Comprehensive Financial Analysis Report: Woolworths Performance Review

This report provides a detailed financial analysis of the Woolworths Company, focusing on its performance within the Australian retail market. It utilizes quantitative assessment tools, particularly ratio analysis, to evaluate the company's profitability, liquidity, and stability. The analysis covers key aspects such as net profit margin, return on assets, inventory turnover, total debt ratio, current ratio, and quick ratio. The report interprets the financial data, considers internal and external business factors, and assesses the company's initiatives, including technological advancements like self-checkout and AI services. It also examines the competitive landscape, economic conditions, and remuneration trends. The conclusion summarizes the company's financial strengths and weaknesses, offering recommendations to improve net profit by reducing operational costs and increasing revenue. The report includes an executive summary, references, and appendices with remuneration trends and shareholding patterns.

Running head: FINANCIAL ANALYSIS REPORT
Financial Analysis
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1FINANCIAL ANALYSIS
Table of Contents
Executive Summary.........................................................................................................................2
Analysis...........................................................................................................................................3
Interpretation....................................................................................................................................4
Conclusion.......................................................................................................................................6
References........................................................................................................................................8
Appendix..........................................................................................................................................9

2FINANCIAL ANALYSIS
Products and Services
The core business area under which the Woolworths Company operates as the Australian
Retail Market that has around 995 stores and around 115,000 team members as an employee
base. The company offers a wide range of products and services in the grocery and retail chain
business services. Products like Vegetables, Fruits, Meat, Packaged Foods, and various other
products are some of the key products that are offered by the company.
Analysis
The financial analysis has been done for the Woolworths Company by applying an
quantitative assessment tool that has helped us in better assessment and analysis of the company
by applying ratio analysis. Ratio Analysis has been better done for analysing the profitability,
liquidity and stability position of the company (Au.advfn.com 2019).
Profitability Analysis: The net profit margin for the Woolworths Company has been around
3.06% which is comparatively low when mapped with the total amount of sales done. Higher
Operational and Fixed Costs for the company is acting as a key constraint for the company in
terms of reporting of higher net profit margins (Woolworthsgroup.com.au 2019). On the other
hand, side the return on assets for the company has been around 7.11% times, which is
comparatively better but from the industry standard perspective the same can be well improvised.
Stability Ratios: The key stability and activity ratios that were evaluated for the Woolworths
Company were the Inventory Turnover Ratio and Total Debt Ratio. The inventory turnover ratio
for the company has been around 9.51 times, that has been currently high for the company and

3FINANCIAL ANALYSIS
the same states that a very low amount of goods is locked in inventory (WOW 2019). On the
other hand, the total debt ratio for the company has been around 54% stating the financial risk of
the company is currently high. The management of the company should take appropriate steps in
order to well control the financial risk by managing the debt position of the company.
Liquidity Ratio: In order to well determine the liquidity position of the company current and
quick ratio has been determined. The current ratio for the company was around 0.78 times and
the quick ratio was around 0.32 times (Analytics 2019). The company clearly do not have
sufficient amount of working capital or current asset base in order to pay-off the current
obligations of the company.
Interpretation
In order to well understand the business factors associated with the company there will be
various internal and external environment study that needs to be done. The core business area
under which the Woolworths Company operates as the Australian Retail Market that has around
995 stores and around 115,000 team members as an employee base. The financial performance
of the company in the last 5 years has remained almost constant for the company in terms of
sales analysis and profitability analysis that has been done for the company. Financial
performance could be better compared with the help of financial performance which clearly
indicates to increase its profitability margins which can be well visualized below:

4FINANCIAL ANALYSIS
In order to well strive and overcome the competitive markets the Woolworths as a
company has taken various initiatives for improvising the business operations like technological
advancement in the business. Services like Self-Checkout, Self- Services and an Artificial
Intelligence Component that helps you find what are the key things required by the customers
and how will the same fit the desired demands (St 2019). The current and future potential market
of the company can be well determined with the help of the growth in the Australian Retail
Market with increase in demands for various goods and services. However, it is crucial to note at
the same time that the increasing competition amongst the retail operating companies have
particularly impacted the market share of Woolworths Company. It is consecutively important
that the company undertakes various actions and measures for the purpose of improvising the
same. Recent slowdown in the Australian Economy can particularly impact the retail market
growth but, it is very important that the Woolworth Company creates various strategies and
actions plans for the purpose of improvising the same. Remuneration trend can be well compared

5FINANCIAL ANALYSIS
from the view perspective of the remunerations that have been paid to the executives and non-
executive officials of the company (Woolworthsgroup.com.au 2019). The trend report attached
in Appendix 1 does not show any material changes in the remuneration structure of the company.
In terms of management structure of the company the company operates as a public limited
company and the key shareholders of the company has been well listed (Appendix 2). The key
strength of the management of the company that would be helping the company in successfully
carrying out the operations is the professional experience/background that would be helping the
company in strategizing the various operations.
Particulars Woolworths
1.Products And Services Vegetables, Fruit, Meat, Packaged Food Products, etc.
2.Name Of Chief Executive Officer Brad Banducci (CEO)
3.Salary of Chief Executive Officer $1.741 Million
4.Profit / Loss After Tax from 2016 Annual Report ($2,347.9 Million)/ (Loss)
5.Latest Dividend Per Share and Date Paid 45 Cents Paid on 5th April 2019
6.Size By Total Assets – 2016 Annual Report $ 23,502.2 Million
7.Number Of Employees * 115000
8.Share Price 52 week High/Low 38.10 (High)/27.03 (Low)
Conclusion
In terms of financial performance of the company it can be well said that the company
has managed to provide a stable profitability aspect, but at the same time key aspects like the
business environment under which the company operates is not favourable. Increasing
competition and slowdown in the economic growth of the economy will be some of the key
aspects that would be impacting the financial performance of the company. It is recommended
that the management of the company undertake various strategies actions and plans for the

6FINANCIAL ANALYSIS
purpose of improvising the net profit by reducing operational costs and by increasing the revenue
base of the company.

7FINANCIAL ANALYSIS
Executive Summary
The aim of the assignment is to conduct a financial analysis on the Woolworth’s
Company that is operating in the Australian Retail Market that is operating a wide range of
grocery and supermarkets across Australia. The company offers a wide range of products and
services in the grocery and retail chain business services. Products like Vegetables, Fruits, Meat,
Packaged Foods, and various other products are some of the key products that are offered by the
company. The financial analysis has been done for the Woolworths Company by applying
an quantitative assessment tool that has helped us in better assessment and analysis of the
company by applying ratio analysis. In terms of financial analysis of the company key aspects
like profitability, stability and liquidity ratios have some of been the key ratio’s that were
evaluated. It is comparatively important that both the financial and non-financial performance to
be taken for the purpose of analysis and the same has been well done while preparing the report
of the company.

8FINANCIAL ANALYSIS
References
(WOW), W. 2019. Woolworths Ltd (WOW) Financial Ratios - Investing.com. [online]
Investing.com. Available at: https://in.investing.com/equities/woolworths-limited-ratios
[Accessed 7 Oct. 2019].
Analytics, I. 2019. WOOLWORTHS GROUP LIMITED: Financial ratios (WOW | AUS | Food
Retailers & Wholesalers) - Infront Analytics. [online] Infrontanalytics.com. Available at:
https://www.infrontanalytics.com/fe-EN/00097AA/Woolworths-Ltd/financial-ratios [Accessed 7
Oct. 2019].
Au.advfn.com. 2019. Woolworths Financial Data. [online] Available at:
https://au.advfn.com/stock-market/ASX/woolworths-WOW/financials [Accessed 6 Oct. 2019].
St, S. 2019. Estimating The Intrinsic Value Of Woolworths Group Limited (ASX:WOW). [online]
Simply Wall St. Available at:
https://simplywall.st/stocks/au/consumer-retailing/asx-wow/woolworths-group-shares/news/
estimating-the-intrinsic-value-of-woolworths-group-limited-asxwow/ [Accessed 7 Oct. 2019].
Woolworthsgroup.com.au. 2019. [online] Available at:
https://www.woolworthsgroup.com.au/content/Document/Woolworths%20Group%202017%20-
%202017%20Five%20Year%20Summary%20PDF.pdf [Accessed 6 Oct. 2019].
Woolworthsgroup.com.au. 2019. [online] Available at:
https://www.woolworthsgroup.com.au/icms_docs/195396_annual-report-2018.pdf [Accessed 7
Oct. 2019].

9FINANCIAL ANALYSIS
Appendix
1) Remuneration Trend

10FINANCIAL ANALYSIS
2) Shareholding Pattern