Wesfarmers Financial Analysis Report

This assignment requires a thorough analysis of Wesfarmers' financial reports. It involves examining their income statement, balance sheet, and statement of comprehensive income to assess key performance indicators like profitability (return on equity), earnings per share, and working capital ratio. The analysis should also consider the company's dividend policy and sustainability practices based on their annual report.

Running head: MANAGEMENT ACCOUNTING
Management Accounting
Name of the University
Subject code and name ‘
Student Name and ID
Assignment Task Number
Author Note

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Table of Contents
Answer 1:................................................................................................................................................3
Answer 2:................................................................................................................................................3
Answer 3:................................................................................................................................................4
Answer 4:................................................................................................................................................4
Answer 5:................................................................................................................................................5
Answer 6:................................................................................................................................................5
Answer 7:................................................................................................................................................7
Answer 8:................................................................................................................................................9
Answer 9:..............................................................................................................................................10
Answer 10:............................................................................................................................................10
Answer 11:............................................................................................................................................10
Answer 12:............................................................................................................................................11
Answer 13:............................................................................................................................................11
References:............................................................................................................................................14

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Answer 1:
The replacement of the cell references with that of the names helps the user in the way such
that he can use the spreadsheet according to his requirements. For example, it helps the user to format
the spreadsheet and use the formula in the same, provided he names the cell first. The following is an
example of a spreadsheet which presents owner’s Equity + Liabilities = Asset
Answer 2:
In order to make the negative numbers more prominent for the relevant users of the
spreadsheet, they can be written within the bracket rather than using a minus sign in front of it. This
can be shown with the help of the following example:

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Answer 3:
Both the processed data as well as the unprocessed data are included in the spreadsheet. To
differentiate between the two types of data, the spreadsheet needs to segregate into the data area and
the report area. This moreover, will also help the user to extract varied data according to his need and
also process the same for the purpose of his requirement (Hoggett et al., 2015). The spreadsheet,
which represents separate areas of report, is shown as follows:

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Answer 4:
The If function is taken to be the logical function in the spreadsheet. The function does logical
testing which in turn is used for analyzing the satisfaction of the particular condition. The If function
returns “TRUE” of the condition gets satisfied and the same returns “FALSE” if the condition is not
satisfies.
The following spreadsheet shows the example of an IF function under the normal view:

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The IF function under the formula view can be shown as follows:
Answer 5:
Periodic systems of the inventory:
In the context of the periodic system, the sales and the purchases related transactions are not
updated for each of the transactions. Instead, the records, in this case are updated after each period’s
closing which can be three months, six months or a year. The purchases get added to opening stock.
After that there is reduction of closing stock from the same to derive the cost figures of the sold
commodities (Higgins, 2012).
The example is given as follows:
Answer 6:
Fancy Footwear- 10 column-adjusted worksheet in the normal view:

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Fancy Footwear- 10 column-adjusted worksheet in the formula view:

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Statement of Income as a normal view:
Statement of Income as a formula view:

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Balance Sheet in normal view:

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Balance Sheet in formula view:

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The uses of the spreadsheet as an accounting tool:
 In this method, it becomes easier to do the calculations with the help of the formula, which
can be used in the spreadsheet.
 The formatting of the data as per the size, numbers, font and text needed can also be done.
 In this context, the graphs and the charts can also be used according to the requirement and to
analyze and compare the data.
 If a particular cell does not require to be shown then it can be hidden (DRURY, 2013).
Answer 7:
Inventory in the normal view:

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The calculation of Gross Profit as a normal view:
Inventory as the formula view:
The calculation of the Gross Profit as the formula view:

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After making the changes in the data:
Inventory
Gross Profit
Answer 8:
The reconciliation of the bank in normal view:

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The reconciliation of bank as formula view:
After making the changes in the data:
Normal view:

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Answer 9:
The journal entries for the account receivables:
Answer 10:
Bad debt determination:
The Write-off Method- In this method the debt amount is uncollectible and it is charged against the
receivable account.
The journal entry for the allowance of $2000 can be shown as follows:
Expenses of bad debt
$ 2,000
To account receivable
$ 2,000
The Allowance Method- In this method, the collectible amount from that of the receivables are
calculated at each of the closing period.
In this method, the journal entry can be shown as follows:
Expenses of bad debt
$ 2,000
To allowance for bad debt
$ 2,000
Answer 11:
The analysis of financial status through that of receivable status:
The solvency of any firm is analyzed with the help of the receivable ratio and with the help of
this analysis; the efficiency of the firm in the collection of the receivables can be calculated. If the

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firm has efficiency in debt collection then the risk of bad debt of the firm will be less. On the other
hand, high risk of bad debt leads to risk in solvency for the company (Myrelid & Olhager, 2015).
Answer 12:
Entry of journals
Answer 13:
1) Business of the Wesfarmers group
The company carries out different types of businesses, few of which are as follows:

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 Products under the retail stores
 Different products in relation to home improvement
 Office improvement products
 Food and liquor
 Energy products and commodities in relation to chemicals
 Safety related commodities
2) Statement of comprehensive account:
This revenue statement of the company shows the profit that can be attributed to the parent firm. The
comprehensive loss for 2016 year ended under the firm is $78 million. This statement also reveals
currency reserve (foreign) for the transaction and the amount involved was $15 million.
3) Items from the financial statement:
Dividend- After the dividend right, the amount is taken to be dividend. The company pays dividend
regularly and for June 30, 2016, it paid $2600 (Wesfarmers.com.au. 2017).
Per share earnings- The basic EPS and the diluted EPS are both at values 36.2 cents on June 30, 2016.
The EPS of the company is measured by division of the contributed profits to parent company by that
of the weighted average of share numbers.
Return to equity- the company’s efficacy regarding return generation on equity is shown by this. The
amount is measured by dividing the net income with the equity of the shareholders. The return on
equity of the concerned company is $407/$22949 = 0.018, the number being quite poor.
Risk and alleviation- the risk is there is no guarantee for accuracy, completeness and reliability. To
alleviate this, no particular person is specified for financial statement and the company complies with
the framework of AASB.
Sustainability- The company as per its annual reports is able for income generation and has
competitive advantages, contributing to its sustainability (Bebbington, Unerman & O'Dwyer, 2014).
Income statement- the expenditures are reduced from the revenue to get EBIT figures and after that
the interest and tax expenses are deducted for getting the net profit
Balance sheet is divided in:
 Assets- Current and non-current assets
 Liabilities- Current and non-current liabilities
 Equity of the shareholders

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4) Working Capital Ratio:
5) Profit after tax

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Advice for Vikram:
Vikram is advised to make investments in the Wesfarmers due to their prospects in consistent
profit generation over the last few years.

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References:
Bebbington, J., Unerman, J., & O'Dwyer, B. (2014). Sustainability accounting and accountability.
Routledge.
DRURY, C. M. (2013). Management and cost accounting. Springer.
Higgins, R. C. (2012). Analysis for financial management. McGraw-Hill/Irwin.
Hoggett, J., Edwards, L., Medlin, J., Chalmers, K., Hellmann, A., Beattie, C., & Maxfield, J. (2015).
Accounting.
Myrelid, A., & Olhager, J. (2015). Applying modern accounting techniques in complex
manufacturing. Industrial Management & Data Systems, 115(3), 402-418.
Wesfarmers.com.au. (2017). Retrieved 16 September 2017, from
https://www.wesfarmers.com.au/infodetail/about/investors/2015AnnualReport.pdf