Accounting for Managers: Woolworths Ltd. Analysis Report

This report provides an analysis of Woolworths Ltd., focusing on accounting principles relevant for managers. It examines the nature of the business, highlighting its operations primarily in Australia and New Zealand and its position as a major player in the retail sector. The report delves into revenue recognition, emphasizing the transfer of risks and rewards to customers. It also discusses the measurement of properties using cost less accumulated depreciation and impairment losses. Furthermore, the analysis extends to ratio analysis, including efficiency ratios like total asset turnover and receivables turnover, which indicate improved management of debtors. Profitability ratios, such as net profit margin and return on equity, are also analyzed, demonstrating the company's financial performance. The report also touches upon the debt-to-equity ratio, indicating changes in the company's borrowing levels.

Accounting For Managers

Part A: Nature of Business
 Woolworths Ltd is engaged in the business of retail and its operations is
mainly in Australia and New Zealand. The company is regarded to be the
second largest company by revenue which is operating in Australia.
 The revenue of the business is recognized when the significant risks and
rewards of ownership have been transferred to the customer, when it is
probable the revenue will be received and the amount of revenue can be
reliably measured.
 The properties of the business are measured at cost less accumulated
depreciation/amortization and accumulated impairment losses

Nature of Business (Continuation)

Ratio Analysis of Woolworths Ltd
 The efficiency ratios of the business represent total asset
turnover ratio and receivables turnover ratio and both the
estimates is shown to have enhanced during the period. The
increase in the receivable turnover ratios shows that the
management has improved the debtor’s policy of the business
and therefore the overall efficiency of the business.
 The profitability ratio of the business is shown by net profit
margin of the business and return on equity of the business. The
net profit margin of the business is shown to be 3.15% which is
increased from previous year which shows that the profitability of
the business.
 The debt to equity ratio of the business shows that there is a fall
in the borrowings of the business which is appropriate for the
business.

Thank You