Wesfarmers Financial Analysis Report

This assignment requires a thorough analysis of Wesfarmers' financial performance based on their provided annual report. The analysis should cover key financial statement items like dividend, EPS, equity return, and working capital ratio. Additionally, it must address risks associated with the financial reporting and assess the company's long-term sustainability. Finally, the assignment concludes with a recommendation for an investor considering Wesfarmers based on its financial health.

Running head: ACCOUNTING SYSTEM AND PROCESS
Accounting system and process
Name of the University
Subject code and name ‘
Student Name and ID
Assignment Task Number
Author Note

1ACCOUNTING SYSTEM AND PROCESS
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

2ACCOUNTING SYSTEM AND PROCESS
Answer 1:
A name is the meaningful shorthand and it makes the sheet easier for understanding. Through
using the names, the users can use the formulas easily and the sheets can be maintained easily
(Baños-Caballero, García-Teruel & Martínez-Solano, 2014). Further, after naming the cells it can be
used for formatting, editing, addition and deletion of data.
Answer 2:
The negative number in the spreadsheet can be displayed through the following steps –
 Choose the specific range or cell to be formatted with the negative numbers
 If the user is using the Windows system then he needs to press CTRL+1 or if he is using Mac
then he needs to press +1.
 Under the Category option the user needs to select Currency or Number option
 From the Negative numbers, choose the option for the negative numbers (Brigham, 2014).
The negative numbers can be shown through red colour, putting negative sigh in front of the
number or within the bracket. However, the users prefer to show the data within bracket rather than
with the minus sign to attract the concentration of the users and make it more visible.

3ACCOUNTING SYSTEM AND PROCESS
Below shown example represent the negative numbers in bracket -
Answer 3:
It will be helpful for the user to differentiate the processed data and the unprocessed data if the
report is divided into data area and report area otherwise the data will be jumbled up (Bryce, 2017).
Moreover, the user can edit, format or adjust the raw data to process it and represent it in report area.
Below shown example represent the data area and the report area as follows –

4ACCOUNTING SYSTEM AND PROCESS
Answer 4:
IF function helps in finding out if particular criteria is met or not through the logical function
like FALSE or TRUE. TRUE represents that the criteria are met and FALSE represent the criteria not
met. IF function enables the user the evaluate a situation with attached condition.
Below shown example represents the IF functions for the normal view as follows –

5ACCOUNTING SYSTEM AND PROCESS
IF functions as formula view
Answer 5:
Periodic systems inventory:
Periodic system is one of the system of maintaining the inventories. Under this, the inventory
purchase and sale are not updated after each transaction rather it gets updated after each closing
period through one journal entry.
The example is as follows:
Cost of goods sold = Opening inventory + Purchases – Closing inventory
Suppose, opening inventory as on 01-07-2016 is $ 5,000
Purchase of inventory during the period is $ 6,000
Closing inventory as on 30.06.2017 is $ 4,000
Therefore, cost of goods sold = $ 5,000 + $ 6,000 - $ 4,000 = $ 7,000
Answer 6:
Fancy Footwear- Adjusted spreadsheet – Normal view:

6ACCOUNTING SYSTEM AND PROCESS
Fancy Footwear- Adjusted spreadsheet - Formula view

7ACCOUNTING SYSTEM AND PROCESS
Income Statement - normal view:
Income Statement - formula view:

8ACCOUNTING SYSTEM AND PROCESS
Balance Sheet - normal view:

9ACCOUNTING SYSTEM AND PROCESS
Balance Sheet - formula view:

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Spreadsheet as accounting tool:
From the accounting perspective, the spreadsheet can be used as decision-making and
problem solving tool. Various other uses of spreadsheet are as follows –
 The user can export or import the data through the spreadsheet
 Data can be filtered, analyzed, sorted and further it can be used to generate annual reports.
 Data can be protected and accounting error can be minimized through using the data
validations (Weygandt, Kimmel & Kieso, 2015).
 The user can input formula and equations for the purpose of various calculations and can use
the text function, sum wizard, accounting codes, VLOOKUP and construct controls and
checks to remove the accounting inaccuracies.

11ACCOUNTING SYSTEM AND PROCESS
Answer 7:
Inventory in the normal view:
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:
Inventory

12ACCOUNTING SYSTEM AND PROCESS
Gross Profit
Answer 8:
The reconciliation of the bank in normal view:
The reconciliation of bank as formula view:

13ACCOUNTING SYSTEM AND PROCESS
After making the changes in the data:
Normal view:

14ACCOUNTING SYSTEM AND PROCESS
Answer 9:
Journal entries for account receivables is shown below –
Date Particulars Debit Credit
2nd July Mariah A/c Dr
To Credit sales
$ 12,000
$ 12,000
2nd July Account receivable A/c Dr
To Mariah account
$ 12,000
$ 12,000
25th October Cash A/c Dr
To accounts receivable
$ 8,000
$ 8,000
31st October Receivable allowance A/c Dr
To Mariah
$ 4,000
$ 4,000
Answer 10:
Bad-debt determination approach
Write-off method – this method does not estimate the amount of doubtful debt, instead the bad debt
amount is identified once it is assured that the amount cannot be recovered (Filatov, Rudykh &
Kiryukhin, 2014).
Journal entry for writing-off the amount of $ 5,000 is shown below –
Allowance method – this method determines the amount of bad-debt and recognizes the same during
the period to which it relates and the revenue is collected (Buchman, Harris & Liu, 2016).
Journal entry for allowance method for the amount of $ 5,000 is shown below –

15ACCOUNTING SYSTEM AND PROCESS
Answer 11:
The receivable turnover ratio of any company can be used to analyze the performance of the
company (Drury, 2013). If the turnover ratio of the company is high, it represents that the company is
proficient is collecting its receivable which in turn represent that the company has a sound and strong
financial position.
Answer 12:
Entry of journals

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Answer 13:
1.Introduction – Wesfarmers is an Australian company and some of the main businesses of the
company are products related to retail stores, nourishment products, liquor products, products related
to chemicals, fertilizers, mining, home furnishing products and energy products.
2.Comprehensive income statement – under this statement the company represent the amount of
profit attributable to the holding company. As per the income statement of the company the
company’s net loss amounted to $ 78 million and the amount of foreign exchange transaction was $
15 million (Wesfarmers.com.au, 2017).
3.Items of financial statement
 Dividend – dividend is recorded only after it is assured that it will be received. The amount of
dividend paid by the company during the year was $2,600 million.
 EPS – The basic and diluted both the EPS for the closing of the year was 36.2 cents.
 Equity return – this is calculated as $407/$22,949 = 0.018, which is regarded as extremely
poor as compared to industrial average.
 Risk and its mitigation – the risk is associated with the quality, completeness and reliability of
the report. Further, it does not assure that the report is free from material misstatement, fraud
or error. To mitigate these risks, the company use the interpretation and conceptual framework
of IFRS and AASB.
 Sustainability – as the company is performing well and achieved some competitive advantages
over its competitors, it is considered as sustainable over the long-term.
Income statement-
Under the income statement, the operating expenses of the company is subtracted from the
gross profit to get the EBIT. And further, from EBIT, the amount of interest and tax expenses is
subtracted to get the net profit (Wesfarmers.com.au, 2017).
Balance sheet is segregated into –
 Shareholder’s equity
 Total asset which is further divided as current asset and non-current asset
 Total liabilities which is further divided into non-current asset and current asset
4) Working Capital Ratio -

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5) Profit after tax
Net profit after
tax 2016 2015 2014 2013 2012
2353 2440
2689
2261 2126
Amount ($ m)
Amount ($ m)

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2353
2440
2689
2261
2126
Amount ($ m)
Net profit after tax
2016
2015
2014
2013
2012
Conclusion and recommendation
Looking at the above analysis regarding the performance of Wesfarmers, it can be
recommended to Vikram that with future growth prospect he can invest his money into the company

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References:
Baños-Caballero, S., García-Teruel, P. J., & Martínez-Solano, P. (2014). Working capital
management, corporate performance, and financial constraints. Journal of Business
Research, 67(3), 332-338.
Brigham, E. F. (2014). Financial management theory and practice. Atlantic Publishers & Distri.
Bryce, H. J. (2017). Financial and strategic management for nonprofit organizations. Walter de
Gruyter GmbH & Co KG.
Buchman, T. A., Harris, P., & Liu, M. (2016). GAAP vs. IFRS Treatment of Leases and the Impact
on Financial Ratios.
DRURY, C. M. (2013). Management and cost accounting. Springer.
Filatov, E. A., Rudykh, L. G., & Kiryukhin, Y. A. (2014). Variational methods of forming
depreciation deductions. American Journal of Applied Sciences, 11(4), 631.
Wesfarmers.com.au. (2017). Retrieved 03 October 2017, from
https://www.wesfarmers.com.au/infodetail/about/investors/2015AnnualReport.pdf
Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2015). Financial & Managerial Accounting. John
Wiley & Sons.