Finance for Business - Assignment
20 Pages3898 Words68 Views
Added on 2021-06-17
Finance for Business - Assignment
Added on 2021-06-17
ShareRelated Documents
1Unit Code: HI5002Unit Name: Finance for Business
2Executive SummaryThe present report has been developed for presenting the financial analysis ofWesfarmers Pty Ltd for the purpose of taking investment decisions. It has been reflected fromthe analysis that Wesfarmers has maintained its strong financial performance over the past yearsand also its potential of growth is very strong as depicted from its performance ratios and debtratios. The calculation of beta by the use of CAPM model for the company has reflected that itssecurities are less risky for the investment purpose. Also, its dividend policy seems adequate forcreating larger return to shareholders and it has been recommended from the overall analysiscarried out that Wesfarmers financial position seems to be appropriate for providing larger returnto investors in the future context. Introduction 150 words
3ContentsExecutive Summary.........................................................................................................................2Introduction......................................................................................................................................4Part 1: Brief Description of the Company.......................................................................................4Part 2: Ownership- Structure of Wesfarmers Ltd............................................................................5Part 3: Fundamental Analysis of Wesfarmers ratio analysis as a financial tool..............................7Part 4: Movement of Wesfarmers Company Share prices Vs movements in the All Ordinaries Index..............................................................................................................................................104.1: Graph representing the monthly share price of Wesfarmers and All Ordinaries................104.2: Report to compare the movements of share price of Wesfarmers and All Ordinaries.......11Part 5: Financial or Business Applications....................................................................................13Part 6: Application of CAPM Model to calculate the required rate of return of Wesfarmers.......146.1: Estimation of calculated beta of the chosen company........................................................146.2: Required rate of return using the CAPM Model.................................................................146.3: Discussion on whether Wesfarmers is ideal for “conservative” investment......................15Part 7: Weighted Average cost of capital......................................................................................157.1: WACC of Wesfarmers........................................................................................................157.2: Implication of higher WACC..............................................................................................16Part 8: Capital Structure of Wesfarmers........................................................................................168.1: Optimal Capital Structure...................................................................................................168.2: Impact on the gearing ratio.................................................................................................16Part 9: Dividend Policy..................................................................................................................16Part 10: Recommendation to Client...............................................................................................17References......................................................................................................................................18
4IntroductionThe present report is developed for carrying out an in-depth analysis into the financialperformance of a selected company listed on ASX. The analysis is carried out for the purpose ofproviding financial assistance to wealthy investors by guiding their decision-making process.The analysis is undertaken in respect of the financial reports disclosed by the selected companyon the ASX. The company selected for the analysis purpose is Wesfarmers Pty Ltd, asupermarket giant in Australia. In this context, the report includes providing a brief descriptionof the company and its ownership-governance structure. This is followed by carrying outexamination of its difference performance ratios for gaining an analysis of its financialperformance in depth. The report also provides a description of the significant factors influencingthe share price of the company. Also, it carries out the calculation regarding the beta values andthe expected rates of return using the CAPM model. The report also carries out calculation inrelation to the weighted average cost of capital of the company and debt ratios for examining theimprovement achieved in relation to maintaining a preferred optimal capital structure. Lastly, thereport provides discussion in relation to dividend policy and recommendation to the investors inrelation to the overall analysis carried out. Part 1: Brief Description of the CompanyWesfarmers is recognized as a leading retail company of Australia listed on ASXestablished in the year 1914. The company carries out diverse business operations includingsupermarkets, liquor, hotels, convenience stores, home improvement, office supplies anddepartment stores. The company is also having industrial divisions for carrying out businesses inchemicals, energy, fertilizers, and coal and safety products. The company actively provides itsproducts and services across Australia and New Zealand. It is also attributed to one of the majororganization in Australia involved in providing employment to large number of people and thusis an important contributor of economic growth and development of the country. The companyhas achieved a dominant position with the retail sector of Australia by providing satisfactoryreturn to shareholders. The major objective of the company is to effectively meet the demandsand expectations of the customers by providing them high quality products and services. Thehigh brand value of the company is attained on the basis of integrity and honesty maintained incarrying out its business activities. Also, their strong corporate governance policy is responsible
End of preview
Want to access all the pages? Upload your documents or become a member.
Related Documents
Financial Analysis of Telstra Corporation Limitedlg...
|22
|4358
|452
Financial Analysis of the National Australian Banklg...
|20
|4009
|28
Financial Analysis of Qantas Airways Ltd.lg...
|20
|4178
|212
Boral Finance for Business 18 18 Finance for Business 18 18lg...
|19
|4359
|349
Finance for Business - Assignment Samplelg...
|19
|3927
|80
Finance for Business: Analysis of Emergent Resources Limitedlg...
|18
|3717
|225