Financial Management: Analysis of Wesfarmers Limited's Financial Performance

Financial management

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Analysis and background of the business that the company does in the industry.......................3
Analysis of the company’s financial performance including the economic aspect that is
associated with it..........................................................................................................................4
Examination of all the ratios........................................................................................................4
Discussion of all the ratios that are calculated above and answering all the questions that are
stated below.................................................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8
APPENDICES.................................................................................................................................9

INTRODUCTION
This report was created by consultation and is based on Wesfarmers Limited's annual report for the
years 2019 and 2020 (Commerford, Hatfield and Houston, 2018). The company's success is calculated
using ratio analysis, which takes data from a company's financial statements and measures profitability,
return, and other performance metrics. Profitability ratios, performance ratios, liquidity ratios, debt ratios,
and market value ratios are examples of common ratios. Profitability ratios, such as return on assets or
return on equity, and gross profit or net profit, show how well a company does in terms of producing
revenue and profit. The current and fast ratios, as well as the cash ratio, are used to determine liquidity.
Turnover ratios are used to calculate efficiency, which refers to how quickly essential tasks like collecting
money are completed. A higher ratio indicates that uncollected revenue is being received more effectively,
and so on. Leverage ratios reveal how much of a company's value is derived from debt. In most cases, a
lower ratio is preferable.
MAIN BODY
Analysis and background of the business that the company does in the industry
Wesfarmers Limited is farming cooperative and conglomerate based in Australia. It is one of
Australia's biggest publicly traded firms. Its headquarters are in Perth, Western Australia, and the company
has approximately 4848000 shareholders. Wesfarmers' primary aim, as that of all businesses, is to maximise
shareholder capital. The company was founded in 1914, and its most recent revenue was estimated to be
around a$27.92 billion in the year 2019. The business was established with the aim of delivering goods and
services to the rural communities of Western Australia. It founded its first public radio station in 1924
before transferring it to ABC Radio Perth. Westralian Farmers Cooperative Limited was renamed
Wesfarmers Limited in 1984. It was reorganised from a co-operative to a public corporation and listed on
the Australian Stock Exchange after that. Wesfarmers and Dalgety Farmers were combined in 1993, and it
was a tough decision. After a 10% initial investment in 1987, Wesfarmers acquired full control of
Bunnings. However, the company was sold to Hilco Capital in 2018 for a loss of $1.96 billion. In 2001,
Wesfarmers went public and became a publicly traded stock. Bunnings Warehouse, a division of the
corporation, sells home improvement and outdoor living goods as well as office supplies. Wesfarmers
restructured its department stores into one independent division in 2016, which included all stores such as
Kmart, Target, and others. Wesfarmers owns and controls 100 percent of several other subsidiaries in
countries such as New Zealand, the United Kingdom, and Australia. Coles Ansett Travel, BBC Hardware,
Coles Property Management, Comnet, Fosseys, Grocery Holdings Pty Ltd, Howard Smith, Harris
Technology, Tooronga Shopping Center, Katies Fashions, Loyalty Pacific, Morley Shopping Center,
Masters Home Improvement New Zealand, Tyremaster, and a variety of other subsidiaries are among them
(Kovalenko, 2019).