Comprehensive Analysis: Preparing an Operational Budget Report

This report analyzes the financial report of Woolworths Ltd for the year ended 2018, focusing on the preparation of an operational budget. It examines the financial statements, including the profit or loss statement, and assesses the company's financial performance, highlighting increases in sales, gross profit, EBIT, and net profit. The report identifies the key audiences for financial reports, such as employees, shareholders, and analysts, and explains their interests in the information provided. It also analyzes the company's projections and commitments, including investments in BIG W and sustainability initiatives like reducing food waste and phasing out single-use plastic bags. The report offers recommendations for the business's upcoming year and provides insights into the company's financial health and strategic decisions.

Running head: PREPARE OPERATIONAL BUDGET
Prepare operational budget
Name of the student
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Table of Contents
Answer 1....................................................................................................................................2
Answer 2....................................................................................................................................2
Answer 3....................................................................................................................................3
Answer 4....................................................................................................................................4
Answer 5....................................................................................................................................4
Answer 6....................................................................................................................................4
Answer 7....................................................................................................................................5
References..................................................................................................................................6

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Answer 1
The financial report is disseminated to the people who are interested in the entity like
employees, shareholders, analysts, suppliers and lenders. It includes the information
regarding the financial position as well as the financial performances of the entity. Through
the financial report the directors of the entity advice the shareholders regarding the business
performances and how the directors have executed their responsibilities. To be more specific,
potential investors and present investors are the main audience for the annual reports. Apart
from them customers, leaders and suppliers are also considered as targeted audience
(Sedláček 2016).
Answer 2
The above mentioned people require information included in annual reports for the
below mentioned reasons –
 Employees – it delivers the management with the opportunity of praising the
employee’s quality, innovation, commitment and teamwork, those are required for
the success of business. It also helps the employees to understand different segments
of the entity
 Suppliers – the ability of the company regarding meeting of the requirements of
customers will be compromised seriously if it is burdened with incompetent
suppliers. Through highlighting the internal measurement regarding quality,
innovation and commitment implicit message can be sent to the suppliers regarding
the expectation of the entity (Grant 2016).
 Shareholders, lenders and investors – they are concerned regarding the return and
risks related to their investments. They further needs the information for deciding

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whether they shall continue investing in the business. Further, they need to assess
whether the business will pay return on their investments.
 Analysts – Investment analysts are considered as major user group as they require
detailed financial as well as other data for analysing competitive performances of the
entity (Nobes 2014).
Answer 3
Various financial information provided under the annual report of Woolworths Ltd for
the year ended 2018 includes the financial report that includes consolidated profit or loss
statement, consolidated other comprehensive income statement, consolidated changes in
equity statement, consolidated financial statement and consolidated cash flow statement.
Contents of financial statements are as follows –
 Section 1 – performance highlights
 Section 2 – Business review
 Section 3 – Director’s report
 Section 4 – Financial report
 Section 5 – Other information (Woolworthsgroup.com.au 2018).
From the financial statement of the company it can be identified that sales, gross
profit, EBIT and net profit of the company has been increased in 2018 as compared to the
previous year. Further, it is identified that the borrowings of the company has been repaid and
equity investment has been increased during the period. Moreover, the cash equivalent of the
company at the closing of the year has been increased as compared to last year. Hence, it can
be stated that the business activities are indicating success during the year (Caetano et al.
2017).

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Answer 4
From the financial report of Woolworths for the year ended 2018 it can be identified
that the profit and loss statement shown profit amounting to $ 1,795 million. Profit of the
company has been increased by 12.39% as compared to previous year. This increase has been
contributed by increase in operating revenue by 3.51% as compared to previous year. Further,
the EBIT of the company has been enhanced by 11.09% in 2018 (Woolworthsgroup.com.au
2018).
Answer 5
For the upcoming year the business is recommended to –
 Achieve leadership in liquor and food
 Act on the portfolio of the company to maximize the value of shareholders
 Maintaining the track for building new growth.
Further, in 2019 the company expects sustainable growth for the shareholders through
delivering good services, prices, choices, convenience and quality to the customers. It also
expects to provide support and opportunities to the team members that will also have a
positive impact on the communities (Weygandt, Kimmel and Kieso 2015).
Answer 6
In 2017 the company projected that it will continue investing in BIG W. In 2018 it has
been identified that BIG W progressed in its turnaround through focussing in customers,
addressing culture and engagement and fixing basics with the new team purpose. Further, it
was expected that the share price will be equal to or more than $ 25.39
(Woolworthsgroup.com.au 2018). It was found that the share price for the year ended 2018
was $ 30.52 per share. Hence, it can be stated that the projections made by the company in

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previous year that is in 2017 were accurate. For investing in BIG W the short term
borrowings of the company have been increased from $ 254 million to $ 604 million and long
term borrowings have been increased from $ 2,777 million to $ 2,199 million. Further, the
share price increase also increased the EPS of the company from 119.4 cents to 132.6 cents
(Woolworthsgroup.com.au 2018).
Answer 7
The company has committed to have food waste division for 100% of the Woolworths
Supermarkets by end of the year 2018. Further, the company committed to phase out single
use plastic bags from the checkouts and from online shopping by end of the year 2018. It will
remove million of bags from the circulation (Woolworthsgroup.com.au 2018).

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References
Caetano, A., Pereira, A.C., Severino Peters, M.R. and Santos, F.D.A., 2017. Analysy Of The
Financial Statements: A Performance Valuation Of The Brazilian Companies By The Private
Equity Based On The Information Disclosured. Revista Eniac Pesquisa, 6(2), Pp.271-285.
Grant, R.M., 2016. Contemporary strategy analysis: Text and cases edition. John Wiley &
Sons.
Nobes, C., 2014. International classification of financial reporting. Routledge.
Sedláček, J., 2016. Financial Statements in the Financial Decision Making. European
Financial Systems 2016, p.678.
Weygandt, J.J., Kimmel, P.D. and Kieso, D.E., 2015. Financial & managerial accounting.
John Wiley & Sons.
Woolworthsgroup.com.au. 2018. [online] Available at:
https://www.woolworthsgroup.com.au/icms_docs/188795_annual-report-2017.pdf [Accessed
28 Nov. 2018].