Financial Statement Analysis of Woolworths Limited

This assignment analyses the financial performance of Woolworths Limited, a supermarket chain in Australia, using common size and horizontal analysis, cash flow analysis, liquidity analysis, income analysis, capital structure analysis, key coverage ratios, and growth and risk analysis.

RUNNING HEAD: FINANCIAL STATEMENT ANALYSIS
FINANCIAL STATEMENT ANALYSIS

FINANCIAL STATEMENT ANALYSIS 1
Contents
WOOLWORTHS LIMITED........................................................................................................................2
INTRODUCTION.................................................................................................................................2
BACKGROUND...................................................................................................................................2
COMMON SIZE AND HORIZONTAL ANALYSIS....................................................................................3
CASH FLOW ANALYSIS.....................................................................................................................11
LIQUIDITY ANALYSIS........................................................................................................................12
INCOME ANALYSIS...........................................................................................................................13
CAPITAL STRUCTURE ANALYSIS.......................................................................................................15
COVERAGE ANALYSIS.......................................................................................................................16
GROWTH AND RISK ANALYSIS.........................................................................................................16
CONCLUSIONS.................................................................................................................................17
REFERENCES....................................................................................................................................19

FINANCIAL STATEMENT ANALYSIS 2
WOOLWORTHS LIMITED
INTRODUCTION
In this assignment operating and financial health of Woolworths Limited is analysed
which is registered in Australian stock market. The chosen company Woolworths limited of
Australia covered under Supermarket or Grocery Store Chain. The financial performance is
evaluated and assessed considering latest last six years. The data required for the analysis is
extracted from the Data Analysis Premium. This assignment covers background and mission
of the company and the assessment of the financial health is based on common size and
horizontal analysis, cash flow analysis, liquidity analysis, income analysis, capital structure
analysis, key coverage ratios and growth and risk analysis and on the basis of mentioned
criteria conclusions are drawn that the Woolworths limited are fundamentally better company
and it is advised to existing investors should continue to hold the stock and prospective
investors should consider buying the stock.
BACKGROUND
The Woolworths Limited was opened in the year 1924 in Sydney’s Imperial Arcade.
The company covered under Food and staples Retailing industry. It is one of the largest
company in terms of broad retail interest across New Zealand and Australia. It was
approximately more than 92 years of existence and around 20 years of being listed in
Australian market. Its stock ticker is WOW (Woolsworth Limited, 2018). The company
mostly specialises in grocery products such as vegetables, fruits, packaged foods etc. also
deals in selling magazines, health and household products, pet supplies, stationery items etc.
Further the company is also a largest retailer of liquor. In addition to above, company also
owns petrol divisions and also offers financial services in terms of credit cards, gift cards etc.
The company has approximately 1000 stores through Australia with nearly 202000
workforces. The Woolworths Limited works with an objective of serve exceptional services
and products to the customers and also deliver shareholders better value. The main highlight

FINANCIAL STATEMENT ANALYSIS 3
of Woolworths group in 2017 financial year was an enhancement in customer scores in
Australian food which has resulted in transactions force all over the year. Woolworths
Limited created the culture that cheers expansion, image and reward boldness.
MISSION
There are five main aims and objectives of the company (Woolsworth Limited, 2018):
 Building Customer’s value by providing best class shopping experience.
 Empowering portfolio business to maximise shareholders return.
 Another objective is to become a lean retailer through system excellence.
 To develop solid brand with the family-friendly culture.
 Better services only with reduced costs and changed values.
COMMON SIZE AND HORIZONTAL ANALYSIS
 Horizontal Analysis:
Profit and loss statement:
Item 2017 (%) 2016 (%) 2015 (%) 2014 (%) 2013 (%)
Operating Revenue 0.41% 5.11% 9.79% 9.94% 5.83%
Other Revenue 316.72% 373.55% 379.52% 327.65% 336.35%
Total Revenue Excluding Interest 0.74% 5.50% 10.18% 10.28% 6.18%
Operating Expenses 3.70% 8.42% 10.97% 11.30% 6.97%
EBITDA -30.46% -25.34% 1.82% -0.50% -2.17%
Depreciation and Amortisation 14.78% 15.70% 29.27% 12.74% 9.26%
EBIT -40.66% -34.59% -4.37% -3.48% -4.74%
Interest Revenue -100.00% -100.00% -100.00% -63.43% -17.16%
Interest Expense -39.18% -22.84% -19.95% -12.72% 28.84%
Pre-tax Profit -41.23% -36.10% -3.71% -3.11% -7.78%
Tax Expense -26.51% -19.48% 18.43% 19.40% 12.38%
Net Profit after Tax Before Abnormals -45.97% -41.47% -10.85% -10.38% -14.29%
Abnormals -100.00% 71.27% -23.91% -100.00% -76.59%
Abnormals Tax #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Reported NPAT After Abnormals -12.32% -229.20% 17.62% 35.29% 24.62%
(Data Analysis Premium, 2018).
Balance Sheet:
Item 2017 (%) 2016 (%) 2015 (%) 2014 (%) 2013 (%)
Current Assets

FINANCIAL STATEMENT ANALYSIS 4
Cash 9.12% 13.76% 60.00% 10.70% 1.90%
Receivables -31.96% -28.15% -3.20% 2.22% 15.78%
Prepaid Expenses 25.36% 23.93% 12.98% 15.90% 1.31%
Inventories 10.33% 23.26% 31.74% 26.90% 13.71%
Investments -32.35% 135.29% 692.02% -46.64% 127.73%
NCA Held Sale 230.13% 192.14% 1.30% 64.75% -60.53%
Total Current Assets 20.55% 28.01% 32.04% 23.66% 7.31%
Non-Current Assets
Receivables 194.29% 250.61% 376.33% 341.63% -32.24%
Investments 112.27% 167.25% 108.38% 27.60% 50.21%
PP&E -12.01% -13.83% 4.93% 0.12% -3.58%
Intangibles(Ex GW) 12.44% 13.63% 17.38% 19.05% 15.69%
Goodwill 30.87% 12.90% 18.76% 20.50% 5.56%
Future Tax Benefit -42.25% 72.17% 17.11% 5.75% -4.08%
Total NCA 0.90% 1.88% 12.02% 7.93% 1.55%
Total Assets 6.18% 8.90% 17.40% 12.16% 3.10%
Current liabilities
Account Payable 30.44% 22.27% 20.62% 17.21% 3.03%
Short-Term Debt 365.99% 802.02% 2924.63% 303.49% 211.40%
Provisions 47.02% 59.41% 1.88% 5.02% 0.44%
NCL Held Sale -89.70% 0.85% -100.00% -100.00% -100.00%
Other -100.00% -90.73% -57.99% -100.00% 21.00%
Total Curr. Liabilities 30.42% 32.91% 35.51% 11.71% 1.47%
Non-Current liabilities
Long-Term Debt -40.86% -17.56% -34.42% -11.91% -8.79%
Provisions 14.89% 56.16% 66.66% 75.67% -16.13%
Other -54.97% -53.02% -53.43% -62.03% 41.30%
Total NCL -33.81% -10.07% -20.92% -3.88% -4.47%
Total Liabilities -0.72% 12.07% 8.15% 4.15% -1.41%
Equity
Share Capital 31.32% 22.83% 14.81% 8.31% 1.55%
Reserves -145.32% -137.40% -137.87% -178.93% -110.00%
Retained Earnings -8.80% -24.95% 40.03% 30.26% 11.95%
Outside Equity 35.65% 20.61% 15.38% 5.73% 5.42%
Total Equity 16.93% 3.97% 31.80% 24.62% 10.11%
Total liabilities + Total Equity 6.18% 8.90% 17.40% 12.16% 3.10%
(Data Analysis Premium, 2018).
Cash Flow Statement:
Item 2017 (%) 2016 (%) 2015 (%) 2014 (%) 2013 (%)
Receipts from Customers 6.34% 6.06% 6.93% 6.97% 3.64%
Payments to Suppliers and Employees 7.08% 7.70% 6.52% 6.11% 3.96%
Interest Received -100.00% -100.00% -100.00% -63.43% -17.16%
Interest Paid -40.92% -26.96% -21.66% -12.14% 20.35%
Tax Paid -29.03% -9.87% 12.14% 23.49% 3.81%
Net Operating Cash flows 8.64% -17.97% 16.40% 20.84% -5.36%

FINANCIAL STATEMENT ANALYSIS 5
Payment for Purchase of PPE -10.79% -7.37% 1.49% -12.05% -7.97%
Proceeds From Sale of PPE 40.25% 261.90% 321.30% -2.81% 352.68%
Investments Purchased -100.00% 116.67% 316.67% -100.00% 4566.67%
Payments for Purchase of Subsidiaries -96.14% -84.37% -38.91% 155.85% 62.12%
Proceeds from Sale of Subsidiaries #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Loans Granted -100.00% -100.00% -100.00% -100.00% -100.00%
Other Investing Cash flows -55.13% -58.97% -41.03% -202.56% 193.59%
Net Investing Cash flows -31.19% -39.11% -35.88% -2.35% -42.23%
Proceeds from Issues -82.87% -62.95% -45.51% -32.36% 29.08%
Proceeds from Borrowings -98.51% -94.92% -59.23% -36.42% -51.67%
Repayment of Borrowings -89.04% -92.25% -59.12% -38.22% -49.33%
Dividends Paid -57.80% -8.67% 17.60% 14.28% 6.30%
Other Financing Cash flows -100.00% -240.70% -262.79% -106.98% -34.88%
Net Financing Cash flows 17.70% 0.39% 9.64% -6.62% 3.48%
Net Increase in Cash -94.27% -43.16% -159.26% -110.27% -99.67%
Cash at Beginning of Period -37.09% -12.25% -39.29% -44.12% -44.38%
Exchange Rate Adj -146.15% 415.38% 700.00% 207.69% 376.92%
Cash at End of Period 8.46% 13.11% 57.76% 9.16% 0.47%
(Data Analysis Premium, 2018).
 Common Size Analysis:
Profit and loss statement:
Item 2017 (%) 2016 (%) 2015 (%) 2014 (%) 2013 (%)
2012
(%)
Operating Revenue 99.89% 99.57% 99.59% 99.54% 99.53% 99.56%
Other Revenue 0.11% 0.43% 0.41% 0.46% 0.47% 0.44%
Total Revenue Excluding
Interest 100.00% 100.00% 100.00% 100.00% 100.00%
100.00
%
Operating Expenses 91.35% 92.03% 92.19% 92.00% 93.88% 94.03%
EBITDA 8.65% 7.97% 7.81% 8.00% 6.12% 5.97%
Depreciation and
Amortisation 1.59% 1.64% 1.63% 1.87% 1.75% 1.81%
EBIT 7.06% 6.34% 6.18% 6.13% 4.38% 4.16%
Interest Revenue 0.05% 0.04% 0.02% 0.00% 0.00% 0.00%
Interest Expense 0.57% 0.70% 0.45% 0.42% 0.42% 0.35%
Pre-tax Profit 6.54% 5.68% 5.74% 5.71% 3.96% 3.81%
Tax Expense 1.59% 1.69% 1.73% 1.71% 1.22% 1.16%
Net Profit after Tax Before
Abnormals 4.94% 3.99% 4.02% 4.00% 2.74% 2.65%
Abnormals 1.01% 0.22% 0.00% 0.70% 1.64% 0.00%
Abnormals Tax 0.00% 0.06% 0.00% 0.19% 0.33% 0.00%
Reported NPAT After
Abnormals 3.27% 3.84% 4.02% 3.50% 4.01% 2.85%
Balance Sheet:
Item 2017 (%) 2016 (%) 2015 (%) 2014 (%) 2013 (%) 2012 (%)
Current Assets

FINANCIAL STATEMENT ANALYSIS 6
Cash 3.86% 3.82% 3.81% 5.26% 4.03% 3.97%
Receivables 2.80% 3.14% 2.55% 2.30% 1.84% 1.79%
Prepaid Expenses 1.24% 1.21% 1.28% 1.19% 1.41% 1.46%
Inventories 17.14% 18.90% 19.39% 19.23% 19.40% 17.81%
Investments 0.11% 0.24% 0.05% 0.74% 0.24% 0.07%
NCA Held Sale 1.75% 0.67% 2.56% 1.51% 4.68% 5.43%
Total Current Assets 26.89% 27.98% 29.64% 30.24% 31.60% 30.52%
Non-Current Assets
Receivables 0.11% 0.07% 0.45% 0.46% 0.37% 0.31%
Investments 1.11% 1.61% 1.26% 1.96% 2.72% 2.21%
PP&E 44.43% 41.56% 39.66% 39.71% 35.16% 36.82%
Intangibles(Ex GW) 9.55% 10.71% 10.13% 9.54% 9.96% 10.11%
Goodwill 14.93% 15.28% 16.04% 15.10% 15.48% 18.40%
Future Tax Benefit 2.99% 2.78% 2.82% 2.98% 4.72% 1.62%
Total NCA 73.11% 72.02% 70.36% 69.76% 68.40% 69.48%
Total Assets 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Current liabilities
Account Payable 23.75% 23.73% 24.81% 24.40% 26.66% 29.17%
Short-Term Debt 0.25% 0.76% 0.91% 6.49% 2.09% 1.11%
Provisions 5.88% 5.73% 5.50% 5.10% 8.61% 8.14%
NCL Held Sale 0.93% 0.00% 0.00% 0.00% 0.86% 0.09%
Other 0.54% 0.64% 0.00% 0.19% 0.05% 0.00%
Total Current Liabilities 31.35% 30.86% 31.23% 36.19% 38.26% 38.51%
Non-Current liabilities
Long-Term Debt 21.76% 19.25% 17.09% 12.15% 16.47% 12.12%
Provisions 4.54% 3.70% 7.12% 6.45% 6.52% 4.92%
Other 3.21% 4.40% 1.09% 1.27% 1.38% 1.36%
Total NCL 29.51% 27.34% 25.29% 19.88% 24.37% 18.40%
Total Liabilities 60.86% 58.20% 56.52% 56.06% 62.63% 56.90%
Equity
Share Capital 19.81% 19.52% 19.13% 19.37% 22.35% 24.50%
Reserves -1.16% 0.11% 0.82% 0.38% 0.40% 0.50%
Retained Earnings 19.29% 20.95% 22.40% 23.01% 13.29% 16.57%
Outside Equity 1.20% 1.22% 1.13% 1.18% 1.32% 1.53%
Total Equity 39.14% 41.80% 43.48% 43.94% 37.37% 43.10%
Total liabilities + Total Equity 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
(Data Analysis Premium, 2018).
Cash Flow Statement:
Item
2017
(%)
2016
(%)
2015
(%)
2014
(%)
2013
(%)
2012
(%)
Receipts from Customers
7287.80
%
7517.29
%
7141.96
%
4939.66
%
6833.66
%
7145.07
%
Payments to Suppliers and
Employees
-
6792.71
%
-
7028.39
%
-
6602.89
%
-
4586.34
%
-
6468.04
%
-
6706.10
%
Interest Received 3.17% 2.61% 1.06% 0.00% 0.00% 0.00%

FINANCIAL STATEMENT ANALYSIS 7
Interest Paid -46.86% -56.14% -37.72% -23.27% -30.26% -25.53%
Tax Paid
-
111.38%
-
115.08%
-
126.00% -79.17% -88.76% -72.88%
Net Operating Cash flows 340.01% 320.29% 376.40% 250.87% 246.60% 340.57%
Payment for Purchase of PPE
-
253.28%
-
231.99%
-
204.08%
-
162.94%
-
207.42%
-
208.33%
Proceeds From Sale of PPE 23.60% 106.35% 21.02% 63.03% 75.52% 30.52%
Investments Purchased -0.07% -3.30% 0.00% -0.19% -0.14% 0.00%
Payments for Purchase of
Subsidiaries -17.18% -27.72% -40.27% -6.65% -2.37% -0.61%
Proceeds from Sale of
Subsidiaries 0.00% 12.46% 4.01% 6.37% 1.57% 21.89%
Loans Granted -0.13% 0.00% 0.00% 0.00% 0.00% 0.00%
Other Investing Cash flows 0.92% 2.70% -0.87% 0.34% 0.33% 0.38%
Net Investing Cash flows
-
246.13%
-
141.51%
-
220.18%
-
100.04%
-
132.50%
-
156.15%
Proceeds from Issues 38.32% 49.23% 23.75% 13.24% 12.55% 6.05%
Proceeds from Borrowings
1462.60
% 703.54% 851.92% 377.96% 65.74% 20.08%
Repayment of Borrowings
-
1518.08
%
-
765.64%
-
859.21%
-
393.40%
-
103.99%
-
153.43%
Dividends Paid
-
157.69%
-
166.84%
-
165.09%
-
117.55%
-
127.32% -61.35%
Other Financing Cash flows 1.02% 0.66% -0.07% -1.05% -1.27% 0.00%
Net Financing Cash flows
-
173.83%
-
179.04%
-
148.70%
-
120.80%
-
154.28%
-
188.64%
Net Increase in Cash -79.95% -0.26% 7.52% 30.03% -40.18% -4.22%
Cash at Beginning of Period 179.79% 99.53% 92.04% 69.19% 139.48% 104.29%
Exchange Rate Adj 0.15% 0.73% 0.43% 0.78% 0.70% -0.07%
Cash at End of Period 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
(Data Analysis Premium, 2018).
Comments:
 In terms of PPE and intangibles, we have observed from below pie chart and graph
that PPE was lowest in 2016 as compared to 2012 year whereas PPE was highest in
2015 in comparison to 2012. In other words, in 2015 PPE was increased by 4.93%
from 2012 and in 2016, it was decreased by 13.83% from 2012. This is due to
additions made by the company in Plant and Equipment was highest in 2015 in
comparison to other 6 years. In addition to this, Intangibles are highest in 2014 that is
19.05% as compared to other years due to business acquisition and positive
movement in foreign exchange rates.

FINANCIAL STATEMENT ANALYSIS 8
2017 (%) 2016 (%) 2015 (%) 2014 (%) 2013 (%)
-15.00%
-10.00%
-5.00%
0.00%
5.00%
10.00%
-12.01%
-13.83%
4.93%
0.12%
-3.58%
PP&E
PP&E
12.44%
13.63%
17.38%
19.05%
15.69%
Intangibles(ExGW)
2017 (%) 2016 (%) 2015 (%) 2014 (%) 2013 (%)
 In terms of sales and Net profit, it is analysed that Revenue of Woolworths are highest
in 2014 whereas it was lowest in 2012 that means revenue of 2014 was 10.28% more
from 2012. Similarly, the net profit and EBIT was also highest in 2014 by 35.29%
from 2012. This is mainly due to company has earned highest $ 9.8 million in interest
revenue among 6 years. Further there are no abnormal items shown in 2014.
Considering 2016 and 2017, there were net loss in 2016 of $ 2347.9 million and for

FINANCIAL STATEMENT ANALYSIS 9
2017, it was seen that net profit lower by 12.32% from 2012 and on the other hand,
there is only 0.74% increment in revenue in 2017 from 2012.
EBIT was lowest in 2017 due to depreciation and amortisation expense was highest in
2017. Also the company has not earned an interest revenue in 2017.
2017 (%) 2016 (%) 2015 (%) 2014 (%) 2013 (%)
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
0.74%
5.50%
10.18% 10.28%
6.18%
Sales
2017 (%) 2016 (%) 2015 (%) 2014 (%) 2013 (%)
-250.00%
-200.00%
-150.00%
-100.00%
-50.00%
0.00%
50.00%
-12.32%
-229.20%
17.62%
35.29% 24.62%
Net profit

FINANCIAL STATEMENT ANALYSIS 10
2017 (%) 2016 (%) 2015 (%) 2014 (%) 2013 (%)
-45.00%
-40.00%
-35.00%
-30.00%
-25.00%
-20.00%
-15.00%
-10.00%
-5.00%
0.00%
-40.66%
-34.59%
-4.37% -3.48% -4.74%
EBIT
 In terms of Debt and Equity, it was observed that Share capital had increased every
year from past 6 years. However, retained earnings was highest in 2015 that is
40.03% which has resulted highest increment in total equity by 31.80%. However, in
terms of debt we have observed from the below graph that the company has least long
term debt in 2017 however at the same time, accounts payable was highest in 2017
which signifies that in FY 2017 total liabilities was decreased by 0.72% from 2012.
2017 (%) 2016 (%) 2015 (%) 2014 (%) 2013 (%)
-5.00%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
16.93%
3.97%
31.80%
24.62%
10.11%
-0.72%
12.07%
8.15%
4.15%
-1.41%
Equity Debt

FINANCIAL STATEMENT ANALYSIS 11
CASH FLOW ANALYSIS
The purpose of Cash flow analysis is to show the actual picture of the company’s cash that
is from where the cash has been generated or where the cash has been spent over the period
of time that is 6 years in this case (2012-2017). This analysis is performed to gauge the
company’s liquidity and long-term solvency position.
Comments:
 Receipts from customers: It is seen from the below table that in 2014, the company
has increased its receipts from customers by 6.97% in comparison to 2012 which is
highest. The reason is due to highest revenue earned in 2014.
 Payments to suppliers and employees: According to below table, it is seen that in
2016, the company has paid more to their suppliers and employees by 7.7% which is
highest among six years.
 Interest received and interest paid: According to below table, it is seen that
Woolworths has not received any interest from past three years but the interest has
been paid during these years. Interest paid by the company was highest in 2013 that is
$ 476.7 million.
Hence, net cash generated from operating activities was highest in 2014 of $ 3472.7
million. However, in 2017, the net cash generated from operating activities was $ 3122
million which has only increased 8.64% from 2012.
Item 06/12 06/13 06/14 06/15 06/16 06/17
Receipts
from
Customers
615965,00,00
0.00
638368,00,
000.00
658917,00,
000.00
658654,00,
000.00
653298,0
0,000.00
654989,0
0,000.00
Payments to
Suppliers
and
Employees
-
574120,00,00
0.00
-
596851,00,
000.00
-
609183,00,
000.00
-
611543,00,
000.00
-
618345,0
0,000.00
-
614748,0
0,000.00
Interest 268,00,000.00 222,00,000 98,00,000.0 0.00 0.00 0.00

FINANCIAL STATEMENT ANALYSIS 12
Received .00 0
Interest Paid
-
3961,00,000.0
0
-
4767,00,00
0.00
-
3480,00,00
0.00
-
3103,00,00
0.00
-
2893,00,0
00.00
-
2340,00,0
00.00
Tax Paid
-
9414,00,000.0
0
-
9773,00,00
0.00
-
11625,00,0
00.00
-
10557,00,0
00.00
-
8485,00,0
00.00
-
6681,00,0
00.00
Net
Operating
Cash flows
28738,00,000.
00
27199,00,0
00.00
34727,00,0
00.00
33451,00,0
00.00
23575,00,
000.00
31220,00,
000.00
LIQUIDITY ANALYSIS
Liquidity analysis is performed to gauge the company’s liquidity position. In this analysis,
company’s ability to pay its short term dues is gauged. In this analysis, current ratio, liquid
ratio, receivables and payables and inventories are considered,
Item 06/12 06/13 06/14 06/15 06/16 06/17
Current
Ratio 0.86 0.91 0.95 0.84 0.83 0.79
Quick Ratio 0.31 0.29 0.33 0.30 0.32 0.33
Days
Receivables 1.44 1.46 1.48 1.70 0.78 0.70
Days
Payables 33.74 32.85 35.97 37.07 39.25 43.83
Inventory
$36983,00,00
0.00
$
42054,00,00
0.00
$
46932,00,00
0.00
$
48722,00,00
0.00
$
45585,00,00
0.00
$
40804,00,00
0.00
Comments:
 Current Ratio: According to the above table, it is seen that current ratio of the
company was in decreasing order. This means that the CA has increased every year
but CL is also increased every year but the percentage of increment of CL is more
than CA. Hence in this case, in 2017 liquidity position is not sound.
 Liquid Ratio: According to the above table, it is seen that liquid ratio of the company
was in increasing order. This means that the Liquid assets are more in 2017 as

FINANCIAL STATEMENT ANALYSIS 13
compared to past years. This means that the company is able to convert its liquid
assets into cash more easily.
 Receivables and payables: In this case, days receivables are in decreasing order which
is a good sign because it signifies that lower the days’ receivables less is the time
taken by the company to collect cash from its credit sales. On the other hand, days’
payables are in increasing order which is a not a good sign because it signifies that
company has taken more time in repayment of its purchases. Hence, the company has
efficient collection department.
 Inventories: In this case, inventories are highest in 2015 and after that the same was
showing a decreasing trend which means that the company is not able to maintain the
stock level properly.
INCOME ANALYSIS
Income analysis is performed to gauge the company’s profitability position. In this analysis,
EBIT margin analysis, a gross profit margin analysis, net income analysis and EPS and ROA
analysis and EBIT ROA are considered,
Item 06/12 06/13 06/14 06/15 06/16 06/17
Net Profit Margin
(%) 4.95 4.00 4.02 4.03 4.67 2.55
EBIT Margin (%) 7.07 6.36 6.21 6.16 4.40 4.18
EPS Aft. Abs. 147.93 181.80 195.60 170.30 -97.73 119.10
ROA 4.78% 3.50% 3.17% 3.62% -4.50% 3.51%
EBIT ROA 18.16%
16.78
% 15.63% 14.79% 10.91% 10.15%
Comments:
 Net profit margin: This ratio assesses the profitability position of the company. As
seen from the above table, net profit margin was least in 2017 due to least net profit
earned in 2017 and least operating revenue in 2017 from past years.

FINANCIAL STATEMENT ANALYSIS 14
Net Profit Margin (%)
0.00
1.00
2.00
3.00
4.00
5.00
6.00
4.95
4.00 4.02 4.03
4.67
2.55
06/12 06/13 06/14 06/15 06/16 06/17
 EBIT margin: This ratio also assesses the profitability position of the company before
interest and tax expenses. As seen from the above table, EBIT margin was also least
in 2017 due to least EBIT earned in 2017 and least operating revenue in 2017 from
past years.
06/12 06/13 06/14 06/15 06/16 06/17
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
7.07
6.36 6.21 6.16
4.40 4.18
EBIT Margin (%)
 EPS: This ratio depicts the profitability position where earnings are gauged from per
value of share. It is noticed that after the losses in 2016 company has earned profits in

FINANCIAL STATEMENT ANALYSIS 15
latest year and at the same time share capital increased every year. Thus, as per above
table it shows that the efficient position of the company in 2017.
 ROA: This ratio is also depicting the profitability positon wherein returns are
computed from the total assets of the company. From the above table, it shows that
effective and sound returns are earned by the company in 2017 in comparison to
losses of 2016.
06/12 06/13 06/14 06/15 06/16 06/17
-6.00%
-4.00%
-2.00%
0.00%
2.00%
4.00%
6.00%
4.78%
3.50% 3.17% 3.62%
-4.50%
3.51%
ROA
 EBIT ROA: In this case, profits before interest and taxes are computed from total
assets. Hence, in this case, EBIT ROA is least in 2017.
CAPITAL STRUCTURE ANALYSIS
In this analysis, level of business risks is identified. Through capital structure analysis,
market value of firm is increased and overall firm is decreased. In this case, debt ratio and
financial leverage are considered to evaluate the business risks.
Item 06/12 06/13 06/14 06/15 06/16 06/17
Debt to equity ratio 1.56 1.39 1.30 1.28 1.68 1.32
Financial Leverage 2.56 2.39 2.30 2.28 2.68 2.32
Comments:

FINANCIAL STATEMENT ANALYSIS 16
 Debt to Equity ratio: This is computed to identify the percentage of company’s
financing that comes from creditors and shareholders. Hence in this case, lower ratio
is always favourable to the company indicating lower level of risk. Hence as per the
above table, debt to equity ratio has decreasing trend which means the company has
financed its more from shareholders and less from external parties.
 Financial leverage: As seen from the above table, financial leverage also shows
decreasing trend which means company has not used its debts to acquire additional
assets. Hence in this case, decreasing graph shows less risk of failure, less interest
payments which depicts the sound financial stability and performance.
COVERAGE ANALYSIS
In this category, interest coverage ratio is examined to evaluate the company’s ability to
meet its interest obligations on timely basis.
 Interest Coverage ratio: This ratio is calculated to conclude the company’s
productivity to pay interest expenses on the outstanding liability on consistent basis.
Hence, in this case, 2017 showing an increasing trend which signifies that
Woolworths is paying its interest obligations in a timely basis which indicates
satisfactory financial health as compared to 2016 financial year.
Item 06/12 06/13 06/14 06/15 06/16 06/17
Net Interest
Cover 13.45 9.63 14.12 14.71 10.44 12.01
GROWTH AND RISK ANALYSIS
In this case, business risk and growth of the company is evaluated. For this purpose,
company’s business risk and conditions are mentioned.
Business Risk is computed as follows: Total assets/standard deviation of EBIT.

FINANCIAL STATEMENT ANALYSIS 17
Item 06/12 06/13 06/14 06/15 06/16 06/17
Business Risk 33.54 34.58 37.61 39.37 36.52 35.61
06/12 06/13 06/14 06/15 06/16 06/17
30.00
31.00
32.00
33.00
34.00
35.00
36.00
37.00
38.00
39.00
40.00
33.54
34.58
37.61
39.37
36.52
35.61
Business Risk
Hence, as per the above case it is evaluated that upto 2015 the graph showing an increasing
trend and afterwards the graph is declined. Hence, in current financial year it shows that
Woolworths has optimum capital structure. In other words, the company has best use of its
debt and equity financing to use for expansions and operations. In addition to this,
Woolworths focuses on to improve the shopping experiences to the customers and also
delivers best shareholders value. Hence, low business risk of the company confirms that
financial commitments will be fulfilled at all times.
CONCLUSIONS
It is concluded that the company’s operating and financial health is sound because
as per the above calculations we have observed from common size and horizontal analysis,

FINANCIAL STATEMENT ANALYSIS 18
cash flow analysis, liquidity analysis, income analysis, capital structure analysis, key
coverage ratios and growth and risk analysis that Woolworths are continuing to improve the
offers for their customers and best shopping experience to them. Also focusses on the
increment of shareholders’ value through maximum returns.
31/05/2018
28/02/2018
30/11/2017
31/08/2017
31/05/2017
28/02/2017
30/11/2016
31/08/2016
31/05/2016
29/02/2016
30/11/2015
31/08/2015
29/05/2015
27/02/2015
28/11/2014
29/08/2014
30/05/2014
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
Share price
In addition to this, extracting the share price of the company we further noticed that
the graph is in increasing trend. which simply concludes that Woolworths Limited created the
culture that cheers expansion, image and reward boldness. Thus, it is opined that Woolworths
limited are fundamentally better company and it is advised to existing investors should
continue to hold the stock and prospective investors should consider buying the stock.

FINANCIAL STATEMENT ANALYSIS 19
REFERENCES
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Woolworths Limited, 2013, Annual Report 2013, viewed on 06 October 2018 from
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Woolworths Limited, 2014, Annual Report 2014, viewed on 06 October 2018 from
http://www.aspecthuntley.com.au/asxdata/20140922/pdf/01554929.pdf.
Woolworths Limited, 2015, Annual Report 2015, viewed on 06 October 2018 from
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Woolworths Limited, 2016, Annual Report 2016, viewed on 06 October 2018 from
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