation. Market cap of woolworths group Ltd was recorded as 26877 and 38625 for seven and I holding co. Ltd. Tesco has also nearest peer which was recorded as 32478. it has largest supermarket chain which is involved in distributing customer satisfactory products and services. It used to trade as Safeway and in all Victorian locations. It has also has private label brands such as Woolworths home brand , Woolworths select, woolworths gold, Woolworths fresh and macro wholefoods market.

Performance of Woolworth Group

Growth rate of last three year was recorded as -2.98% net income growth was calculated as -14.48%. Return on assets was calculated as 6.61% and return on equity was recorded as 17.04%. overall return on assets% is calculated as 6.16% return on equity is calculated as 15.30% and return on invested capital is recorded as 13.14%.

Analysis of Financial Statements

Income Statement of Wesfarmersof Financial Year 2016 and 2017

Sales	30/06/17	30/06/16
Total sales	68444000	65981000
Cost of sales	46774000	45930000
Gross profit	21670000	20051000
Operating expenses	Â	Â
Selling general and administrative	13457000	12884000
Others	2931000	2702000
Total Operating Expenses	64428000	62812000
Operating income or loss	4016000	3169000
Income From Continuing Operations	Â	Â
Total Other Income/Expenses Net	122000	-2131000
Earnings before interest and taxes	4016000	3169000
Interest expense	-219000	-266000
Income before tax	4138000	1038000
Income tax expense	1265000	631000
Net income from continuing ops	2873000	407000
Net Income	2873000	407000
Net Profit Available For Shareholder	2873000	407000

Income statement of Wasfarmers Ltd is presented above which defines the profitability of organisation. It is seen that total saless get increased in the year 2017 comparison to year 2016. total sales get increased by $2463000 in percentage 3.73% total increment record for the financial year 2017. Cost of sales get increased by $844000 which increased by 1.83% till the year 2017. gross profit increased by 1619000 which was 8.07% increased from the last year.

Operating expensed get increased by 1616000 with the incremental change of 2.57%. operating income get increased by 847000 with the incremental change of 26.73%. in income from continuing ops which is increased by 2466000 due to high corporate tax liability organisation had to bear a loss of saless. Interest expenses was recorded as 1265000 fort the year 2017 and 631000 for the year 2016.

apart form credibility there are some other aspects also considered in this context such as discontinued operations which were exist in the year 2014 get reduced and bifurcated in subsiding years. There are some essential aspects are covered in respect of analysing the performance of various groups as income tax expenses, income before tax and net income from continuing ops. Quarterly profit was calculated as 5680500 for the month of 2017. and 5361500 for the quarter of before mid year. And half yearly net profitability was recorded as 106000 for the first half year and 648000 for the second half year.

Income Statement of Woolworths Group For The Year Ending 2016 and 2017

Sales	25/06/17	26/06/16
Total sales	55668600	53663700
Cost of sales	39739700	38538600
Gross profit	15928900	15125100
Selling general and administrative	13811800	13905700
Non-recurring	-	-
Others	-244200	-275500
Total Operating Expenses	53307300	52168800
Operating income or loss	2361300	1494900
Income from continuing operations	Â	Â
Total other income/expenses net	-228900	-245600
Earnings before interest and taxes	2361300	1494900
Interest expense	-201600	-255900
Income before tax	2132400	1249300
Income tax expense	650400	486400
Minority interest	350100	311300
Net Income From Continuing Ops	1482000	762900
Non-recurring events	Â	Â
Discontinued operations	111400	-3110800
Net income	1533500	-1234800
Net Profit Available For Share Holders.	1533500	-1234800

 Profitability condition of Whoolworths group is in favourable condition. As per above given income statement following aspects come in existence such as the total sales was recorded as 55668600 for the year 2017 and 53663700 for the year ended 2016. Sales get increased by 2004900 with the percentage of 3.73%. it is calculated that cost of sales was recorded as 39739700 and 38538600. there is difference is calculated as 1201100 with the percentage change of 3.11%. Avail my assignment help from professionals of Global Assignment Help Australia.

Difference between Selling and distributing expenses for the year 2016 and 2017 was calculated as 93900 with the incremental change of 0.67%. total operating expenses was recorded for the year of 2017 was 5,33,07,300 and for the year of 2016 was 5,21,68,800 with the difference of 1138500 and percentage change is recorded as 2.18%. operating income is recorded as 2361300 for the year ended 2017 and 1494900 for the year ended as 2016, difference was recorded as 866400 with the incremental change of 57.95% Quarterly profitability of organisation was recorded in three forms such as gross profit, operating profit and net profit. Gross profit for the first quarter was recorded as 4360500 and 484500 for the net profit.

Analysis of Balance Sheet

Balance Sheet of Wesfarmers Limited For The Year Ended 2016 and 2017

Period Ending	30/06/17	30/06/16
Current Assets	Â	Â
Other current assets	491000	1185000
Net receivables	1633000	1628000
Inventory	6530000	6260000
Cash and cash equivalents	1013000	611000
Total Current Assets	9667000	9684000
Property plant and equipment	9440000	9612000
Other assets	1369000	1809000
Long-term investments	703000	605000
Intangible assets	4576000	4625000
Goodwill	14360000	14448000
Deferred long-term asset charges	971000	1042000
Total Assets	40115000	40783000
Current Liabilities	Â	Â
Accounts payable	6615000	6491000
Other current liabilities	1028000	845000
Short/current long-term debt	5413000	7303000
Total Current Liabilities	10417000	10424000
Long-term debt	4066000	5671000
Other liabilities	1691000	1739000
Total Liabilities	16174000	17834000
Stockholders' Equity	Â	Â
Treasury stock	164000	138000
Retained earnings	1509000	874000
Other stockholder equity	164000	138000
Common stock	22268000	21937000
Total Stockholder Equity	23941000	22949000
Net Tangible Assets	5005000	3876000

Balance sheet of Wasfarmer is defined subject to analyse financial position of organisation. As per above analysis of balance sheet of Swarmer current assets for the year 2017 was calculated as 9667000 and 9684000 for the year 2016. current assets get increased by 17000 with the 0.17% percentage. Total assets for the year 2017 was recorded as 40115000 and 40783000 for the year 2016. total assets get increased by 668000 with the incremental change of 1.63%.

Total current liabilities for the year 2017 was recorded as 10417000 and 10424000 for the year ended 2016. total liabilities was recorded for the year 2016 was recorded as 161740009 and 17834000 for the year ended 2017. stockholder's equity was recorded as 23941000 for the year 2016 and 22949000 for the year 2016. net tangible assets were recorded as 5005000 for the year 2017 and 3876000 for the year ended 2013. overall changes are seen towards incremental change in respect of tangible and intangible assets.

Balance Sheet of Woolworths Groups For The Year Ended 2016 and 2017

Period Ending	25/06/17	26/06/16
Current Assets	Â	Â
Other current assets	1259700	1156500
Net receivables	410500	433500
Inventory	4080400	4558500
Cash and cash equivalents	909400	948100
Total Current Assets	6994200	7427000
Property plant and equipment	8437500	8262800
Other assets	833100	1113300
Long-term investments	118200	108500
Intangible assets	2316400	2341000
Goodwill	4216400	4249600
Deferred long-term asset charges	372300	497700
Total Assets	22915800	23502200
Current Liabilities	Â	Â
Short/current long-term debt	3030500	4361600
Other current liabilities	1168800	1511800
Accounts payable	5068200	4809100
Total Current Liabilities	8824200	8992700
Other liabilities	1438500	1856700
Minority interest	350100	311300
Long-term debt	2774700	3868000
Total Liabilities	13039700	14720300
Stockholders' Equity	Â	Â
Treasury stock	252300	246700
Retained earnings	3554700	2876900
Other stockholder equity	252300	246700
Common stock	5719000	5347000
Total stockholder equity	9526000	8470600
Net Tangible Assets	2993200	1880000

Financial position of Woolworths groups shows following results in terms of sustainability. As per balance sheet figures of 2017 and 2016 was recorded in three terms such as current assets, total assets, current liabilities and total liabilities and stock holders equity. Current assets for the year 2017 was recorded as $6964200 and $7427000 for the year 2016. current assets get decreased in the year 2017 by 462800 with the incremental change of 6.23%. total assets were recorded for the year 2017 was 22915800 and 23502200 for the year 2016, difference with 586400 and 2.50% incremental changes.

Current liabilities for the year ended 2017 was calculated as $8824200 and $8992700 for the year 2016. current liabilities get decreased by $168500 in 2017 due to repayment of short term debts and payment to creditors. Total liabilities was recorded as 13039700 for the year 2016 and 14720300 for the year 2016, percentage difference was calculated as 11.41%. stock holder's equity was recorded as 9526000 for the year 2017 and 8470600 for the year ended 2016. this change in stock holders's equity as 11.079%.

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Analysis of Cash Flows

Cash Flow Statement of Wesfarners of Financial Year 2016 and 2017

Period Ending	30/06/17	30/06/16
Net income	2873000	407000
Operating activities, cash flow provided by or used in	Â	Â
Depreciation	1126000	1175000
Changes in other operating activities	-104000	29000
Changes in liabilities	204000	-88000
Changes in inventory	-296000	-444000
Changes in accounts receivable	87000	17000
Adjustments to net income	-106000	2153000
Total Cash Flow From Operating Activities	4226000	3365000
Investment activities, cash flow provided by or used in	Â	Â
Capital expenditure	-1559000	-1794000
Investments	-2000	-2000
Other cash flow from investment activities	-	-
Total cash flow from investment activities	-53000	-2132000
Financing Activities, Cash Flow Provided By or Used In	Â	Â
Sale purchase of stock	1000	1000
Net borrowings	-1774000	936000
Dividends paid	-1998000	-2270000
Total Cash Flow From Financing Activities	-3771000	-1333000
Change in cash and cash equivalents	402000	-100000

As per analysis of cash flow statements there are some essential figures and aspects come across subject to analyse rotation of cash during the year 2016 and 2017. cash flow of Wesfarmers is calculated in three major terms such as

• cash flow from operating activities which contains the over all cash inflow from operating activities. Cash flow from operating activities for the year ended 2017 was calculated as 4226000 and 3365000 for the year 2016. cash flow from operating activities get increased by 861000.
• Cash flow form investing activities was recorded as -53000 for the year 2017 and -2132000 for the year 2016. this impact fall upon over all changes such as investment in acquiring new assets and sale of old machinery.
• Cash flow from incest activity indicates towards analysing the dereference between financial activities. As per analysis of financial ratios it is seen that capital expenditures for the year 2017 was recorded as -1559000 and -1794000 for the year 2016 which resulted total cash from financing activity is calculated as -53000 for the year 2017 and -2132000 for the 2016.

Cash Flow Statement of Woolworths Group For The Year Ending 2016 and 2017

Period Ending	25/06/17	26/06/16
Net income	1533500	-1234800
Operating activities, cash flow provided by or used in	Â	Â
Depreciation	1037600	985300
Adjustments to net income	441300	1085600
Changes in accounts receivable	2400	29100
Changes in liabilities	382500	-534100
Changes in inventory	367600	204100
Changes in other operating activities	-687500	1881800
Total cash flow from operating activities	3122000	2357500
Investment activities, cash flow provided by or used in	Â	Â
Capital expenditure	-1886800	-1938300
Investments	-	-1300
Other cash flow from investment activities	3500	3200
Total cash flow from investment activities	-1431400	-1266700
Financing activities, cash flow provided by or used in	Â	Â
Dividends paid	-540900	-1184800
Sale purchase of stock	55500	55500
Net borrowings	-1222400	-365600
Other cash flow from financing activities	-21500	75500
Total cash flow from financing activities	-1729300	-1474900
Effect of exchange rate changes	-600	6700
Change in cash and cash equivalents	-39300	-377400

Cash flow statement of Woolworth Group is defined in respect of analysing cash rotation and requirement during the year. As per analysis of cash flow statement there are following figures are analysed such as cash flow from operating activity was recorded as 3122000 for the year 2017 and 2357500 for the year 2016. this is one of the essential aspect which need to analyse for proper analysis. Cash flow form investing activities was receded as -1431400 for the year 2017 and -1266700 for the year 2016. cash flow form financing activity is calculated as -1729300 for the year 2017 and -1474900 for the year ended 2018.

RATIO Analysis

Wesfarmer Ltd

Ratios	Formula	Results
Current Ratio	Current assets / current liabilities	9667000 / 10417000 = 0.928
Debt equity ratio	Debts / equity	4066000 / 23941000 = 0.1698
Return on assets	Total assets / revenues	(40115000 / 68444000)*100 = 58.61%
Profit ratio	Net profit / revenues	(2873000 / 68444000)*100 = 4.19%

Woolworths Group

Ratios	Formula	Results
Current Ratio	Current assets / current liabilities	6994200 / 8824200 = 0.79
Debt equity ratio	Debts / equity	2774700 / 9526000 = 0.29
Return on assets	Total assets / revenues	(22915800 / 55668600)*100 = 41.16%
Profit ratio	Net profit / revenues	(1533500 /55668600)*100 =2.75%

SWOT Analysis

SWOT of Wesfarmer Ltd

Strength ·Strong capital structure ·Impressive and string goodwill ·Community development initiatives ·sales through online features	Weakness ·Being a market leader always chances to loss reputation ·Loss of reputed and functional experiences
Opportunities ·opportunities to grow business at large scale ·Expand the business scale across Australia.	Threats ·strong market competition ·Economic downturn leading to boost the structure

SWOT of Woolworths Group

Strength ·Oldest organisation ·Large number of stock market	Weakness. ·Low international Presence ·late entry in online retail sector
Opportunities ·To grow business at large level ·huge retail industry	Threats ·Loss of slow growth ·huge competition

Recommendation

As per above analysis of financial statements of Werfarmers Ltd some certain points come across at which organisation should pay attention for better financial and operational growth. Organisation need to analyse the financial performance with the help with strong capita l structure and cash inflows. It is require to improve the liquidity to manage the current liabilities and short term debts of organisation. Cis the measure current liability of Wesfarmer Ltd is seen 0.928 which need to improve for the subsiding year. 1 is considered optimum current ratio which is essential subject to evaluate and maintain optimum level of current assets to repay off liabilities

AS per analysis of financial statements of Woolworths group subject to analyse financial performance of organisation. Liquidity position of organisation is shows the following aspects subject terms of current ratio. Current ratio is calculated as 0.79 for the year 2017 and the profitability ratio is calculated as 58.16%. it is required to maintain optimum level of net current ratios subject to settlement of short term loans debts and credits.

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Conclusion

This report is prepared to analyse the performance of two Australian countries which deals in the same segments. The objectives and importance of the report is determined in this report. Financial statements of organisation of last two years are analysed in order to determine the financial position of the organisation. Overview of both the organisation's calculations and recommendations are given for both the organisations are also determined in this context. Ratio analysis, swot analysis, recommendations are given for better growth and development of the organisation.

Reference

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• Danuletiu, A.E., 2010. Working capital management & profitability: a case of Alba county companies.Annales Universitatis Apulensis: Series Oeconomica.12(1). p.364.
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