Finance and Analysis Report 2022

Finance

FINANCE 1
Part A: Motivation
The main competitor of Wesfarmers Group is Woolworths. These two companies operate the
business in the same industry that is supermarket and grocery retains chain. The brand image of
the companies is also similar as these have similar line of business. It has been found that the
organization structures of both the companies is not similar to that of Wesfarmers management
as the management of Wesfarmers divided into two parts such as retail and industrial and the
other business and the management structure of Woolworths is not divided into parts it is in the
form of top and bottom management (Wesfarmers Group, 2018). For the comparison, it is
required that both the companies follows the similar accounting principles for all financial
activities but it is observed that both the companies does not follows the similar principles which
is main limitation that makes the process of comparison difficult. It has been found that both the
companies record the items in financial report as per the different method such as fair value or
cost value. Woolworths recorded the inventory as the cost value or net realizable value and
Wesfarmers record the inventory on the purchase value. The financial statements of both the
companies have been analyzed with the help of financial ratios. One of the limitation is that the
comparison has been done on the financial basis not on the non-financial information due to
which it is difficult to find the differences among them (Zainudin, and Hashim, 2016).

FINANCE 2
Part B: Analysis Report
B1. Wesfarmers Only Consolidated Statement of Financial Position for 2018 only
1. Wesfarmers Group uses the straight line method of deprecation to record the plant and
equipment. The company disclose assumed useful live for depreciation purpose of plant
and equipment is between the time period of 3 and 40 years.
2. The recoverable amount is calculated of individual assets. The recoverable amount of
assets is calculated by subtracting the cost, value in use from the fair value. The
recoverable amount of the company is $1167 million which was recognised in
impairment expenses.
3. In the beginning of the year 2018, the addition amount of Plant and Equipment is $1013.
The net assets disposed are $555 m and total assets disposed are 987 in the year 2018.
The depreciation expense of the year is 913 (Wesfarmers Group, 2018).
4. The gross balance of PPE in the year 2018 is $12620m. The accumulated depreciation of
PPE is $7136 in millions and the net carrying amount at the end of the year 2018 is
$5484 in millions. The percentage of gross profit of Building is 97.33%, Leasehold is
52.65%, and Plant is 7.23% in the proportion of depreciation expenses.
Proportion of gross balance in depreciation expenses
Buildings Leasehold Plant
Depreciation Expenses 913 913 913
Cost 938 1734 12620
97.33% 52.65% 7.23%
5. The intangible assets have been reported under the heading of non-current assets. An
intangible asset of the company contains the brands, software, contractual and non-
contractual relationships, and gaming. The amount of intangible assets is 4369 in millions

FINANCE 3
in the year 2018 in which the brand has $3654, contractual is 38, software is 519, and
Gaming is 158.
6. The company owned the amount on non-current liabilities is $4154 million at the end of
the year 2018 are. The current liability of the company is $10025 at the end of the year.
7. The total amount of finance costs (interest expenses) of the company is $211 in the year
2018 (Wesfarmers Group, 2018).
B2. Wesfarmers only Income Statement for 2018 only
1. The total revenue of Wesfarmers Group is $66883 from the company’s operation. Sales
of goods, rendering of services, interest, dividends and operation lease rental revenue are
the operation from the amount of revenue is derived in the year 2018.
2. The net profit of the firm is $1197 in the year 2018. There are different categories of the
profit that are reported in the income statement of the company. The EBIT expenses is
$4061, the profit before income tax is $3850 in millions, profit from continuing operation
is $1246, profit after tax for the period from discontinued operations is $1407, profit after
tax for the period from discontinued operations is $1197and the profit attributable to
members of the parent. These are profits that are reported in the income statement. In
these all types of profits, profit after tax for the period is beneficial as it defines the net
profit of the firm which is generated at the end of the year 2018 (Wesfarmers Group,
2017).
3. As per the analysis of annual report of 2018 of the organization, it is observed that the
profit of the organization is $1197 in millions. It is observed that the net profit of the