Financial Management | Woolworths Firm

Running head: FINANCIAL MANAGEMENT
Financial Management
Name of the Student:
Name of the University:
Author’s Note:

FINANCIAL MANAGEMENT1
Executive Summary
The assignment aims at analyzing the Woolworths Firm for a trend period of five years whereby
important aspects of the firm has been taken into consideration. Factors like profitability, capital
structure, liquidity and efficiency were some of the key points that have been analyzed for the
firm. The analysis reflecting the ROE of the firm has been done with the help of the Du Pont
Analysis over a five year trend period. In all of the financial ratio’s that have been analyzed the
answers that have been derived for the firm was well compared with the industry average ratio’s
for getting an comparison of the firm performance with the industry levels.

FINANCIAL MANAGEMENT2
Table of Contents
Introduction......................................................................................................................................3
Discussion and Analysis..................................................................................................................3
Ratio Analysis..............................................................................................................................3
Capital Structure Ratio............................................................................................................3
Efficiency Ratio.......................................................................................................................4
Profitability Ratio....................................................................................................................4
Liquidity Ratio.........................................................................................................................5
Du Pont Analysis.........................................................................................................................6
Capital Structure and Profitability Relationship..........................................................................7
Price to Earning’s Ratio...............................................................................................................7
Conclusion.......................................................................................................................................8
References........................................................................................................................................9
Appendix........................................................................................................................................11
1) Ratio Analysis.......................................................................................................................11

FINANCIAL MANAGEMENT3
Introduction
The financial analysis of the firm has been done for the Woolworths Firm that is a major
Australian firm with an extensive operations spread in Australia and New Zealand. The firm
analyzed is regarded as the second largest organization when viewed in terms of revenue
reported. The firm is listed in the Australian Stock Exchange with its ticker symbol as WOW.
The current share price of the firm is around A$41.32. The financial analysis of the firm has been
done using ratio analysis a quantitative assessment tool in which we would be considering data
for the firm for a sum of five years (Haskins 2017). Liquidity, Profitability, Efficiency and
Capital Structure of the firm were some of the key aspects that were analyzed. Other aspects like
Du Pont Analysis and Price to Earnings were some of the crucial aspects that were in particular
taken into consideration in order to get the quantitative analysis with respect to firm.
Discussion and Analysis
Ratio Analysis
Capital Structure Ratio
The capital structure ratio that has been well analyzed with the help of debt ratio which
shows the proportion of debt in contrast to total assets deployed (Haskins et al., 2019). The debt
ratio for the firm has been around 0.56 times in the year 2015 and the same was around 0.55
whereby changes in the ratio is well shown below in the graph. When comparing the firm’s ratio
from the industry standard level the same is around 0.51 times. Woolworth’s Firm should in turn
reduce the level of debt so that the financial risk of the firm decreases and the same does not
affect the business operations. The ratio analyzed for the firm well shows that the firm should
reduce the same with respect to the total asset base that the firm reports.