A Comparison of Financial Statements: Woolworths Group vs Walmart

This report compares the financial statements of Woolworths Group and Walmart Inc., highlighting the similarities and differences in their financial reports, methods used for depreciation and inventory valuation. Woolworths Group is an Australia-based retail company, while Walmart Inc. is an American multinational company. The report analyzes the basis of consolidation, principles of preparation, format of presentation, and balance sheet and profit and loss statement of both companies. It concludes that Walmart Inc. is performing better than Woolworths Group.

Running head: A COMPARISION ON THE FINANCIAL STATEMENTS OF
WOOLWORTHS GROUP (AUSTRALIA) AND WALMART (US)
A COMPARISION ON THE FINANCIAL STATEMENTS OF WOOLWORTHS GROUP
(AUSTRALIA) AND WALMART (US)
Name of the Student:
Name of the University:
Author Note

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A COMPARISION ON THE FINANCIAL STATEMENTS OF WOOLWORTHS GROUP
(AUSTRALIA) AND WALMART (US)
Table of Contents
Introduction................................................................................................................................2
Woolworths Group.................................................................................................................2
Walmart Inc............................................................................................................................2
Discussion..................................................................................................................................3
Differences in both company’s financial report.....................................................................3
Similarity in both company’s financial report.......................................................................5
Method used for depreciation.................................................................................................5
Method used for inventory.....................................................................................................5
Conclusion..................................................................................................................................6
References..................................................................................................................................7
Appendix....................................................................................................................................8

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A COMPARISION ON THE FINANCIAL STATEMENTS OF WOOLWORTHS GROUP
(AUSTRALIA) AND WALMART (US)
Introduction
This report is prepared to compare the financial statement of Woolworths Group and
Walmart Inc. The paper focuses to highlight the similarity and differences in the financial
report of both the company. Along with that the report analyse the methods, rules and
accounting standards used by both the company to report their financial and accounting
information.
Woolworths Group
The Woolworths group limited is an Australia based retail company. This is
Australia’s second largest company by revenue, also the second largest company of New
Zealand. The company have the extensive retail chain across the Australia and New Zealand
along with the largest take away liquor retail in Australia and largest hotel and poker machine
operator of Australia (Woolworths, 2019). Woolworths also entered in the petrol market with
the Plus Petrol. The company also owns the 75% stakes of the Australian Leisure &
Hospitality Group. Its five founders establish the first outlet of the company in 1924. This
paper, considers the annual report of the company for the year 2018 to perform the rest of
analysis.
Walmart Inc.
Walmart Inc. is an American company having headquarter in Bentonville, Arkansas,
U.S. This multinational company operates an intensive chain of hypermarkets, departmental
stores and grocery stores. Mr Sam Walton founded the Walmart Inc. in 1962 and
incorporated in 1969. The company has more than 11,000 store in more than 27 countries
under more than 55 different names (Walmart, 2019). This is world’s largest company by
revenue as well as the world’s largest private employer with more than 2.2 million

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A COMPARISION ON THE FINANCIAL STATEMENTS OF WOOLWORTHS GROUP
(AUSTRALIA) AND WALMART (US)
employees. The company also owns the club retail warehouses of Mr Sam. It is family owned
publicly traded business as the Walton family controls the company.
Discussion
Differences in both company’s financial report
After analysing the financial report 2018 of both the company the following
difference are identified between the annual financial report of both companies:-
 Basis of consolidation: - The Consolidation financial report of Woolworths
incorporate the asset, liabilities and all subsidiaries as the June 2018 (S2.q4cdn.com,
2019). In other hand, the Walmart only consider those subsidiaries, which are more
than 50% owned by the company and fulfils the requirements of consolidation. The
Walmart does not consider its all subsidiaries in their consolidation report; hence, the
company does not reveal the information of all the subsidiaries in their financial
report. However, the Woolworths consider all their subsidiaries in their annual report,
hence, the information regarding all the subsidiaries of the company is enough to
gather financial information of all the subsidiaries of the Woolworths.
 Principles of preparation: - The consolidated financial reporting prepared by the
Walmart is based on the generally accepted accounting principles, while, the financial
report of Woolworth is based on the Australian Accounting Standards with the
International Financial Reporting Standards issued by the IASB (Woolworthsgroup,
2019). As Walmart is an American company, the company follow and prepare its
financial report based on the American standards. On other hand, the Woolworths Ltd
is based on the Australia hence this follows the Australian Accounting Stands along
with the Internally accepted accounting policies to report its financial information.

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A COMPARISION ON THE FINANCIAL STATEMENTS OF WOOLWORTHS GROUP
(AUSTRALIA) AND WALMART (US)
 Format of presentation: - The format used to present the information is also
different for both companies as the Woolworths has more informative format
including the notes in the format. While, the Walmart’s format is less informative and
does not have the notes column. In simple world, Woolworths used the more recent
format to report it financial information, which is more preventative and easy to
understand with more information. While, the Walmart is uses the traditional format
to report its financial information that comparatively take more time understand.
 Balance sheet and Profit and loss statement
The balance sheet and the profit and loss statement of the both the companies
provides the different data based on the performance of the company. This is an
important aspect of the financial information of the company. The following
discussion show the different between the financial ratios in the basis of the data of
the balance sheet and profit and loss statement of the firm. The profitability ratio of
the company shows the profitability of the company. Here the operating profit is take
into the account to analyse the profitability of the company. This ratio states the
ability of the firm to generate the profit from the total sale (Nissim & Penman, 2015).
The Woolworths Group have the same ratio in both the financial year that is 29% and
can consider as good. The ratio shows the efficiency of the company to generate the
revenue by the using the available assets. Hare, again the ratio is same in both years as
2.4. The high asset utilization ratio is consider as good. The liquidity ratio that shows
the company’s ability to meet its liability by selling its asset (Sherman & Gold, 2016).
The ideal current ratio is 1 and should be more than 1. Here, the Woolworths has 0.8
as liquidity ratio, which is cannot be consider as good. The debt utilization ratio revels
the how efficiently the company is its debt to increase its assets. The lower ratio is
consider as good. Here, the company is showing the ratio as 0.1 in both years, which

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A COMPARISION ON THE FINANCIAL STATEMENTS OF WOOLWORTHS GROUP
(AUSTRALIA) AND WALMART (US)
can be consider as good. The operating profit of the Walmart Inc., is decreased in the
current year and become 4%. This reveals that the performance of the company
related with the profitability is decreasing. The asset utilization ratio of the firm is 2.4
in both the financial year. As the high ratio is consider as good, the company with 2.4
ratio is consider as good. Same like the Woolworths, Walmart Inc. also have the low
current ratio and this cannot be consider as good. The debt ratio of the firm is 0.2 in
both year, which is good for the company.
Similarity in both company’s financial report
Apart from the above differences there are many similarity in the financial report of
the both the company. As the objective of preparing of the financial report is for the
stakeholders of the company and to attract the investors, is same with both the company
(Hotelling, 2017). The format of the report as whole is also same. Both the company prepared
this report in the basis of an international standard. The external auditor for the authenticity of
the report audited the financial report of both companies.
Method used for depreciation
The Woolworths Limited used the straight-line method to depreciate the fixed asset
over the estimated life of such assets. While, the Walmart Inc. is also used the straight line
method to depreciate its assets over the estimated life of the assets. The both company charge
the same amount as depreciation amount, which is calculated by dividing the cost of the fixed
asset plus the installation cost of the asset and minus scrap value of the fixed by the estimated
life of the asset. This is most commonly used method of depreciation and most easy method
to calculated and charged the depreciation. This is also an easy method to understand the
calculation for depreciation as the amount of depreciation is remain same in every years.

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A COMPARISION ON THE FINANCIAL STATEMENTS OF WOOLWORTHS GROUP
(AUSTRALIA) AND WALMART (US)
Method used for inventory
The Woolworths Limited valued the inventory at the lower of cost and net realisable
value. Other related costs are determined in the basis of the weighted average basis (Bruns,
2015). Net realisable value of the inventory is calculated by deducting the estimated selling
expenses from the estimated selling price of the inventories.
While, the Walmart values its inventory at lower of cost or market by retailing
method of accounting. The company uses last in LIFO method in U.S. inventory segment and
FIFO for the international segments. Both company value its inventories at the lower of cost
and net realisable value but the Woolworth does not reveals the method of recording the
inventory while the Walmart does that is FIFO of international segment and LIFO for US
business.
Conclusion
The paper concludes the there are few differences between the financial report of the
Woolworths and Walmart Inc. like basis of consolidation, standards consider while preparing
the report. Although, the similarity between financial reports of both company is also present.
The financial analysis reveals that Walmart is comparatively performing well than the
Woolworths Group. Lastly, the paper concludes that the both company is using different
method for the valuation of the inventory and the same method to depreciate the asset that is
straight-line method.

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(AUSTRALIA) AND WALMART (US)
References
Walmart (2019). Our History. Retrieved from https://corporate.walmart.com/our-story/our-history
Woolworths. (2019). About Us - Woolworths Group. Retrieved from
https://www.woolworthsgroup.com.au/page/about-us
S2.q4cdn.com. (2019). Retrieved from
https://s2.q4cdn.com/056532643/files/doc_financials/2018/annual/WMT-2018_Annual-
Report.pdf
Woolworthsgroup. (2019). Retrieved from
https://www.woolworthsgroup.com.au/icms_docs/195396_annual-report-2018.pdf
Nissim, D., & Penman, S. H. (2015). Ratio analysis and equity valuation: From research to
practice. Review of accounting studies, 6(1), 109-154.
Sherman, H. D., & Gold, F. (2016). Bank branch operating efficiency: Evaluation with data
envelopment analysis. Journal of banking & finance, 9(2), 297-315.
Hotelling, H. (2017). A general mathematical theory of depreciation. Journal of the
American Statistical Association, 20(151), 340-353.
Bruns, W. J. (2015). Inventory valuation and management decisions. The Accounting
Review, 40(2), 345.

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Appendix

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