Financial Performance Analysis of Woolworths Limited

Running head: COMPANY PERFORMANCE ANALYSIS
Company Performance Analysis
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Author’s Note

1COMPANY PERFORMANCE ANALYSIS
Abstract
The main objective of this report is the financial performance analysis of Woolworths
Limited for making appropriate investment decision. Analysis of profitability and
operational efficiency is a major part of this report. After that, analysis of the cash
management through the analysis of the marketable securities of Woolworths Limited is
another major aim of the report. This report undertakes the analysis of provided
scenario of proposed investment to determine whether the proposed project needs to
be selected or not. This report also shows the major systemic as well as un-systemic
risk of the company. Analysis of the dividend payout ratio is undertaken regarding
Woolworths Limited.

2COMPANY PERFORMANCE ANALYSIS
Table of Contents
I. Introduction.....................................................................................................................3
II. Financial Analysis of Woolworths..................................................................................3
2.1 Company Description...............................................................................................3
2.2 Calculation and Analysis of Woolworth’s Ratios......................................................3
2.3 Cash Management Analysis....................................................................................6
2.4 Performing a Sensitivity Analysis.............................................................................7
2.5 Identification and Discussion of Systematic and Unsystematic Risks...................10
2.6 Identification of Divided Payout Ratio and Dividend Policy...................................10
III. Recommendation Letter.............................................................................................11
IV. Conclusion..................................................................................................................11
References.......................................................................................................................13

3COMPANY PERFORMANCE ANALYSIS
I. Introduction
Analyzing the financial statement of the company is an important factor to identify
the financial performance and to fetch the idea of future performance of the company.
As per above reasons the investors also analyzes the financial statement of the
company to identify the present and future financial performance for the purpose of
decision making process (Robinson et al. 2015). To conduct the decision making
process it involves the usage of different tools which include sensitivity analysis, ratio
analysis and many others. There are other kind of aspects for the decision making
process includes analysis of risks, marketable securities of the company and many
others (Easton and Sommers 2018). This report discusses about the analysis of the
financial statement of the company which is listed with the Australian Stock Exchange
(ASX) for the purpose of decision making process. The ASX listed company which is
considered for this report is Woolworths Limited (Woolworths).The division of this report
is provided below. The first part of the company involves the description of Woolworths.
The next part of this report includes the profitability ratio and efficiency ratio of the
company and analyzing the ratios from the financial statement of the company which
will in turn helps for decision making. The next part explains about the cash
management of Woolworths for analyzing the marketable securities of the company.
The next part includes the sensitivity analysis for the determination of the project. The
next part explains the identification of the systematic and unsystematic risks. The next
part talks about the dividend payout ratio and the dividend policy of the company. The
last part of this report provides the recommendation and the conclusion.
II. Financial Analysis of Woolworths
2.1 Company Description
Woolworths Group is one of the largest companies all throughout Australia and
New Zealand. The company mainly deals with retain and have presence in other kind of
business like liquor retailer, gaming and poker machine operator. The company started
its business way back in 1924. The company has more than 3000 stores all throughout
Australia and moreover it is still counting. The company associated with more than
thousands of local farmers and manufactures of the goods. The company is responsible
for the 201,000 jobs for the working class. Utilizing the huge goodwill the company has
gained trust of more than 29 million customers in total. The company lives up to their
mission statement which states that the company will provide best convenience, value
and quality for the customers who are associated with the company
(woolworthsgroup.com.au 2019).
2.2 Calculation and Analysis of Woolworth’s Ratios
In order to analyze the financial performance as well as financial position of
Woolworths, the analysis of both profitability and efficiency is paramount ((Agha 2014)).
The following discussion shows the profitability as well as efficiency ratio analysis of
Woolworths.
Profitability Analysis