Business Finance| Assignment Sample
Added on 2021-06-17
20 Pages3688 Words99 Views
RUNNING HEAD: BUSINESS FINANCE[DOCUMENT TITLE]
ContentsINTRODUCTION......................................................................................................................2Company Profile....................................................................................................................2RATIO ANALYSIS...................................................................................................................3Short-term solvency ratios (Liquidity Ratios)........................................................................3Long-term solvency ratios (Financial leverage ratios)...........................................................6Asset utilisation ratios (efficiency or turnover ratios)............................................................8Profitability ratios.................................................................................................................10Market value ratios...............................................................................................................13CONCLUSION and RECOMMENDATION..........................................................................15REFERENCES.........................................................................................................................16
INTRODUCTIONThis assignment covers financial analysis of two companies of same industry listed in Australian stock market. The chosen companies are Wesfarmers limited and Woolworths limited of Australia covered under Food and staples Retailing industry. The chosen companies’ performance is evaluated and assessed through financial ratios and 2017 financialyear is considered for the same. The data required for the analysis is extracted from the annual reports. The performance of each company is assessed and compared on the basis of 5criteria’s such as short-term solvency ratios, long-term solvency ratios, profitability ratios, market value ratios and asset utilisation ratios and based on that fundamentally better company is analysed.Company ProfileWesfarmers LimitedThe company is originated in the year 1914. The registered office is situated in Western Australia. It is the leading Australian listed company with code (ASX: WES) (ASX, 2018). The business activities are: fuel and alcohol outlets, superstores, convenience and department stores, hotels, home improvement and office deliveries and some industrial divisions with chemicals, energy and fertilizers businesses and industrial and safety product distribution. The company has approximately 220,000 number of employees providing pleasing environment at the workplace and also promotes opportunities for the employees. The company’s chief objective is to serve the shareholders better value (Wesfarmers, 2018). Considering 2017 financial year, the company’s reported a record level of performance in relation to operating cash flows and the earnings with the strong increase in return on equity. Wesfarmers created the culture that cheers improvement, vision and reward boldness.Woolworths Limited
The company is originated in 1924. With 93 years in existence and 20 years of listed in Australian stock market (ASX: WOW) (ASX, 2018). The company is leading the Australian market. The chairman of the company is Gordon Cairns. The business activities are: Supermarkets, Liquor, hotels, and petrol divisions and also engaged in financial services offering credit cards, gift cards etc. Approximately company is having 202,000 employees across New Zealand and Australia. The main agenda of the company is to serve exceptional services and products to the customers (Woolworths Group, 2018). The company has the objective to deliver maximum returns to their shareholders. The main highlight of Woolworths group in 2017 financial year was an enhancement in customer scores in Australian food which has resulted in transactions force all over the year. The figure goes to total of $ 36.4 billion in 2017. RATIO ANALYSIS The performance of the above companies is compared on the basis of 5 categories of ratios such as short-term solvency ratios, long-term solvency ratios, profitability ratios, market value ratios and asset utilisation ratios and based on that fundamentally better company is analysed. Short-term solvency ratios (Liquidity Ratios)The liquidity ratios are the indicators that whether the company has sufficient current assets to meet its current liabilities as when they become due. Generally, ratio more than 1 implies that short term debts are recovered entirely. In other words, short-term solvency position of a company is gauged. The most common liquidity ratios are current ratio, quick ratio and cash ratio.1.Current Ratio:
End of preview
Want to access all the pages? Upload your documents or become a member.
Related Documents
Analysis of Financial Statements for Wesfarmers Limitedlg...
|17
|3679
|173
Finance Assignment Solved - Doclg...
|18
|4127
|259
Report on Australian Company Wesfarmerslg...
|16
|2793
|85
Financial Analysislg...
|16
|3205
|428
Ratio Analysis and Evaluation of Corporate Reporting in Wesfarmerslg...
|13
|2829
|93
Financial and Economic Interpretation and Communicationlg...
|9
|1424
|412