Wesfarmers Limited Financial Analysis

This assignment analyzes the financial performance of Australian retail giant Wesfarmers Limited. It examines key financial ratios such as Return on Equity, Earnings per Share, and Working Capital Ratio. The analysis also delves into risk management practices, corporate governance adherence (to ASX Corporate Governance), and provides recommendations for potential investment based on the company's financial stability and profit trends.

Running head: ACCOUNTING SYSTEMS AND PROCESSES
Accounting Systems and Processes
Name of the Student:
Name of the University:
Author Note:

2ACCOUNTING SYSTEMS AND PROCESSES
Table of Contents
Question 1........................................................................................................................................4
Naming cells in spreadsheets...........................................................................................................4
Question 2........................................................................................................................................4
Negative numbers............................................................................................................................4
Question 3........................................................................................................................................5
Spreadsheet of data and report areas...............................................................................................5
Question 4........................................................................................................................................6
IF Functions.....................................................................................................................................6
Question 5........................................................................................................................................7
Periodic inventory systems..............................................................................................................7
Question 6........................................................................................................................................7
Worksheet and financial reports......................................................................................................7
Question 7......................................................................................................................................14
Question 8......................................................................................................................................18
Bank reconciliation........................................................................................................................18
Question 9......................................................................................................................................20
Accounts receivable.......................................................................................................................20
Question 10....................................................................................................................................21

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Question 11....................................................................................................................................22
Question 12....................................................................................................................................22
Dishonor of a note receivable........................................................................................................22
Question 13....................................................................................................................................23
Reference List................................................................................................................................26

4ACCOUNTING SYSTEMS AND PROCESSES
Question 1
Naming cells in spreadsheets
In a spreadsheet, it is important to name each cells with a name to avoid any confusion.
Naming each of the cell make it easy to understand and correlate with the statement that is
required to solve any case calculations.
Calculation of Gross Profit:-
Particulars Amount
Sales Revenue $17000
Less: Cost of Goods Sold $2000
GROSS PROFIT $15000
Question 2
Negative numbers
In spreadsheet, negative numbers are presented by either brackets with minus sign or with
a red color.

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Question 3
Spreadsheet of data and report areas
An accountant make use of spreadsheets with completely separate data entry area as well
as separate report area in order to reduce any type of error present at the time of analyzing
financial study. The spreadsheet design is treated as one of the important mechanisms where it is
sure to achieve success in short-term and long-term basis. Using spreadsheets by accountants
will help them in getting access to flexible results and further it become easy to analyze, enhance
and optimize performance level in any of the business organization. Use of spreadsheet can even
give rise to risk as it even generate incorrect information that automatically lead to poor
decision-making activities. To that, accountants should make an effort to reduce the level of risk
as far as possible by following required design and get involved in developmental practices.
Therefore, spreadsheets are a significant tool that makes works easier for the accounts where

6ACCOUNTING SYSTEMS AND PROCESSES
they can enter the entries in separate report area in systematic ways. This tool helps in recording
of inventory in the most appropriate way.
Question 4
IF Functions
By using IF function; user can set command for highlighting whether a particular
statement is true or false. The function looks whether any conditions matches with the command
or not. In that case, if condition matches with the command, then it is noted that the outcome is
as per the logical value. On the other hand, if condition fails to match with the command then it
is noted that the outcomes is different from the logical values (Gomes, Fernandes & Carvalho,
2015).
PERIOD Particulars Amount Remarks
Jan'16 Sales Revenue, less, 22000 =IF(C7>0,"NET

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Total Expenses PROFIT","NET LOSS")
Feb'16
Sales Revenue, less,
Total Expenses -10000
=IF(C8>0,"NET
PROFIT","NET LOSS")
Question 5
Periodic inventory systems
Periodic inventory systems records inventory on periodic basis that means at the end of
accounting period
Question 6
Worksheet and financial reports
Normal view

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Formula view

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Particulars Amount Amount
Current Assets:
Cash =J8
Accounts Receivable =J9
Closing Inventory =F40
Supplies =J11
TOTAL CURRENT ASSETS =SUM(C95:C98)
Non-Current Assets:
Building =J12
Less: Accumulated Depreciation =-K13 =B102+B103
Furniture =J14
Less: Accumulated Depreciation =-K15 =B104+B105
TOTAL NON-CURRENT ASSETS =SUM(C103:C105)
TOTAL ASSETS =C99+C106
Current Liabilities:
Accounts Payable =K16
Salary Payable =K17
Interest Payable =K18
Unearned Sales Revenue =K19
TOTAL CURRENT LIABILITIES =SUM(C111:C114)
Non-Current Liabilities:
Notes Payable, Long Term =K20
TOTAL NON-CURRENT LIABILITIES =SUM(C116:C118)
TOTAL LIABILITIES =C119+C115
NET ASSETS =C108-C121
Equities:
Capital =K21
Add: Net Profit =K41
=B126+B127
Less: Drawings =-J22 =B128+B129
TOTAL EQUITIES =SUM(C125:C129)
for the period ended….
In the Books of Fancy Footwear
Balance Sheet

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Question 7
Original data
Normal view
Particulars
Average
Cost FIFO LIFO
Beginning Inventory $3,420 $3,420 $3,420
Net Purchases $7,790 $7,790 $7,790
Cost of Goods Available $11,210 $11,210 $11,210
Ending Inventory $7,583 $8,075 $7,250
Cost of Goods Sold $3,627 $3,135 $3,960
Calculation of Gross Profit:-
Particulars
Average
Cost FIFO LIFO
Sales Revenue $25,000 $25,000 $25,000
Less: Cost of Goods Sold $3,627 $3,135 $3,960
GROSS PROFIT $21,373 $21,865 $21,040
Calculation of Gross Profit:-
Formula view

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Particulars Average Cost FIFO LIFO
Sales Revenue 25000 =B6 =C6
Less: Cost of Goods Sold 3627 3135 3960
GROSS PROFIT =B6-B7 =C6-C7 =D6-D7
Particulars Average Cost FIFO LIFO
Beginning Inventory 3420 3420 3420
Net Purchases 7790 7790 7790
Cost of Goods Available =B17+B18 =C17+C18 =D17+D18
Ending Inventory 7583 8075 7250
Cost of Goods Sold =B19-B20 =C19-C20 =D19-D20
Calculation of Gross Profit:-
Calculation of Gross Profit:-
Workings
Date Unit
Cost per
Unit
Total
Amount Unit
Cost per
Unit
Total
Amount Unit
Cost per
Unit
Total
Amount
1-Oct 60 $57 $3,420
3-Oct 10.00 $65 $650 60 $57 $3,420
10 $65 $650
70 $58 $4,070
12-Oct 30 $70 $2,100 70 $58 $4,070
30 $70 $2,100
100 $62 $6,170
18-Oct 70 $72 $5,040 100 $62 $6,170
70 $72 $5,040
170 $66 $11,210
31-Oct 55 $66 $3,627 115 $66 $7,583
Inventory Ledger (Average Method):
Purchase Cost of Goods Sold Balance Inventory

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Date Unit
Cost per
Unit
Total
Amount Unit
Cost per
Unit
Total
Amount Unit
Cost per
Unit
Total
Amount
1-Oct 60 $57 $3,420
3-Oct 10 $65 $650 60 $57 $3,420
10 $65 $650
12-Oct 30 $70 $2,100 60 $57 $3,420
10 $65 $650
30 $70 $2,100
18-Oct 70 $72 $5,040 60 $57 $3,420
10 $65 $650
30 $70 $2,100
70 $72 $5,040
31-Oct 55 $57 $3,135 5 $57 $285
10 $65 $650
30 $70 $2,100
70 $72 $5,040
31-Oct 55 $3,135 115 $8,075
Inventory Ledger (FIFO Method):
Purchase Cost of Goods Sold Balance Inventory
Date Unit
Cost per
Unit
Total
Amount Unit
Cost per
Unit
Total
Amount Unit
Cost per
Unit
Total
Amount
1-Oct 60 $57 $3,420
3-Oct 10 $65 $650 60 $57 $3,420
10 $65 $650
12-Oct 30 $70 $2,100 60 $57 $3,420
10 $65 $650
30 $70 $2,100
18-Oct 70 $72 $5,040 60 $57 $3,420
10 $65 $650
30 $70 $2,100
70 $72 $5,040
31-Oct 55 $72 $3,960 60 $57 $3,420
10 $65 $650
30 $70 $2,100
15 $72 $1,080
31-Oct 55 $3,960 115 $7,250
Inventory Ledger (LIFO Method):
Purchase Cost of Goods Sold Balance Inventory
Revised

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Question 8
Bank reconciliation
Original view

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Normal view
Date Particulars Amount
30/4 Bank Balance as per Pass Book $19,670
Add:
Deposit in Transit $1,543
EFT Insurance Payment $300
Book Error Cheque 1419 $340
NSF Cheque from Customer $1,700
Bank Service Charge $40 $3,923
$23,593
Less:
Outstanding Cheques 2462
EFT Rent Receipt 600
Note Receivable $1,500
$4,562
30/04 Cash Account Balance as of 30th April $19,031
Bank Reconcilaition Statement
As on 30th April
Formula view
Date Particulars Amount
30/4 Bank Balance as per Pass Book 19670
Add:
Deposit in Transit 1543
EFT Insurance Payment 300
Book Error Cheque 1419 340
NSF Cheque from Customer 1700
Bank Service Charge 40 =SUM(D8:D12)
=E6+E12
Less:
Outstanding Cheques =1532+700+230
EFT Rent Receipt 600
Note Receivable 1500
=SUM(D15:D18)
30/04 =IF(E20>0,"Cash Account Balance as of 30th April","Bank Overdraft Balance as of 30th April") =E13-E18
Bank Reconcilaition Statement
As on 30th April
Revised

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Question 9
Accounts receivable
In the Books of…
Journal Entries
Dr. Cr.
Date Particulars Amount Amount
12/4/2017 Accounts Receivable A/c. Dr. $8,750
To, Sales A/c. $8,750
30/4/2017 Cash A/c. Dr. $4,375
To, Accounts Receivable A/c. $4,375
5/30/2017 Bad Debts Expenses A/c. Dr. $4,375
To, Accounts Receivable A/c. $4,375
15/6/2017 Cash A/c. Dr. $4,375
To, Bad Debt Recoveree A/c. $4,375

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Question 10
Direct method
In the Books of…
Journal Entries
Dr. Cr.
Date Particulars Amount Amount
10/5/2017 Bad Debts Expenses A/c. Dr. $2,330
To, Accounts Receivable A/c. $2,330
30/6/2017 Profit & Loss A/c. Dr. $2,330
To, Bad Debts Expenses A/c. $2,330
5/7/2017 Cash A/c. Dr. $2,330
To, Bad Debt Recoveree A/c. $2,330
Allowance method
In the Books of…
Journal Entries
Dr. Cr.
Date Particulars Amount Amount
10/5/2017 Bad Debts Expenses A/c. Dr. $2,330
To,
Provision for Doubtful
Debts A/c. $2,330
10/5/2017
Provision for Doubtful
Debts A/c. Dr. $2,330
To, Accounts Receivable A/c. $2,330
30/6/2017 Profit & Loss A/c. Dr. $2,330
To, Bad Debts Expenses A/c. $2,330
5/7/2017 Accounts Receivable A/c. Dr. $2,330
To,
Provision for Doubtful
Debts A/c. $2,330

22ACCOUNTING SYSTEMS AND PROCESSES
5/7/2017 Cash A/c. Dr. $2,330
To, Accounts Receivable A/c. $2,330
Question 11
Just as the case when bank ask individual for a guarantee and details about their personal
assets and liabilities, same goes with companies also. Investors need to gather proper information
about the company before investing their money into it. Future cannot be predicted very easily
but there are trend analysis and other tools that can be used to have better understanding on how
far the company will achieve in a time span of 5 to 10 years (Grabinskia, Kedziora &
Krasodomska, 2014).
Question 12
Dishonor of a note receivable
In the Books of…
Journal Entries
Dr. Cr.
Date Particulars Amount Amount
5/7/2017 Accounts Receivable A/c. Dr. $5,000
To, Sales A/c. $5,000
28/7/2017 Notes Receivables A/c. Dr. $5,000
To, Accounts Receivable A/c. $5,000
27/9/2017 Accounts Receivable A/c. Dr. $5,000
To, Notes Receivables A/c. $5,000
5/10/2017 Cash A/c. Dr. $5,000

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To, Accounts Receivable A/c. $5,000
Question 13
The discussion will be on Australian retail giant named as Wesfarmers Limited that
operates in diversified areas such as retail, office improvements, home improvements and
energy.
Profits generated by the companies are often attributing to their parent member and same
us the case with Wesfarmers Limited. It is found that the company gets engaged in using foreign
currency for their operation purpose that amounts $15 million and shows several cash hedging
activities and hedge reserve as well. Further, it is even found out that the company undergoes a
loss of around $78 million. The company is required to pay dividend money of $2600 on time.
Return on Equity
Net Income $407
Shareholder’s Equity $22949
Return on Equity 0.018
Return on equity is a profitability ratio that measures the profitability position of any
business enterprise. The above graph shows that Wesfarmers Limited has very low return on
equity that is 0.018, this is very poor financial or profitable condition for the company.
Earnings per share of Wesfarmers Limited arrive at 36.2% and this is calculated by using
weighted average numbers for the ordinary share.

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On explaining the aspect of risk management and mitigation management, it is quite
feasible and obvious that companies do not disclose any information about whether there
financial statements are materially misstated or not. Wesfarmers Limited had not even appointed
any of the individual who can prepare financial statements that complies with AASB conceptual
framework.
On explaining the concept of Corporate Governance, Wesfarmers Limited compiles to
the third edition of ASX Corporate Governance.
Working capital ratio
Net profit after tax

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It is advisable to Vikram to invest his money in Wesfarmers Limited as the company is in stable
position and there is constant increase in the net profit from the year 2012 to 2016.

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Reference List
Gomes, P. S., Fernandes, M. J., & Carvalho, J. B. D. C. (2015). The international harmonization
process of public sector accounting in Portugal: the perspective of different
stakeholders. International Journal of Public Administration, 38(4), 268-281.
Grabinskia, K., Kedziora, M., & Krasodomska, J. (2014). The Polish accounting system and
IFRS implementation process in the view of empirical research. Accounting and
Management Information Systems, 13(2), 281.