Financial Analysis of Wesfarmers 2018

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This report focuses on the financial analysis Wesfarmers. This report include a statement of financial position, change in equity statement, income statement, and cash flow statement. The financial analysis of Wesfarmers helps in providing clear picture of business done in the market in 2018.

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Running head: FINANCIAL ANALYSIS OF WESFARMERS
Financial Analysis of Wesfarmers 2018
Name of the Student
Name of the University

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FINANCIAL ANALYSIS OF WESFARMERS
Table of Contents
Executive Summary.........................................................................................................................3
Introduction......................................................................................................................................4
Statement of Financial Position...................................................................................................4
Shareholder’s Equity.......................................................................................................................5
Profit and Loss Statements..............................................................................................................6
Cash Flow Statement.......................................................................................................................7
Conclusion.......................................................................................................................................8
References........................................................................................................................................9
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FINANCIAL ANALYSIS OF WESFARMERS
Executive Summary
This report focuses on the financial analysis Wesfarmers. This report include a statement of
financial position, change in equity statement, income statement, and cash flow statement. The
financial analysis of Wesfarmers helps in providing clear picture of business done in the market
in 2018. There has been a conclusion provided at the end of report that reflects summary of
analysis and comparison of year 2017 ad 2018.
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FINANCIAL ANALYSIS OF WESFARMERS
Introduction
This report has focused on Wesfarmers that has been established in 1984 by Westralian
Farmers Cooperative Limited. It was formed by taking requirements of farmers in Western
Australia for providing services and financial support to Westralian Rural Community.
Wesfarmers has been enlisted in the Australian Stock Exchange. It compromises of various
departmental stores, supermarket, coal mining, energy resources and industrial product.
Wesfarmers has been one of the largest employer having 217,000 employees and around 49500
shareholders (Wesfarmers.com 2019). This report include four financial statements of the
company that include statement of financial position, change in equity statement, income
statement and cash flow statement. These statements provide financial analysis of the
Wesfarmers.
Statement of Financial Position
Particulars 2017 (AUD in
billions)
2018 (AUD in
billions)
Percentage change
Total Current assets 9667 8706 9.61 %
Total Noncurrent
assets
30448 28227 22.21 %
Total Current
Liabilities
10417 10025 3.92 %
Total Noncurrent
Liabilities
5757 4154 16.03 %
Total shareholders’ 23941 22754 13.67 %

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FINANCIAL ANALYSIS OF WESFARMERS
Equity
(Source: Wesfarmers.com 2018)
Statement of financial position has been a type of financial statement that helps in
focusing on financial performance of an organization in an accounting year. It helps in providing
data related to the financial performance of organization in one year. It has been identified and
analysed that financial performance of Wesfarmers have been decreasing in the market including
its value of shares from 2017 to 2018. The total current asset of the organization has reduced by
9.61 % in 2018 than that of previous year (Wesfarmers.com 2019). Therefore, it refers that
financial strength of Wesfarmers has decreased in 2018 with compare to 2017. The noncurrent
assets of Wesfarmers has gone down by 22.21 % in 2018 which reflects that organization has
released fixed assets in 2018 than that of 2017. The current liability of this organization in 2018
had decreased by 3.92 %. The noncurrent liabilities of Wesfarmers has declined in 2018 that
means the company has long term liabilities has reduced by 16.03 % (Wesfarmers.com 2019).
Therefore, it can be analysed that organization has been meeting strong financial position in long
term debts. The long-term asset has been increased but are not converted into cash. Along this
this, equity of shareholders of 2017 have been more than that in 2018.
Shareholder’s Equity
It is the statement that shows change in the equities of the company in a financial year.
The equity shareholders statement gives clear picture of fluctuations in equity of the company.
Particular 2017 (AUD millions) 2018 (AUD millions) Percentage change
Common stock 23,708 22,965 7.43 %
Retained earnings 3241 3042 1.99 %
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FINANCIAL ANALYSIS OF WESFARMERS
Treasury stock 565 463 1.02 %
(Source: Wesfarmers.com 2018)
The above table interpret about shareholder’s equity of the Wesfarmers during the year of 2018.
The common stock of Wesfarmers has been AUD 23708 million during 2017 that has been
decreased to AUD 22965 million during the year 2018. The retained earnings of the Wesfarmers
have been decreasing. The net income of the company increases, the retained earnings of the
company have decreased to AUD 3049 million by June 2018. This indicates that the net income
of company increases. The retained earnings of the company have decreased in 2018. The
treasury stock has decreased in 2018 and it was AUD 565 million in 2017 which has decreased
in 2018 by AUD 463 million. There has been reduction in treasury stock by 1.02 %
(Wesfarmers.com 2019). It has been analysed that this organization has not been able to perform
well in the market with respect to previous year. Wesfarmers has been losing their effectiveness
and market value.
Profit and Loss Statements
Profit and Loss statements has been known as income statement that helps in revealing
expenditure and income of an association in one financial year. It helps in reflecting net profit
and loss of the association. It include different types of income and expenditure of the
organization in two columns. In case, expenditure of the company get increased than that of
income, it shows loss of the company and accordingly vice versa. It incorporates all expenses
excluding factory expenses on the left side column. If the expenses get increased, the revenue of
the company, it generates net loss of the company.
Particular 2017 (AUD in 2018 (AUD in Percentage change
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FINANCIAL ANALYSIS OF WESFARMERS
millions’) millions’)
Total Operating
Revenue
3865 4015 +1.5 %
Cost of goods sold 44963 47296 + 23.33 %
Total expenses
before income tax
59343 61983 +26.40 %
Non-operating gains
and losses
387 498 + 1.11 %
Earnings per
common share
257 209 -0.48 %
(Source: Wesfarmers.com 2018)
The above data focuses on total operating revenue of the Wesfarmers in 2018 has
increased by 23.33 % that means the company has been able to cut down and increase profit. The
cost of goods sold has been increased by 23.33 % while expenses has been increased by 26.40 %
that shows that decreased efficiency of the company has reduced with cost comparison of 2017
(Wesfarmers 2016). The other expenses have been increasing that giving the high cost to the
company in turn increasing cost of the goods.
Cash Flow Statement
Cash flow statement helps in showing cash position of the company. It depicts cash
inflow n outflow of the company.
Particular 2017 (AUD in
millions’)
2018 (AUD in
millions’)
Percentage change

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FINANCIAL ANALYSIS OF WESFARMERS
Net cash inflow/used
in from operating
activities
4226 4080 1.46 %
Net cash inflow
from/used in
financing activities
3771 3752 0.19 %
Net cash inflows
from/used in
investing activities
53 658 6.05 %
Net increase or
decrease in cash
during the year
1013 683 3.3 %
(Source: Wesfarmers.com 2018)
It has been found that the Wesfarmers earned $4080 million from operating income in
2018 that has been higher than cash inflow from operating activities in 2017 is $4226 million.
The net cash inflow from operating activities increased by 1.46 % in the year 2018. The cash has
been used in financing condition which is helping in minimizing payment and borrowing.
Conclusion
The above analysis has discussed on financial performance of association which has not
been able to maintain its performance in 2018 compared to 2017. The analysis helps in providing
data and information related to weak points of association. This analysis might help in
identifying issues in the association and implementing proper steps to recover losses in year
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FINANCIAL ANALYSIS OF WESFARMERS
2018. It can be analysed Wesfarmers has experienced problem of liquidity in the year 2018. The
cash inflow of association has been decreased and the cash outflow has been increased in 2018.
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FINANCIAL ANALYSIS OF WESFARMERS
References
Bari, A., Peidaee, P., Khera, A., Zhu, J. and Chen, H., 2019, March. Predicting Financial
Markets Using The Wisdom of Crowds. In 2019 IEEE 4th International Conference on Big Data
Analytics (ICBDA) (pp. 334-340). IEEE.
Nwogugu, M.C., 2016. Corporate Governance, Financial Stability and Evolving Insurtech: The
Case of Insurance Australia Group (2011-2016). Financial Stability and Evolving Insurtech: The
Case of Insurance Australia Group (2011-2016).
Wesfarmers, (2019) Wesfarmers: who we are [Online]. Available at:
https://www.wesfarmers.com.au/.
Wesfarmers.com (2018), Wesfarmers.com, Available
at :https://www.wesfarmers.com.au/docs/default-source/asx-announcements/appendix-4e-and-
2018-full-year-results.pdf?sfvrsn=0
Wesfarmers.com (2018), Wesfarmers.com, Available
at:https://www.wesfarmers.com.au/docs/default-source/asx-announcements/2018-annual-
report.pdf?sfvrsn=0.
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