Financial Performance Analysis of Woolworths

ASSESSMENT TASK2:
WRITTEN REPORT ON AN
AUSTRALIAN COMPANY’S
FINANCIAL PERFORMANCE
Accounting and finance for managers

TABLE OF CONTENTS
1. Executive Summary...............................................................................................................3
2. Introduction............................................................................................................................4
3. Discussion and critical analysis.............................................................................................4
3.1 Financial statement analysis.............................................................................................4
Income statement...............................................................................................................4
Balance sheet......................................................................................................................4
Cash flow statement...........................................................................................................4
3.2 Financial ratio analysis.....................................................................................................4
4. Conclusion..............................................................................................................................4
5. Appendices.............................................................................................................................5
5.1 Income statement.............................................................................................................5
5.2 Income statement vertical analysis...................................................................................5
5.3 Statement of financial position.........................................................................................6
5.4 Cash flow statement.........................................................................................................7
5.5 ratio analysis of Woolsworth...........................................................................................8
5.6 Ratio analysis of Wesfarmers...........................................................................................8
6. References..............................................................................................................................8

1. EXECUTIVE SUMMARY
Financial analysis is crucial tools for internal as well as external stakeholders to evaluate the
overall position of the company. The present study aims to evaluate the financial performance
of Woolworths by conducting vertical and ratio analysis by considering the financial
statements of the company. The study shows that company is having fluctuating financial
position but by considering the overall financial performance of past three years they had
improvised. It is because losses have been covered, outsiders liabilities is constantly
reducing, and the company is making an investment in fixed assets to strengthen their
operational base.

2. INTRODUCTION
Woolworth is the biggest supermarket chain of Australia, with operations in 995 stores
throughout Australia, and it is dependent on the team of 115,000 in its outlets, distribution
centres and offices to offer customer best services, options, ease and value. .Woolworth
believes in working with the growers and farmers of Australia to make sure that the products
are superior enough to meet the demand of customers. Woolworth has 30% of the market
share of the grocery market, Australian food and liquor market. Also, the company has
changed its consideration towards the capital management which creates an affirmative result
to the significant number of shareholders returns (Woolworth, 2018). Woolworth prides in
integrating quality, in each of the offerings, delivering and customer experience, while
aiming at becoming the most responsible retailer in the world. The Woolworth limited is the
organization based in Australia, and it has its listings in the Stock exchange with immense
retail sectors. The organization is considered the 2nd largest retail organization within
Australia in terms of profits and gains.
Further, financial statement analysis is considered mandatory to know the investments,
profitability and performance of the company. The financial statement is inclusive of the
Balance Sheet, Profit & Loss statement and Cash Flow Statement. Furthermore, several
financial ratios, gauged from the financial statement, showcase the overall performance and
health of the organization (Fazzini, 2018). Thus, the aim of the present report is to critically
evaluate the company’s financial statement by making use of effective and usable methods
and systems, which will engage ratio calculation and in-depth analysis of the same. In
addition, the study also addresses with the assessment of the financial performance of
Woolworth. The present report is inclusive of calculation of ratios and analysis of the
selected company which is Woolworth’s profitability, liquidity and solvency. For a better
analysis of the position statement, the financial ratios of Woolworths are compared with
Wesfarmers.
3. DISCUSSION AND CRITICAL ANALYSIS
3.1 Competitors of company
Major competitor of company is Wesfarmers

3.2 Financial statement analysis
Income statement
An income statement is considered as the financial statement of the organization and reflects
the revenues and expenditures of the company at a specified period. It reflects the
transformation of the revenues in the net incomes. Further, the income statement is consisted
of profits and expenses as well as the outcomes of net income or loss during a particular time
period because of earning activities (Robinson, Henry, Pirie, Broihahn & Cope, 2015). It is a
financial statement that does the reporting of the financial performance of the company on a
particular date and shows the summary of the managerial performance as shown in the
profitability of the firm over some period.
Fiscal year
(AUD in
Millions)
2014 2015 2016 2017 2018
Net income 2146 (1235) 1534 1724 1724
-1250
-750
-250
250
750
1250
1750
2250 2146
-1235
1534 1724 1724
Net income (AUD in Millions)
2014 2015 2016 2017 2018
By considering the above statement, it can be noticed that from the past three years
Woolworth has shown increasing trend and effective performance in terms of income, as
there is a rise in the resulting income and generated profits. Although there is still scope of

improvement for the company, by considering the data given in past five years, it can be said
that in 2014 the company was performing exceptionally well, so the company again is
required to match the same level and track in order to become more strong financially
(Annual report of Woolsworth, 2014).
Balance sheet
The balance sheet shows the business’s entity financial position on the particular date. It
consists of three key elements which are assets; equity and liability. Further, the statement of
financial statement assists financial statement users to consider the financial idealness in
context with liquidity, financial, credit and business risk (Sedláček, 2016). The main aim of
the balance sheet is to provide information to the user regarding the current business state as
on the date is given on the balance sheet. Further, this information is employed to gauge the
liquidity, debt, fund business’s position and is the base for the range of liquidity ratios.
Fiscal year
AUD in
Millions
2014 2015 2016 2017 2018
Total assets 24202 25337 23502 22916 23558
Total
liabilities
13953 14503 15032 13390 13077
Total
stockholders'
equity
10253 10834 8471 9526 10481