Corporate Finance: Strategies, CAPM, Share Price Calculation, P/E Ratio, RRR Method

Running Head: CORPORATE FINANCE 0
Corporate Finance
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CORPORATE FINANCE 1
Table of Contents
Brief............................................................................................................................................2
Wesfarmers strategies................................................................................................................3
Core values.............................................................................................................................3
Strategies................................................................................................................................3
CAPM........................................................................................................................................4
Calculation of share price using Dividend Discount Model......................................................4
Calculation of share price using Non-Dividend Discount Model..............................................5
Price Earning Ratio....................................................................................................................5
Reward to Risk ratio...................................................................................................................6
RRR METHOD..........................................................................................................................6
References..................................................................................................................................8

CORPORATE FINANCE 2
Brief
Wesfarmers Limited Company is an Australian based conglomerate company whose
headquarters are situated in Perth, Western Australia. The company is currently involved in
chemicals, cola, fertilisers and industry safety products. By 2016 the Wesfarmers became the
largest Australian company with a worth of AU$ 66.98 billion revenue. The company
overtook it biggest competitors like Woolworth and BHP Billiton. Around 220000 employees
are currently working in this organisation.
Further, under the current scenario the written down value of retail chain Wesfarmers
accounted for $307 million which is lower than expected by the company. In 2018 the net
profit of the company reached $214 million. The jump was of 86.6% in total as compared to
previous year. The ratios of the Wesfarmers Ltd. indicate the operating margin of the
company is 5.8% in 2016 and it increased to 6.9% in the year 2017. The current ratio of the
company is 0.93 which is less than the ideal ratio of 2:1. This means that the company that
was not having sufficient assets to pay back the liabilities. On the other hand the quick ratio
has improved from 0.21 in 2016 to 0.25 in 2017. This means that the company was able to
convert the assets into cash to pay back. The retail chain Coles has made revenue of $42,242
million which is 2.7% up from last year (Marciniak & Palmowski, 2017).
The company has a diversified range of products which includes retail chain,
insurance, operates mines, manufactures and distributor of industrial product. The entire
group generated revenue of $66,981 million in 2016 which is 5.9% more than last year. The
operating cash flows of the entire business amounts to $3365 million which is $426 million
less than the last year as compared. The higher working capital investments were jumped to
improve the inventory and the sales of the business (Pandey, 2017).