Financial and Sustainability Analysis of Westfarmers Company

This article provides a detailed analysis of the financial performance and sustainability initiatives of Westfarmers Company. The analysis includes key ratios such as current ratio, quick ratio, cash flow ratio, asset turnover ratio, percentage return on equity, and net profit ratio. The sustainability report of the company covers social accounting, environmental considerations, and corporate social responsibility. The report highlights the company's focus on safety, ethical outsourcing, human rights, diversity, and climate change. The company's contribution to the community and its robust corporate governance are also discussed.

Running head: MASTERS OF ACCOUNTING
Masters of Accounting
Name of the Student:
Name of the University:
Author’s Note:

1MASTERS OF ACCOUNTING
Table of Contents
In Response to Question 1..........................................................................................................2
In Response to Question 2..........................................................................................................8
In Response to Question 3........................................................................................................11
Reference..................................................................................................................................12
Bibliography.............................................................................................................................15

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In Response to Question 1
The financial analysis of the Westfarmers Company was done in order to review the
financial overview and performance of the company. The financial performance of the
company has been impressive as the earnings of the company and the return created for the
stakeholders for the company has been impressive or the company. The use of ratio analysis
was done in order to review the company’s financial position and performance. The key
ratio’s analysed as a prospect for the same were current ratio, quick ratio, cash flow, asset
turnover, percentage return on equity and net profit margin. The key financial data taken for
the financial performance was for the financial year 2015-16 and 2016-17. The performance
of the company has been shown with the help of the trend analysis among the financial year
(Almamy, Aston and Ngwa 2016).
The current ratio for the company states about the potential of the company in
order to fulfil the current obligations/liabilities of the company. The formula for the current
ratio is Current Ratio = Current Assets/Current Liabilities. The current ratio for the company
is around 0.93 times in both the financial year under the trend period taken. The company
should focus more on increasing its current assets of the company in order to service its
obligations and remain liquidity in the daily operations of the business (Katsouras, et al.
2015).
Figure 1: Current Ratio
2016-17 2015-16
0.93
0.93
0.93
Current Ratio

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(Source: Wesfarmers.com.au 2018)
The Quick ratio is also called the acid test ratio and is an important source for determining
the liquidity of the company. The formula for the Quick Ratio is (Marketable securities+
Cash+ Trade Receivable)/Current Liabilities. The Quick ratio for the company is around 0.41
times in the year 2017, while the same was around 0.32 times in the year 2016 this shows that
the liquid assets of the company such as cash and trade receivables of the company has
increased substantially (Yu et al. 2014).
Figure 2: Quick Ratio
(Source: Wesfarmers.com.au 2018)
The cash flow ratio for the company Westfarmers has shown a significant amount of increase
from the year 2015-16 to 2016-17. The formula for the Cash flow ratio is Cash Flow Ratio:
Cash Flow from Operations/Current Liabilities. The ratio for the company showed an
improvement from 0.32 times to 0.41 times. This shows the company has a sufficient amount
of cash flowing from the operating source of their business to cater/service the current
liabilities of the company (Rahman and Rahman 2017).
2016-17 2015-16
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
0.45
Quick Ratio

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Figure 3: Cash Flow Analysis
(Source: Wesfarmers.com.au 2018)
The asset turnover ratio for the Westfarmers Company shows the company efficiency in the
utilisation of the assets of the company. The formula for the asset turnover ratio is Asset
Turnover Ratio: Sales/ Average Total Assets*100. The efficiency and utilisation of the
company has been static and non-volatile while showing growth in the utilisation and
delivering better returns to the company assets. The ratio for the company for the year 15-16
was around 1.63 times which has grown to 1.69 times in the year 16-17 (Warrad and Al
Omari 2015).
Figure 4: Asset Turnover Ratio
(Source: Wesfarmers.com.au 2018)
2016-17 2015-16
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
0.45
Cash Flow Ratio
2016-17 2015-16
1.60
1.62
1.64
1.66
1.68
1.70
Asset Turnover Ratio

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The percentage return on equity for the Westfarmers is calculated via the returns or the
wealth the company is generating on the invested capital of the firm. The formula for the
Percentage Return on Equity: (Net Income/ Shareholder's Equity)*100. The return on equity I
the key important financial ratio for determining the growth and sustainability of the
company. The return on equity for the company has been around 1.77% in the year 15-16 but
the same was around 12% in the year 16-17 a considerable amount of improvement for the
year (Kijewska 2016).
Figure 5: Percentage Return on Equity
(Source: Wesfarmers.com.au 2018)
The Net profit ratio for the company shows the amount of money the company is earning
after paying of all of its expenses and operational expenses. The formula for Net Profit
Margin Ratio: (Net Income/Net Sales)*100. The net profit is calculated by dividing the net
amount of earning earned by the company after payment of all expenses and after accounting
of all incomes by the company. The amount is a crucial factor for determining the importance
of the survival and existence of the company in the long term. The ratio for the company has
been around 0.62% in the year 15-16 and was around 4.20% in the year 16-17. The growth
in the numbers shows that the company has performed and delivered extensively positive
returns for the company.
2016-17 2015-16
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
Percentage Return on Equity

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Figure: Net Profit Analysis
(Source: Wesfarmers.com.au 2018)
The financial position of Westfarmers has been consistent while the profitability of
the company has shown a considerable amount of increase from the year 2015-16 to the year
2016-17. The financial position of the company and especially the profitability of the
company has shown consistent return for the company. Thus we can conclude by the fact that
indeed the company has increase its focus on creation of wealth for the stakeholders of the
company. The increasing revenue and the decreasing expenses at the same time has made the
company realise more profit and generate better returns for the company (Heikal, Khaddafi
and Ummah 2014). However after assessing the financial position of the company overall we
can say that company has tried to maintain consistency and sustainability in returns which is
very good for the long term growth and increases the goodwill and credibility of the company
in the market (Mwizarubi et al. 2016).
2016-17 2015-16
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
Net Profit Ratio

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Financial Analysis of West Farmers
Ratio Analysis 2016-17 2015-16
Current Ratio 0.93 0.93
Quick Ratio 0.41 0.32
Cash Flow Ratio 0.41 0.32
Asset Turnover Ratio 1.69 1.63
Percentage Return on Equity 12.00% 1.77%
Net Profit Ratio 4.20% 0.62%
Workings
Current Ratio = Current Assets/Current Liabilities 2016-17 2015-16
Current Assets 9684 9667
Current Liabilities 10417 10424
0.93 0.93
Quick Ratio: (Marketable securities+ Cash+ Trade
Receivable)/Current Liabilities.
Marketable securities+ Cash+ Trade Receivable 4226 3365
Current Liabilities 10417 10424
0.41 0.32
Cash Flow Ratio: Cash Flow from Operations/Current Liabilities.
Cash Flow from Operations 4,226 3365
Current Liabilities 10417 10424
0.41 0.32
Asset Turnover Ratio: Sales/ Average Total Assets*100
Sales or Revenue 68444 65981
Average Total Assets 40,449 40,449
1.69 1.63
Percentage Return on Equity: (Net Income/ Shareholder's Equity)*100
Net Income 2873 407
Shareholder's Equity 23941 22949
12.00% 1.77%
Net Profit Margin Ratio: (Net Income/Net Sales)*100
Net Income 2873 407
Sales or Revenue 68444 65981
4.20% 0.62%
Average Total Assets 2017 2016
Total Assets 40115 40783
Average Total Asset 40449

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In Response to Question 2
Creation of wealth along with creation of the long term values in an organisation is
only possible if the company serves the community positively and actively. The sustainability
report for the company shows the company incitement toward environment and society. The
sustainability is an important and a critical role in board level and the corporate governance
of the company (Cho et al. 2015). Assessment and sustainability of the opportunities and risk
is the responsibility of the management of the company. The sustainability report for the
company covers the social accounting, environmental considerations and the accounting for
the same. Non-financial reporting and corporate social responsibility were some of the key
factors highlighted in the company’s sustainability report (Loannou and Serafeim 2017).
The key material concerns and issues highlighted by the company were the social and
the environmental effects that indirectly influences the decisions and the assessment of the
stakeholders of the company. The key focus which was seen in the company’s sustainable
report was regarding the safety of employees, ethical outsourcing and the human rights as
defined by the act, diversity in the base of gender among the employee base along with the
change in the climate and the resistance for the same were the key factor discussed in the
project (Silva, Lourenço and Branco 2017). The Westfarmers has always focused on the
safety of the employees and the same is done by the company by giving a safety and a safe
environment to work in. The main factor which was seen to be as a additive feature n the
2017 financial year report sustainable report was that the company has introduced key factors
like equitable pay for all employee base of the company regardless of their gender. The
important factors highlighted by the management of the company is regarding the compliance
of the company in respect to the corporate governance and the ethical guidelines which the
company should focus and maintain and follow it (Tricker and Tricker 2015). The
sustainability report has also guidelines and a basic idea about the outsourcing of the

9MASTERS OF ACCOUNTING
company in terms of the relationship and the commitment with the suppliers of the company.
The company also focuses on sourcing products responsibly and working with the suppliers
of the company to enhance the environmental and social issues and practices. The community
perspective of the sustainability report suggests that the company is making a positive and a
strong contribution to the communities in which the company operates. The company is
addicted by providing its customers with safe and secured products. The company has taken
major steps towards preference and securing the environment under, which the company
operates. The corporate governance for the company has remained robust and is backed by
the ethical rules and guidelines set up by the company. The company places key interest in
the safety of the people working in the company along with the type of employee base and
the gender equality for the same. The company has reported some key factors in there
sustainability reports from the year 2015-16 to the year 2016-17 that the management of the
company has significantly reduced injuries employee faces while at working at sites by about
17%. There were certain increase in the safety initiatives taken down by the management of
the company that reduces risks of injury among the employees. Gender balance, enhanced
recruitment process and improving the talent management were some of the key factors
accounted for in the sustainability report of the company. The company has also done some
major contributions to the community organisation in different parts of Australia and New
Zealand. The donation for the year by the company was around $73 million which was in
excess of the fund contributed last year of about 59 million dollars. The company on an
overall created 68 billion dollars amount of revenue and paying around 2 billion dollars’
worth of tax making it as the top 10 tax payers (Zahid and Ghazali 2015).
Westfarmers on an overall basis plays a vital role in the society and through its
employee by acting in the best interest of the company’s policy and guidelines set. The
Westfarmers Company has maintained sustainability in the initiatives it takes in the form of

10MASTERS OF ACCOUNTING
environmental concern it has it has the factor of giving more to the nature than it takes
(Abdel-Shafy and Mansour 2016). The company has the initiatives towards the people of the
society and has several steps taken for the safety and for the rights of the people. The
Westfarmers Company had several initiatives which are well laid down in accordance to the
corporate governance structure of the company. The following up of ethical corporate
governance guidelines also marks the company as ethically responsible
(Sustainability.wesfarmers.com.au 2017). The company has not stopped or discontinued from
any of the initiatives it used to took as a part of its corporate sustainable report instead the
company has stepped down towards new areas of overall development of the society and the
environment where it can cater its service (Sadou, Alom and Laluddin 2017).

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In Response to Question 3
Cash Flow Statement of Dural Trade Ltd
Cash flows from operating activities 2018
Cash receipts from customers 1432800
Cash paid to suppliers 850680
Other Expenses 403200
Cash generated from operations 178920
Interest paid -
Income taxes paid 34800
Net cash from operating activities 144120
Cash flows from investing activities
Purchase of property, plant, and equipment 105200
Purchase of Land 122400
Proceeds from sale of equipment 25400
Proceeds from sale of Investment 117600
Net cash used in investing activities 84600
Cash flows from financing activities
Proceeds from issuance of common stock 72,000
Proceeds from issuance of long-term debt -
Principal payments under capital lease obligation -
Dividends paid 17280
Net cash used in financing activities 54,720
Net increase in cash and cash equivalents 1,14,240
Cash and cash equivalents at beginning of period 92400
Cash and cash equivalents at end of period 2,06,640

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