Financial And Planning Management Report

RUNNING HEAD: FINANCIAL MANAGEMENT
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Financial Management

Financial Management
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Executive Summary
The aim of this report is to analyse the profitability, liquidity, efficiency and capital structure
of Woolworths in comparison with industry aggregate and its competitor Wesfarmers.
Further, the report includes trend analysis, DuPont analysis and market value ratio of the
company in order to identify strengths and weaknesses and financial performance of the
company in the retail industry. At last, few recommendations are given considering the poor
profitability and return on equity of Woolworths. Recommendations are that the company
should increase its profit margin that helps Woolworths to increase its profitability and return
on equity.

Financial Management
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Table of Contents
Introduction................................................................................................................................3
Theories......................................................................................................................................3
Liquidity Analysis..................................................................................................................3
Profitability Analysis..............................................................................................................4
Capital Structure.....................................................................................................................4
Efficiency Analysis................................................................................................................5
Analysis......................................................................................................................................5
Conclusion and Recommendations............................................................................................8
References................................................................................................................................10

Financial Management
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Introduction
Financial management is considered as the management of planning, organizing, controlling
the activities related to finances of business that includes the procurement of funds, utilization
of funds and investment of funds. In simple terms, it is managing finances in the business in
order to get maximum return. The objective of this report is to analyze how Woolworths
perform as compared to its competitor and industry standard. Further, analysis is done using
tools such as DuPont analysis, ratio analysis, and trend analysis. At last, by considering
information or weak and strong areas of Woolworths few recommendations are given.
Woolworths is an Australian company that offers groceries, magazines, DVD’s, household,
beauty and health products. The company has 981 supermarkets and 43 convenience stores
across. Wesfarmers is the biggest competitor of Woolworths in the retail industry
(Woolworths,2020).
Theories
The analysis of Woolworths is done for 5 years in order to analyze the performance and
growth of the company in the retail industry. For that different parameters are taken into
considerations that are efficiency, profitability, and capital structure and liquidity position of
the company.
Liquidity Analysis
The liquidity analysis of any company includes analysis of the company’s ability to pay the
short term obligations without raising funds from external sources (Wadhwa,2019). In order
to know the liquidity position of Woolworth's current ratio is calculated.
Particulars Formula 2015 2016 2017 2018 2019
1. Liquidity
Analysis
Current Ratio CA/CL 0.84 0.83 0.80 0.78 0.73
The ideal ratio that companies should maintain in the retail industry is 2 but the current ratio
of Woolworths is 0.73. The current ratio of the company decreases from 0.84 in 2015 to 0.73
in 2019. Decreasing ratio means that the company is not in a good position as the Current