Wesfarmers Financial Analysis Report

This assignment requires a comprehensive analysis of Wesfarmers' financial statements. Students must calculate and interpret key financial ratios like the working capital ratio and profit after tax. The report should also delve into the company's equity return, risk management strategies, and sustainability practices, ultimately assessing its financial health and suitability as an investment.

Running head: ACCOUNTING INFORMATIONSYSTEM
Accounting information system
Name of the University
Subject code and name
Student Name and ID
Assignment Task Number
Author Note

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Table of Contents
Answer 1:................................................................................................................................................3
Answer 2:................................................................................................................................................3
Answer 3:................................................................................................................................................4
Answer 4:................................................................................................................................................4
Answer 5:................................................................................................................................................5
Answer 6:................................................................................................................................................5
Answer 7:................................................................................................................................................7
Answer 8:................................................................................................................................................9
Answer 9:..............................................................................................................................................10
Answer 10:............................................................................................................................................10
Answer 11:............................................................................................................................................10
Answer 12:............................................................................................................................................11
Answer 13:............................................................................................................................................11
References:............................................................................................................................................14

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Answer to question 1:
Naming the cells under the spreadsheet enables the users to use it as per their preference or
requirement (Baños-Caballero, García-Teruel & Martínez-Solano, 2014). For instance, the data in the
cells can be updated, edited or formatted. Further, it can be used for auditing and calculation.
Answer 2:
Negative numbers are expressed with minus symbol, parentheses or with red colour within
brackets. It can be expressed as above by selecting the negative number from the number or currency
option after selecting the cell range. Instead of showing the negative number with minus symbol, it is
shown with red colour and within bracket to represent the data more clearly and make it more visible.
Example showing the negative numbers within bracket is shown below –

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Answer 3:
As the worksheet hold raw data as well as the data after it is processed, the user will not be
able to differentiate the data after and before processing. Therefore, expressed it through different
area for the data and for the report is a better way of presentation.
An instance where the data are shown in under both areas is as follows –

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Answer 4:
IF function provides the user with the data that tells about the fulfillment of criteria;
Generally, IF function provides the results in two forms that is ‘TRUE’ and ‘FALSE’. TRUE
represents the positive result whereas FALSE represents negative results.
Instance of IF function with result – Normal view

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IF functions - formula view
Answer 5:
Periodic systems of the inventory:
Under this system, it is unlikely to maintain and document the updated records for each
transaction of buy and sold. Through one entry the record is updated at the closing of the period.
The instance is given below -
Answer 6:
Fancy Footwear- Adjusted spreadsheet as normal view:

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Fancy Footwear- Adjusted spreadsheet as formula view

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Statement of Income in normal view:

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Statement of Income in formula view:

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Balance Sheet in normal view:

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Balance Sheet in formula view:

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The spreadsheet usages as accounting tools –
 It can be used for budgeting and business accounting
 Can be used for calculations, creating charts and graphs
 Interpret and explore data for analysis and drawing conclusions
 For planning and modeling
 Preparing invoices, wage sheets
Answer 7:
Inventory in the normal view:

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The calculation of Gross Profit as a normal view:
Inventory as the formula view:
The calculation of the Gross Profit as the formula view:
After making the data changes:
Changed data –

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Inventory
Gross Profit
Answer 8:
The reconciliation of the bank in normal view:

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The reconciliation of bank as formula view:
After altering the data:

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Normal view:
Answer 9:
The journal entries - account receivables:
Date Particulars Debit Credit
5th January Mr Andrews account
To sales
$ 25,000
$ 25,000
5th January Account receivable
To Mr Andrews account
$ 25,000
$ 25,000
10th February Cash account
To accounts receivable
$ 15,000
$ 15,000
28th February Receivable allowance
To Mr Andrews
$ 10,000
$ 10,000

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Answer 10:
Determination of bad-debt
Allowance approach – when the transactions related to sales are recorded, an expected amount for
bad debt is also recorded. This amount is debited against the bad debt expenses and credited to bad
debt allowance (Drury, 2013).
Journal entry –
Direct Write-off method – when it is apparent that a specific debtor invoice cannot be collected, the
amount is directly charged to expenses of bad debt.
Journal entry –
Answer 11:
The turnover ratio for receivable is a efficiency ratio to measure how many times the firm is
able to collect its debt during the period under consideration (Bryce, 2017). Higher ratio represents
the business is highly efficient in collecting debts, which in turn represent that the company is healthy
and efficient with regard to the financial position.

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Answer 12:
Entry of journals
Answer 13:
1. Wesfarmers group –
Listed under Australian Stock exchange, Wesfarmers group’s main activity areas are Australia
and New Zealand. The group’s main activities are retail business, home products, liquor, chemicals,
coal mining, fertilizers, food items and office related products.
2. Comprehensive income:
The profit or loss that belongs to the holding company is expressed through the
comprehensive income statement. Loss contributed to holding company is $ 78 million as per the
comprehensive statement prepared on 30th June 2016.
3. Items from the financial statement:

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Dividend – distribution of dividend as per the financial report of Wesfarmers was $ 2600 million as
on 30th June 2016.
Per share profit – the investors get their share of profit for each share at 3,62 cents for both their
diluted and basic earnings.
Equity return – the equity return of Wesfarmers for 30th June 2016 is considered to be extremely poor
as it amounted to just ($407/$22949) = 0.018 (Wesfarmers.com.au, 2017).
Risk and the mitigation approach – risk involved in the exactness, completeness and reliability, of the
annual reports and further, it does not ensure that the report error free and materially not misstated.
To mitigate these risks the company follows the IASB, AASB framework and IFRS interpretation
(Brigham, 2014).
Sustainability – Wesfarmers believe that sustainability means taking care of the things that have an
adverse impact on the environment and community under which it carries out its business operation.
Income statement-
Net profit is arrived through deducting the operating expenses, interest expenses and tax expenses
from the amount of revenue.
Balance sheet is represented as:
 Shareholder’s equity that includes common stock and retained earnings
 Total assets that is segregated into non-current and current
 Total liabilities that is segregated into non-current and current (Petty et al., 2015).
4) Working Capital Ratio:
5) Profit after tax

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Net profit
after tax
2016 2015 2014 2013 2012
0
500
1000
1500
2000
2500
3000
Amount (million)
Amount (million)

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Recommendation:
It is concluded from the above analysis that Wesfarmers is financially stable and the financial
position of the company is regarded as healthy and strong. Further, from the investment aspect the
company will be considered as good option as it is regular in payment of dividend and earning profit.
Therefore, Vikran can think of Wesfarmers as a good option for investing his money.