Assignment || Financial Analysis

Financial Analysis

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Contents
Resource A..................................................................................................................................................2
Executive Summary.................................................................................................................................2
Analysis...................................................................................................................................................2
Interpretation...........................................................................................................................................4
Non-financial analysis.............................................................................................................................5
Resources B.................................................................................................................................................5
Conclusion...............................................................................................................................................7
Bibliography............................................................................................................................................9

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Resource A
Executive Summary
The main objective of this report is to learn the concept of financial and non-financial analysis of
the company. In this paper, the financial and non-financial analysis will be done on the
Woolworths. Woolworth is a supermarket chain in Australian that provides the wide variety of
goods and services to consumers such as DVDs, Magazines, household goods, pet foods, beauty
product and many others (Woolworths Group, 2019).
Analysis
Woolworth
s
Woolworth
s
AUD in Million 2018 2019
Profitability Ratio
(Net) Profit margin (a/b) Net Profit 1724 2693
Net Sales 56965 59984
3% 4%
Gross Profit Margin Gross Profit 16470.00 17442
Net Sales 56965.00 59984.00
29% 29%
Efficiency Ratio
Days Debtors (a/b) Receivables (a) 1290 1320
sales *365 (b) 56965.00 59984.00
8.27 8.03
Days Creditors (a/b) Payables (a) 5316 5219

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Sales*365 (b) 56965.00 59984.00
34.06 31.76
Liquidity Ratio
Current ratio (a/b) Current assets (a) 7,181 6298
Current liabilities (b) 9,196 8620
0.78 0.73
Quick ratio (a/b) Quick assets (a) 5635 5478
Current liabilities (b) 9,196 8620
0.61 0.64
Solvency Ratio
Debt (to assets) ratio (a/b) Total Liabilities (a) 12709 12822
Total Assets (b) 23558 23491
53.95% 54.58%
Debt to Equity Total Debt 3513 4202
Total equity 10481 10286
34% 41%
Cash Flow Ratio
Operating Cash Flow Margin
Cash Flow from operating
activities 2994 2948
Sales 56965.00 59984.00
0.05 0.05
Cash Return on owners’
equity Operating cash flow 2994 2948
Equity 10481 10286
0.29 0.29
(Source: Yahoo Finance, 2019)
Interpretation
As per the above evaluation of ratios of Woolworths, it is calculated that the ability of the
company to generate the profit has been increases with the continuous years such as 3% to 4%
from the year 2018 and 2019. It has been seen that the company gross profit margin is constant

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with the 29% (Yahoo Finance, 2019). According to efficiency ratio, it is observed that the
company collects the receivables amount in 8 days in both the year 2018 and 2019 and pay the
amount in 31.76 days in the year 2019 (Yahoo Finance, 2019). It states that the company
operates effectively as it collects and pays the amount in few days. The company liquidity
position is not good as it has fewer amounts of current assets as compare to current liabilities. As
the current assets is less due to which it is not able to pay the current liabilities (Musallam,
2018). Solvency ratio states that the company finances the operating activities by issuing the
shares instead of borrowing the money from third party. Debt to equity ratio of the company has
been increases from 34% to 41% in 2018 and 2019 respectively (Robinson, 2020).
Non-financial analysis
Market Position of Woolworths: Coles and Woolworths start improving stores and digital
capabilities in order to differentiate the brands from low cost supermarkets. There are numerous
competitors in the market such as Wesfarmers, Aldi and the others. In the competitive market,
Woolworths is also considered as the leading supermarket company in Australian supermarket
industry just because of its availability of wide range of products and pricing strategy.
Resources B
Answers
1. Woolworths is a supermarket company that offers the multiple products to consumers.
Woolworths operate the business in Australian and New Zealand market.
2. By evaluating the financial statement of the company, it is observed that the financial
performance has been improved from the previous year 2018 to 2019 (Woolworths
Group, 2019).

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3. Yes, there are also some other sources that have information related to the company such
as IBIS World. IBIS World is the website that contains the information regarding the
company and trends of the industry (IBIS World, 2019).
4. Pricing strategy and food strategy are the current business strategy of Woolworths. These
strategies help the company to gain the competitive advantage in the competitive market.
Woolworths target all age of people as the consumers especially for families,
professionals and the others. There are around 100000 numbers of employees that have
different skills to attend the guest properly to enhance the performance (Woolworths
Group, 2019).
5. It is observed that the Woolworths leading company in supermarket industry. It is
observed that the company has the opportunity to expand the business at the international
level. Food strategy of the company has three steps in which it enhance the quality of
product that helps it to grow in the international market.
6. The main strength of the company management team is that all are highly talented in
performing their jobs. The management team manages the risk of the organization which
is the one of the best technique to gain the advantage in the market in the coming future.
7. In 2018, the maximum remuneration amount is taken by the high earner is 779,934 and in
2019, the company offers the 792042. The company provides the non-monetary benefits
in large number from the last years which enhance its total amount of fees from the last
year 2018 to the current year 2019 (Woolworths Group, 2019).
8. Wages rate of the company includes the cost rate that affects the business. It has been
determined that Woolworths offers $ 18.97 per hour average wage rate to employees and

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Wesfarmers offers the wages from $9 to $11 (Wesfarmers, 2019). It can be said that the
company pays the large amount to employees as compare to Wesfarmers due to which
the employees has less chances to earns the wage amount from competitors.
9. The current management structure and ownership structure of Woolworths are given
below:
(Source: Woolworths Group, 2019)
10. The company offers the various non-monetary benefits to its employees in order to
encourage them for enhancing their performance. Work place safety, training to
employees, insurance and premium policy are the non-monetary benefits that are provide
by the company to its employees for their benefits. Woolworths provide the training to
employees according to their roles and responsibilities.
Conclusion
As per the above discussion, it is concluded that the financial condition of Woolworths is strong.
According to non-financial analysis, it has been found that the Woolworths is one of the leading

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companies of the Australian market. The management team of the company also performs their
responsibilities appropriately that helps to attain the success in the coming future. It is
recommended that the company has to invest in operating activities by controlling the expenses
for good financial performance.

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Bibliography
Books
Robinson, T. R. (2020) International financial statement analysis. John Wiley & Sons.
Websites
IBIS World. (2019) Supermarkets and Grocery Stores industry trends (2014-2019). Available
From: https://www.ibisworld.com.au/industry-trends/market-research-reports/retail-trade/food-
retailing/supermarkets-grocery-stores.html [Accessed 9/2/2020].
Yahoo Finance. (2019) Woolworths Group Limited (WOW.AX).
https://finance.yahoo.com/quote/WOW.AX/financials?p=WOW.AX
Wesfarmers. (2019) 2019 Wesfarmers Annual Report. Available From:
https://www.wesfarmers.com.au/docs/default-source/asx-announcements/2019-annual-
report.pdf?sfvrsn=0 [Accessed 9/2/2020].
Woolworths Group. (2019) 2019 Annual Reports. Available From:
https://www.woolworthsgroup.com.au/icms_docs/195582_annual-report-2019.pdf [Accessed
9/2/2020].
Woolworths Group. (2019) About Us. Available From:
https://www.woolworthsgroup.com.au/page/about-us [Accessed 9/2/2020].
Journals
Musallam, S. R. (2018). Exploring the relationship between financial ratios and market stock
returns. Eurasian Journal of Business and Economics, 11(21), 101-116.

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