Finance for Business

Running head: FINANCE FOR BUSINESS
FINANCE FOR BUSINESS
Name of the Student:
Name of the University:
Author’s Note:

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FINANCE FOR BUSINESS
Table of Contents
Introduction........................................................................................................................2
Discussion..........................................................................................................................2
Description and Nature of the Business........................................................................2
Ratio Analysis of the Business.......................................................................................3
Cash Management Strategies.......................................................................................6
Systematic and Unsystematic risks of the business......................................................9
Dividend Policies..........................................................................................................10
Recommendations...........................................................................................................10
Conclusion.......................................................................................................................11
Reference........................................................................................................................11

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FINANCE FOR BUSINESS
Introduction
The main purpose of the assessment is to analyse the business of Woolworths
which is engaged in the business of retail business and also operates as a supermarket
chain. The analysis would be helping the consultancy business of DS Consultancy
Group to provide appropriate advice to the management of Woolworths. The
assessment would be identifying the key area of operations of the business along with
competitive advantage which is developed by the business. In addition to this, the
financial performance of the business of Woolworths would be conducted considered
key financial ratios of the business (Woolworthsgroup.com.au. 2019). The key financial
ratios which are to be computed are mainly associated with liquidity, profitability and
efficiency of the business. The assessment would also be providing emphasis on the
cash flows of the business for a better understanding of the financial structure of the
business. Moreover, the assessment shows that the business of Woolworth ltd is
undertaking a project for which NPV of the project is to be computed and sensitivity
analysis for the same would also be conducted as shown in the assessment. The
management of the company would also be identifying the systematic and unsystematic
risks which might affect the business along with the trends of dividend which is paid by
the business over a period of three years. The assessment would finally be containing
the advices which can be suggested to the management of Woolworths so that the
overall business structure can be improved.
Discussion
Description and Nature of the Business
The company which is being considered for the assessment is Woolworths ltd
which is engaged in retail business and also runs chains of supermarkets in different
regions of Australia. The company is known to be a leading brand in the supermarket
industry and the only close competitor of the business if Coles Supermarket. Together
with Coles supermarket, Woolworths ltd accounts for more than 80% of the market
shares of Australia. As per the recent estimate of the market conditions, Woolworths
supermarket serves around 29 million customers in a week which shows the popularity
of the brand in the markets of Australia. The company is also dedicated towards
meeting the needs of the customers and also follows a sustainable approach in
managing the operations of the business.
The management of the company recognizes the importance of the customers
and the need to keep the customers of the business satisfied. Some of the comparative
advantage which the management of the company has developed over the years are
listed below:
 Wide range of distribution networks with the numerous shops which has been
opened by the business which allows the business to reach out to more
customers and thereby provide every chance to enhance the revenue of the
business.

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FINANCE FOR BUSINESS
 The management of the company follows a low-cost model for the of keeping the
prices so that more customers can be attracted to the business. In this manner
as well, the business has built a brand loyalty for itself in the market.
 The management of the company always follows innovative approach for the
purpose of appropriate meeting the needs of the customers and also for keeping
up with the level of competition in the market.
These approaches have made the business of Woolworths one of the leading
supermarket chains in the country. As per the current annual report of the company, the
management of the company is aiming to capture the grocery market by offering
grocery products at a cheaper price.
Ratio Analysis of the Business
Ratio analysis is a tool which is used by businesses for appropriately estimating
the performance of the business in the current year and comparing the performance if
the business with previous year. Ratio analysis allows the management of company to
identify the trends in the marker and on the basis of the same important decisions are
taken by the business (Babalola and Abiola 2013).
Ratio Analysis 2018 2017 2016
Ratio Company:
Woolsworth Ltd Formula
Absol
ute
Absol
ute
Absol
ute
Catego
ry
$
Value
s
$
Value
s
$
Value
s
Liquidit
y
Current ratio
Current assets 7,181 7,121 7,427
Current liabilities 9,196 8,952 8,992
Ratio Ratio Ratio
0.78 0.80 0.83
Quick ratio
Highly liquid current assets 2,948 2,914 2,868
Current liabilities 9,196 8,952 8,992
(EXCLUDES INVENTORY AND
PREPAID ASSETS)
Ratio Ratio Ratio
0.32 0.33 0.32
Profitab
ility
Return on ordinary
shareholders' equity
Profit after tax 1,795 1,593 -2,348
Average ordinary shareholders' equity 10,849 9,876 9,876
Ratio Ratio Ratio
16.55
%
16.13
%
-
23.77
%
Return on assets
Profit after tax 1,795 1,593 -2,348
Total assets 23,558 23,043 23,502
Ratio Ratio Ratio