Comprehensive Analysis of Wesfarmers' Financial Performance Report

This report provides a comprehensive analysis of Wesfarmers' financial statements, focusing on the interpretation of its annual report from an accounting student's perspective. The analysis covers key components such as the income statement, balance sheet, and cash flow statement, examining the company's adherence to AASB standards and its financial performance. The report delves into the remuneration report, highlighting the company's compensation policies for directors and executives, and assesses the company's adopted techniques and the insights from financial report notes. Furthermore, it explores the auditor's and director's reports to understand their perspectives on the company's performance and compliance. The study concludes with recommendations and a summary of the company's financial health and adherence to accounting principles. This report aims to provide a clear understanding of Wesfarmers' financial standing and reporting practices. This document is contributed by a student to be published on Desklib, a platform which provides all the necessary AI based study tools for students.

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Accounting conceptual framework

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Contents
Introduction.......................................................................................................................3
Company Overview..........................................................................................................3
Conceptual framework and AASB standards...................................................................3
Interpretation.....................................................................................................................4
Remuneration report.....................................................................................................4
Income statement..........................................................................................................5
Balance sheet................................................................................................................6
Cash flow statement:.....................................................................................................7
Techniques adopted by the company............................................................................8
Notes from financial reports.........................................................................................9
Auditors report............................................................................................................10
Director’s report..........................................................................................................11
Recommendation and conclusion...................................................................................12
References.......................................................................................................................13

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Introduction:
This report has been presented to analyze the financial statement of the company. In
this report, it has been depicted that how an accounting student interpret the financial
statement from annual report of a company according to the GPFR (general purpose financial
reporting) and on the basis of AASB. It has been analyzed that there are various factors
which could be analyzed through the final financial statement of the company and on the
basis of that a best idea could be made over the performance, profitability, strategies, future
changes etc. For conducting this report, Wesfarmers has been taken into consideration, this
company’s annual report has been analyzed and many financial and non financial factors of
this company has been found and interrupted those facts and figures according to the
understanding of an accounting student.
For conducting this report, auditor’s statement, director’s statement, balance sheet,
income statement, cash flow statement, statement of changes in equity, remuneration report,
financial notes etc have been investigated. This report would help the user to understand the
meaning of every factor and aspect written in the annual report of the company.
Company Overview:
Wesfarmers Limited is the Australian company which falls in the category of ASX
100. This company operates its business in retail industry, coal mining industry and
production industry, gas processing and distribution industry, safety product distribution,
chemicals industry and fertilizers manufacturing industry, and investment businesses in
Australia, the United Kingdom, new Zealand and globally. Currently, 787 Coles
supermarkets are operated by the company as well as this company also offers credit cards,
insurance products; liquor stores, Vintage Cellars; 690 fuel and convenience stores; 89 hotels;
and an online superstore. This company has also diversified its market into various industries
to enhance the revenue of the company as well as enjoy the high growth and market share in
the industry. This company came into existence in 1914 and currently, the head office of the
company is in Perth, Australia (Allen & Carletti, 2008).
Conceptual framework and AASB standards:
Conceptual framework is a technique which is used by the accounting professionals to
manage, prepare and present the final financial statement of the company. Basically, it is

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theoretical framework which depicts the user about the some regulations, norms,
assumptions, rules, guidelines, principles etc to understand the concept of accounting and
prepare and present the final financial statement of the company accordingly. This is not the
set of rules which is required to be executed but these guidelines make it easy for the
accountant to prepare and present the final financial statement of the company and it also
help the users to understand the final financial statement of the company (Hák et al, 2012).
Interpretation:
The annual report of Wesfarmers has been analyzed to understand the annual report
factors and the hidden data in the annual report of a company. Annual reports are the primary
source for the analyst and investors to analyze the performance of the company. Following
are some of the points in an annual report which must be analyzed according to the
understanding and requirement according to the annual report:
Remuneration report:
Remuneration report of Wesfarmers has been analyzed from its annual report (2016)
to understand the policy of the company about paying the remuneration to its directors,
executive members and other top level management. Through the reports, it has been
analyzed that a fixed remuneration is always given by the company to the members and
further remunerations depends over the performances of the directors and executive
members. Company offers annual incentive as well as long term incentive to the managing
directors and other senior executives according to the performance of the company. it has
been analyzed through performing a study over this that the company is not involving into
any unethical practices while offering the remuneration to its members as the remuneration
has been given to them according to their performance and the performance of the company
(Glasson, Therivel, & Chadwick, 2013). The final statement of the company depict that the
revenue of the company has been enhanced and thus the remuneration and annual incentive
of the directors and managing partners have been enhanced.

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(Annual Report, 2016)
Income statement:
Income statement of Wesfarmers has been analyzed from its annual report (2016) to
understand the policy of the company about preparing the final financial reports and present
them in a better manner. Through the reports, it has been analyzed that AASB framework has
been used by the company to prepare this reports (Evangelinos, Nikolaou & Leal Filho,
2015).
Many related factors of the income statement have been analyzed to understand the
guidelines used by the company. The revenue of the company has been analyzed and found
that it is according to the AASB and the revenue has been presented equally it is neither the

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overstated nor understated. The revenue of the company has been enhanced from last year
and this has taken place due to many new strategies of the company.
Further, expenses of the company has been analyzed and found that company has
understated the expenses to improve the profitability condition as this would help the
company to attract more investors to invest in the company (Dye & Sunder, 2001). It has
been analyzed through doing a study over the profitability ratios of the company and industry
regulations. The depreciation technique used by the company is according to the AASB but
the depreciation % has not been followed by the company but directors have assured that
from next year, they would follow it according to the regulations (Daly & Farley, 2011).
(Annual Report, 2016)
Balance sheet:
Balance sheet of Wesfarmers has been analyzed from its annual report (2016) to
understand the policy of the company about preparing the final financial reports and present
them in a better manner. Through the reports, it has been analyzed that AASB framework has
been used by the company to prepare this reports.
Many related factors of the balance sheet have been analyzed to understand the
guidelines used by the company. The inventory of the company has been analyzed and found
that it is not according to the AASB concept as the inventory amount has been overstated and
it has not been revaluated according to the market cost. Further, the debtors of the company

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have been analyzed to interpret the value of it and it has been observed that the provision of
the debtors is understated and thus the value of debtors is quite high (Brinkerhoff, 2005).
Further, it has been found that the liabilities of the company have also been enhanced
and this has taken place due to various changes into the capital structure of the company. It
has been analyzed that the liabilities of the company have been stated in a right way and in
right figures. Company has not taken any assets on the lease whereas the current liabilities of
the company depict that the tax amount has been reduced due to advance payment of tax and
the provision of the company has been enhanced to manage the tax expenses of the company.
Further, it has been analyzed that equity valuation of the company is correctly presented by
the company in its annual reports.
(Annual Report, 2016)
Cash flow statement:
Cash flow statement of Wesfarmers has been analyzed from its annual report (2016)
to understand the policy of the company about preparing the final financial reports and
present them in a better manner. Through the reports, it has been analyzed that AASB
framework has been used by the company to prepare this reports (assessment, 2013).
Many related factors of the cash flow statement have been analyzed to understand the
guidelines used by the company. The cash flow from operating activities of the company has
been analyzed and found that it is according to the AASB concept. Further, many other
factors of operating activity of the company have been analyzed to interpret the value of it

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and it has been observed that the presentation has been done according to the AASB
regulations (Bierman et al, 2016).
Further, cash flow from financing and investigating activities of the company has
been analyzed and found that it is according to the AASB concept. Further, many other
factors of financing and investigating activity of the company have been analyzed to interpret
the value of it and it has been observed that the presentation has been done according to the
AASB regulations (Laux & Leuz, 2009).
(Annual Report, 2016)
Techniques adopted by the company:
It has been analyzed through study over the annual report of the company that many
techniques have been adopted by the company in last year to enhance the operations of the
company and manage the growth of the company. It has been analyzed through this study that
current techniques of the company is quite competitive and will help the company to manage
the further issues in the operations and business functioning of the company. It has also been
analyzed that the technology used by the company will last for next 5 years and would
enhance the revenue of the company (Lee, 2006).

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(Annual Report, 2016)
Notes from financial reports:
Financial report notes have been analyzed to understand the concept behind every
financial activity, figures and presentation of final financial report of the company. it has
been analyzed through conducting a study over the financial report notes that the revenue has
been measured according to the cost basis, expenses of the company has been understated to
improve the profitability condition, expenses of the company has been uunderstated to
improve the profitability condition of the company (Whittington, 2008).

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(Annual Report, 2016)
Auditors report:

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Further, the audit report of the company has been analyzed to identify the view of
auditor on the annual report of the company. Through the auditor’s report, it has been
analyzed that auditors are quite satisfied with the performance of the directors and thus the
remuneration given to them is justified (Whittington, 2008). Further, it has been analyzed that
the corporate act, 2001 and ASB regulations has been taken into consideration while
evaluating the annual report of the company and it has been analyzed that the reports has
been presented accordingly and any unethical issues have not taken place in the year in the
operations of the company. Thus it has been found that the auditors are quite satisfied with
the annual report of Wesfarmers.
(Annual Report, 2016)
Director’s report:
Further, the director’s report of the company has been analyzed to identify the view of
directors on the performance and changes of the company. Through the director’s report, it
has been analyzed that the performance of the employees and company are quite satisfied and
many new technology has been execute by the company to be more competitive and enhance
the revenue of the company and thus the salary increment has also been done. Further, it has
been analyzed that the corporate act, 2001 and AASB regulations has been taken into
consideration while preparing and presenting the annual report of the company and it has
been analyzed that the reports has been presented accordingly and any unethical issues have
not taken place in the year in the operations of the company (Arewa, 2006). Thus it has been
found that the directors are quite satisfied with the performance of Wesfarmers.

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(Annual Report, 2016)
Recommendation and conclusion:
Thus through performing this study over Wesfarmers, it has been analyzed that the
corporate act, 2001 and AASB regulations has been taken into consideration while preparing
and presenting the annual report of the company and it has been analyzed that the reports has
been presented accordingly and any unethical issues have not taken place in the year in the
operations of the company. Thus it could be concluded that it is required by every company
to manage the performance, preparation and presentation of annual report accordingly. It has
also been concluded that the honest annual report helps the investors to make a better
decision about the performance of the company.