Corporate Accounting Analysis of Wesfarmers and Woolworths (HI5020)

This report presents a thorough accounting analysis of two Australian Securities Exchange (ASX)-listed companies, Wesfarmers Limited and Woolworths Group Limited, focusing on their financial performance. The analysis encompasses key financial aspects such as owner's equity, cash flow statements (including operating, investing, and financing activities), and other comprehensive income statements. The report examines the companies' issued capital, reserves, and retained earnings to assess their equity positions. It also delves into the cash flow statements, evaluating operating, investing, and financing activities over a period of time. Furthermore, the report discusses the accounting for corporate income tax, providing a comprehensive overview of the companies' financial health and decision-making processes. The report is structured to meet the requirements of a corporate accounting assignment, offering insights into the financial strategies and performance of these prominent Australian retailers.

Running head: ACCOUNTING
Accounting
Name of the student:
Name of the University:
Authors note:

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Executive Summary:
In the report is based on the analysis that considers the equity position that comprises of the
company’s cash flows, and other relevant statement of income. This is related to the basic
requirement of managing of the income tax for the corporate income that has lead to the
evaluation of the suitable that is based on the effective decision making on the methods right
investment of making the two companies namely Wesfarmers Limited and Woolworths Group
Limited. The various types of current assessment can be evaluated on the apparent solvent
position that would relate to both companies. On reviewing the balance sheet statement of the
company the4 companies shares reserves have declined on majority for calculating all the shares
equity of the company.

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Table of Contents
Introduction......................................................................................................................................3
Owner’s Equity................................................................................................................................4
Requirement (i)............................................................................................................................4
Requirement (ii)...........................................................................................................................5
Cash Flow Statement.......................................................................................................................5
Requirement (iii)..........................................................................................................................6
Operating cash Flow........................................................................................................................6
Investing cash flows........................................................................................................................6
Financing cash flows.......................................................................................................................7
Requirement (iv)..........................................................................................................................8
Requirement (v)...........................................................................................................................9
The other comprehensive income statement....................................................................................9
Requirement (vi)..........................................................................................................................9
Requirement (viii)......................................................................................................................10
Requirement (viii)......................................................................................................................10
Requirement (ix)........................................................................................................................11

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Accounting for Corporate Income Tax..........................................................................................12
Requirement (x).........................................................................................................................12
Requirement (xi)........................................................................................................................12
Requirement (xii).......................................................................................................................13
Requirement (xiii)......................................................................................................................13
Requirement (xiv)......................................................................................................................14
Requirement (xv).......................................................................................................................14
Requirement (xvi)......................................................................................................................15
Conclusion.....................................................................................................................................15
References......................................................................................................................................16

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Introduction
In this present scenario, it is normal practice for the shareholders to critically analyze
position of the equity, cash flow and some other relevant statement of income based on the
concept of corporate accounting income tax for undertaking some vital decisions of investment.
Specifically, for meeting the specific purposes of this report, the company Woolworth Group
Limited and the Wesfarmers have rightly taken into some considerations that comprises of the
two magnificent retailers who are operating within the super markets of Australia. The
mentioned aspects in this report is specifically discussed with the lights on the two organizations
there are selected using the specific methods that can be followed for bringing the disclosures of
all the items that are to be mentioned in the statement of finance.
Owner’s Equity
Requirement (i):
The statement of balance sheet of the company mainly consists of three major categories in
which main focus is given on equity part under this particular segment. The companies
Wesfarmers and Woolworth cannot be considered an exception context of equity. To be precise
enough, the capital that is issued treated by the business organization as equity. It has been
estimated that the issued capital of Woolworths has gone up significantly from the amount of $
5,252.20 million in the year 2016 and was evaluated in the year 2017 be around $ 5,615 million.
The same had happened for Wesfarmers where amount has been increased from $ 21,937 million

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in the year 2016 and in 2017, the amount reached $22,268. The amount was due, and the
management of the company for both the organization had gone for minimizing the funding for
debt (Dagwellet al 2015). From Woolworth and Wesfarmers that has been identified that the
company Woolworth has experienced an increase in the reserve rate from about $ 166 million in
the year 2016that amounts to $ 190 million by 2017 (Langfield-Smithet al 2017).
The equity shares occurs due to the repurchase and do not require a payment of dividend along
with the voting rights. It has been ascertained from the statement of the Wesfarmers a declination
in the reserved shares of the amount $ 28 million in the year 2016 which has been decreased by 2
million in the next accounting period of 2017. Hence there are no such specific shares that are
inherent for the case of Woolworths. It can be increased as retained earnings to be observed as
the profit base in the whole year (Al‐Hadiet al 2017).
Requirement (ii):
In the table above, it has been comprehensively understood that Woolworths can be considered
to be more controlin comparison to the Wesfarmers as ascertained in three ratios. The reason is
probably, Woolworths has provided minimum dependence on the funding of debt in the year
2017. The portion of the collected fund of business can be still acquired by the bank loans. The

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situation is just opposite with Wesfarmers as it raised a considerable portion for its equity shares
fund through market operation. It can be clearly estimated that, the solvent position terms when
considered by Wesfarmers can be compared with a much favorable position on bringing
comparison to the retail sector of Australian market considering Woolworths (Schaltegger et al
2017).
Cash Flow Statement:
Requirement (iii)
The items which have the considerable importance are listed within the statement of cash flow of
Woolworth and Wesfarmers that are briefly evaluated
Operating cash Flow:
The path mainly consists significantly of four items, that includes the payments made to the
suppliers and employee structure, the receipts received from the customers, the interest payments
and the cost that is borrowed from others. The amount tamed is mainly denoted by the receipts
from the business customers according to which the sales are generally made on the credit basis.
Furthermore, the payments made to the suppliers during both organizations have mutually
increased due to the product line extension for fulfilling certain changes of preferences among
the ultimate customers. The other side, signifies the payments of interest from among those
amounts that and business organization needs to incur for some loans from Bank that can be
taken for conducting the daily operations in business. For both the business concern, the interest

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payments gradually declined over a period of time I have reduced their interdependence on fund
raising true collection of debts (Epstein 2018).
Investing cash flows:
The items that are considered under the section basically includes payments that comprises of the
plant, equipments and properties that are considered add some specific amount that are meant for
acquiring and purchasing the necessary items that are essential for carrying out business
proceedings. On the conversing note, that includes those assets that help in generating income to
be on the advantages position for organization. The assets mainly comprises of the equipment
proceedings along with the plant and the property. The information has been gathered that
according to the company Wesfarmers Limited, fees in the investment rate for the year 2017 this
has increased passage of time because of some assets portions. In such an situation, the
Woolworths a considerable processing amount needs to be gathered from the arrangement the
company associates jointly. The amount gathered for the investment of about $ 47 millions along
with the attainment of redemption loan notes of about $ 54 million (Carnegie and O’Connell
2014).
Financing cash flows:
The most important divisions within the activities of financing generally includes mission of
repayment and equity proceeds. The proceeds are made with the dividends of equity and the
borrowings that are offered to the shareholders of Wesfarmers Limited. The procedure of

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borrowing mainly indicates that the net amount the companies lender to its segment of borrowers
under some conditions that are quite relevant sorry nice eating loan agreements. On considering
the situation of the company Woolworth Limited, there has been a drop in the amount of
borrowings extension of the loan terms there are made to the company debtors. There is also an
increased the amount of offerings made to the bank for repayment of loans as well as the equity
dividend clearly indicates that there is a offer to the companies equity shareholders from the
annual cash flow. On considering the case analysis of Wesfarmers, dividend payment has been
decreased gate 2017 and has got focused on increasing the rate of retained earning (Quet al
2018).
Requirement (iv):
As it has been gathered from the annual report, the company Woolworth and Wesfarmers
Limited has three segments of cash flow that also includes the operational investment along with
the activities of finance. The table shows an comparative analysis of the main identified groups
and the categories that can be considered within the statement of cash flow on considering the
previous three years of business (Sivathaasan 2016).

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Figure 1: The
analysis of Cash
Flow for the
mentioned
companies
( Source:
Wesfarmers.com.au,2018)
Requirement (v):
On carrying out typical analysis the cash flow activities of the concerns, the information has been
gathered for Wesfarmers. It clearly declares that the operating activities results in gradual
increase of cash flow from the year 2015 to 2017 that amount to an considerable amount of about
$ 3791 million (2015), and $ 3365 (2016) and the $ 4226 million (2017). Cash flow can be
retained from the activities of investment that has resulted in an increase in the cash flow. The
decrease of flow that was observed was mainly the reasons that it was related to the plant,
equipments and property acquisition. Furthermore in the cash flow for outing from the several
financial activities Wesfarmers was analyzed to get down to an amount of about 1333 million by
the 2016 and an increase in the following year 2017 of about $ 37771 million (Ali 2016).
It has been observed that the operational activities that results in the cash flow in the year 2015
amounted to $ 3122 million. Even there was an decrease in the investment activities of the
1 2
0
2000
4000
6000
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10000
12000
Chart Title
Particulars Series2
Cash flow for operating activities Cash flow from investing activities
Cash flow from financing activities

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business concern. The main reasons that lies behind clearing all the loans by the year 2016 is
because of all the activities of investment. The financial activities results in the increase in the
cash flow that gradually increases from 2015 to the early span of 2017 on putting upon a
comparatively analysis to the business concern Wesfarmers Limited (Miglaniet al 2015).
The other comprehensive income statement:
Requirement (vi):
The major and mandatory aspects that have been reported with some of the specifications for the
comprehensive statement of income of the business concerns Woolworths Limited and
Wesfarmers generally includes the retained earnings, cash flow hedges reserve and the retained
earning along with translation reserve of the foreign currencies (Carnegie 2014).
Requirement (viii):
The foreign currencies are employed for initiation of certain subsidiaries for the parent company
for reporting the currencies. This can be considered as a major part for facilitating the
consolidation of the financial statements of the Wesfarmers for the currencies that are functional
for the several cross-border business organizations that needs to be ascertained initially (Bryce et
al 2015). Additionally, the foreign companies at the same time re-measured along with the
reporting currencies within the working of the parent organization. It ultimately indicates the
parts of retained that can be evaluated by calculation of the payment of dividend that is enabled
the shareholders. This also is investment within the company capital projects that are meant for

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bringing the development in the future years. On analyzing the case of Woolworths Limited, the
hedge reserve that can be used for the benefit of the company has been subjected to decrease and
finally get rid of certain exposure. It also results in changes in the liability in the financial assets
from the changes in cash flow. This is the result of some particular changes within the risk
factors like the floating rate debt and the interest rates (Watson 2015).
Requirement (viii):
On analyzing the statement of comprehensive income has been observed various kinds of
diversified views that the company has been subjected to a net profit. Over the early years, there
has been certain change in the profit that has been observed as a major channel operation that can
be considered volatile. It results in transfer within the equity of shareholders. To be on the note
of comparative analysis, the employee base of Wesfarmers can go for employing certain income
statement considerably on the details of the numerical associated along with the other types of
items that are mentioned. In case of the company Woolworth Limited, the income
comprehensively is observed within the income statement for offering comprehensiveness along
with certain perceptions that are not concurrent enough for all kinds of business operation and all
kind of activities that may not be adequately reported among the statement of income (Tucker
and Schaltegger 2016).
Requirement (ix):
It can be clearly observed from the income statement comprehensively that it is likely to get the
potential recognition of the items important. The reason is facilitating the right manner in which
the company dealings and the issues related to investment can be conducted with the ability to