Financial Analysis of Woolworths: Liquidity Ratio, Profit Trend and Cash Flow

Financial Analysis

FINANCE 1
Introduction
Financial analysis is the process of evaluating, and summarizing the financial performance of the
company. It is required for the company to analyze the financial performance for expanding or
operating the business effectively (Williams, & Dobelman, 2017). In this report, Woolworths has
been taken into consideration to analyses the financial performance. In this paper, liquidity ratio,
trend analysis of profit and the cash flow statement of the company will be analyzed.
Woolworths is an Australian supermarket store which was founded in the year 1924
(Woolworths, 2018).
Financial Analysis
1.
2017 2018
100.00% 104.90%
Gross Profit 15929 16709
100.00% 112.29%
Profit before income
tax 2132 2394
100.00% 112.68%
Profit for the period 1593 1795
According to Annual Report of 2018 of Woolworths, the profit of the company is 1795 in
millions. As per the horizontal analysis, it is observed that the percentage of profit of the year is

FINANCE 2
increasing from the previous year with the 12.86%. It has been evaluated that the percentage of
profit for the period is 112.68% which is increasing from the base year 2017. As per the trend
analysis, it has been evaluated that the percentage of gross profit is also increasing from 2017 in
the year 2018(Woolworths Group, 2018). The main reason of increasing profit is decreasing
finance cost and increasing revenue from sales. Due to increasing revenue from sales and
reducing cost helps to increasing the percentage of profit. According to the analysis, it is
observed that the financial position of 2018 is more effective as compare to 2017.
2.
Woolworths
Industr
y
2017 2018
Liquidity
Ratio
Current ratio Current assets 6994 7181
Current
liabilities 8824 9196
0.79 0.78 0.81
Quick ratio Quick assets 660 847
Current
liabilities 8824 9196
0.07 0.09 0.3
A.