Principles of Managerial Finance - PDF
Added on 2021-05-31
12 Pages2860 Words59 Views
UNIT:NAME:DATE:
Question 1Westfarmers retail businesses financial results comparison IntroductionThe following section compares financial results for different retail businesses of Westfarmers Group. The Westfarmers Group originated from Western Australian farmer’s cooperative that was founded in 1914. Westfarmers is among the largest listed companies in Australia stick Exchange (ASX) and largest private employer in Australia. Westfarmers Limited aims to providesatisfactory returns to its shareholders. The conglomeration is led by Richard Goyder as the managing director and Michael Chaney as the chairman. Westfarmers limited recorded revenues amounting to $68444 million in 2017 FY from $65981 million in 2016 FY. The company net profits for 2017 FY were $2873 million which was 22.1% increase from previous financial year. The company paid $2.23 dividend per share for 2017 FY from $1.86 in 2016 financial year. The write-up focuses on each individual division of Westfarmers financial results. The divisions include; Coles, Department Stores, Home Improvements, and office Works. The write up will use financial results for 2016 and 2017 financial years. The write-up will aim to establish best financial performing retail business in Westfarmers group.ColesCole started in Collingwood in 1914 and has grown over the years to be one of the largest and iconic Australian retailers. The division operates Coles Express, Spirit Hotels, Coles Supermarkets, Vintage Cellars, Liquorland, Coles online, and Coles Financial Services. Coles recorded revenues amounting to $39217 million in 2017 FY which is slightly lower compared to $39242 million in 2016 FY. The earnings before interest and tax amounted to $1609 million that was a 13.5% decline from 2016 FY that recorded $1860 million.Home ImprovementsBunnings was acquired by Westfarmers in 1994. Bunnings is an international warehouse of household hardware with chains in New Zealand, United Kingdom, Australia, and Ireland. The Bunnings is the market leader in home improvement retail in New Zealand and Australia and
second largest home improvement retailer in Ireland and United Kingdom. The division recorded$13586 million revenues that were 17.4% increase from 2016 FY that had recorded $11571 million. The Home Improvement division earnings before tax and interest rate increased to $1245 million in 2017 FY from $1214 million in 2016 financial year.Departmental StoresThe Westfarmers department Stores division was started in February 2016. It was a combination of target and Kmart stores. The Department Stores operates 774 stores in Australia and New Zealand. Kmart deals with home-wears, clothing, and general merchandize and operates 220 stores in New Zealand and Australia. Target also deal with the same products as Kmart and operates 303 stores and an online store. The Department Store recorded revenues that amounted to $8528 million that was lower compared to previous financial year that recorded $8646 million. The division also recorded $543 million earnings before tax and interest rates that were higher to 2016 FY that recorded at $275 million.OfficeworkThe Officeworks division first opened in 1994 in Richmond. The division is a market leader in supply of office products and solutions in Australia. The Officework 2017 FY revenues amounted to $1964 million an increase from $1851 million in 2016 FY. The division also recorded an increase in earnings before interest rates and tax to $144 million in 2017 FY from $134 million in 2016 FY. ComparisonThe Westfarmers retail businesses financial performance will be compared in terms of revenue, earnings before interest and tax (EBIT), capital employed, and ratio of return on capital employed. Revenues Revenues are the total amount of income received from sale of products less returned products. The higher the revenue the more sales a company or unit made in a specified period of time.
DivisionRevenues ($M)Financial Year20172016Coles 3921739242Home Improvement1358611571Department Stores85288646Officework19641851Coles division has the largest amount of revenue while Officework has the lowest amount of revenue recorded for both financial years. Both Coles and Department Stores revenues declined in 2017 FY form 2016 FY. The Home Improvement and Officework division revenues increasedin 2017 FY from 2016 FY. The Home Improvement division recorded the highest increase in revenues while Department Stores recorded the largest decline in revenue in 2017 FY from 2016 FY.Earnings Before Interest and Tax (EBIT)EBIT is a profitability measurement of a company that calculates operating profits without considering tax implications and cost of capital (Gitman, Juchau, & Flanagan, 2015). It is total revenue less operating expenses and cost of goods sold. The EBIT shows the ability of a company to earn profit. DivisionEBIT ($M)Financial Year20172016
End of preview
Want to access all the pages? Upload your documents or become a member.
Related Documents
Comparing Financial Results and Sustainability Reports of Wesfarmerslg...
|10
|2731
|444
Analysis of Financial Statements for Wesfarmers Limitedlg...
|17
|3679
|173
Accounting for Corporationslg...
|11
|3263
|54
BAC202 ASX Corporate Governance Principles and Recommendationlg...
|9
|2686
|52
Sustainability of Wesfarmers Limited in Retail Businesslg...
|3
|711
|259
Wesfarmers Annual Report 2018lg...
|81
|100027
|95