A Comprehensive Financial Performance Analysis of Wesfarmers Ltd

This report provides a financial performance analysis of Wesfarmers Ltd, focusing on the year 2017. It examines the company's profitability, highlighting a significant increase in earnings per share and overall profit, alongside improvements in free cash flow and net debt. The analysis also covers key financial indicators like Return on Equity (ROE) and asset growth, demonstrating the company's wealth maximization efforts. The report includes figures comparing current assets from 2016 to 2017, such as cash and cash equivalents, receivables, and inventories, illustrating the company's growth and financial health. The report also touches upon Wesfarmers' commitment to sustainable practices within its retail divisions, Kmart and Target, aligning with sustainable business strategies. Overall, the report concludes that Wesfarmers has achieved substantial growth in profitability, asset generation, and overall business performance during the analyzed period. This document is contributed by a student and published on Desklib, a platform offering AI-based study tools.

Running head: ACCOUNTING AND FINANCIAL MANAGEMENT
Accounting and Financial Management
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ACCOUNTING AND FINANCIAL MANAGEMENT
Performance Analysis of Wesfarmers Ltd
Wesfarmers ltd is a company which has its headquarters situated in Perth, Australia and
operates mainly in retail business, chemicals, industrial and safety products and operates in
markets of Australia and New Zealand (Group, 2018). The company is regarded as one of the
largest private employer in Australia. Wesfarmers is one of the largest firms in terms of revenue
generation after two other companies.
The financial report of Wesfarmers ltd for the year 2017 shows that the board of directors
of the company is committed towards attaining development for the business by following
sustainable practices (Fonseca, McAllister & Fitzpatrick, 2014). The departmental stores of
Wesfarmers are Kmart and Target which is committed towards sustainable practices for the
overall development of the business. As per the financial statements of Wesfarmers for the year
2017, Kmart will be following the sustainable practices program which is “Better Together”
which focuses on developing strategic material decisions and review the environmental risks
which are associated with the business (Cho et al., 2015). In addition to this, the departmental
store focuses on enhancing the working conditions of the employees and also empower the
employees of the business. Similarly, Target also follows a strong sustainability practices which
involves looking after the safety requirements, environmental risks and ethical practices in the
business. In addition, the business is committed towards supporting the communities in which
the departmental store operates.
The financial reports of the company for the year 2017 shows that the company has been
very successful in 2017 in terms of profitability. The earning per shares of the company has
significantly increased to $ 254.7 which has significantly increased from previous year which

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was $ 36.2. This shows that the profits of the business have been significantly increased which is
shown as $ 2873 million in 2017. The increases in the overall profit of the company is a sign that
the business has developed tremendously over the year. The free cash flows of the business for
the year 2017 is $ 4,173 million which has also increased from the previous year’s figure which
was $ $ 1,233 million in 2016. This shows that the liquidity position of the business has also
improved from the previous year. The company has enough cash or liquidity in case the
company wants to finance projects. Moreover, the net debt of the company has reduced from the
previous year’s figures which is also a positive sign for the business. The other financial
indicators of the business also have improved which includes ROE, total assets of the business.
The ROE of the company has increased from the previous year’s estimate which means that
company is engaged in wealth maximization for the shareholders (Zeitun & Tian, 2014). The
company has achieved a return on equity of 12.4% and the total assets of the business has also
increased which shows that the company has attained growth in 2017.
2016 2017
Current Assets:
Cash and Cash Equivalents 1013 611
Receivables- Trade and other 1633 1628
Receivables- Finance advances and loans 0 835
Inventories 6,530 6,260
Derivatives 247 54
Other Assets 244 296

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Current Assets: Assets
Classified as
held for Sales
Inventory Trade
Receivables Cash and Cash
Equivalents Other financial
Assets
0
500
1000
1500
2000
2500
12
351
784
1775
100
17
336
795
1980
229
Current Assets
2016 2017
Figure 1: (Figure showing Current assets of Wesfarmers ltd)
Source: (Created by Author)

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0
500
1000
1500
2000
2500
3000
3500
4000
Line Diagram Showing Current Assets
2016 2017
Figure 2: (Figure showing Current assets of Wesfarmers ltd)
Source: (Created by Author)
The above figures depict bar diagrams for showing currents assets of the business and
also display the growth which the business has achieved from the previous year 2016. The cash
balance of the company has increased from the previous year and is shown as $ 1,980 million for
the current year. Thus, from the above discussions it can be said that Wesfarmers has achieved
growth in terms of profitability, asset generation and overall performance of the business.

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Reference
Fonseca, A., McAllister, M. L., & Fitzpatrick, P. (2014). Sustainability reporting among mining
corporations: a constructive critique of the GRI approach. Journal of Cleaner Production, 84,
70-83.
Cho, C. H., Laine, M., Roberts, R. W., & Rodrigue, M. (2015). Organized hypocrisy,
organizational façades, and sustainability reporting. Accounting, Organizations and
Society, 40, 78-94.
Group, D. (2018). Reports. Retrieved from
http://www.wesfarmers.com.au/investor-centre/company-performance-news/reports
Zeitun, R., & Tian, G. (2014). Capital structure and corporate performance: evidence from
Jordan.