Comprehensive Analysis of Wesfarmers Annual Report: Financial Plans

This report analyzes the annual report of Wesfarmers, examining its financial performance, budget management, and financial planning. The report is disseminated to various stakeholders, including shareholders, management, and creditors, through email, newsletters, or the company website. The analysis covers key financial information, including the income statement, cash flow statement, and balance sheet, highlighting both successful and unsuccessful business activities. The report details profit figures, expense control measures, and debt management strategies. It compares the current year's report with the previous year's projections, assessing the accuracy of the forecasts and the impact of implemented recommendations on the company's financial outcomes. The report highlights improvements in operational expenses, net profit, and financial leverage, demonstrating the effectiveness of the company's financial planning and budget management strategies. This document is a student's project and is available on Desklib for study purposes.

Running head: MANAGE BUDGET AND FINANCIAL PLANS
Manage budget and financial plans
Name of the student
Name of the university
Student ID
Author note

1MANAGE BUDGET AND FINANCIAL PLANS
Table of Contents
Answer 1....................................................................................................................................2
Answer 2....................................................................................................................................2
Answer 3....................................................................................................................................3
Answer 4....................................................................................................................................4
Answer 5....................................................................................................................................4
Answer 6....................................................................................................................................5
Answer 7....................................................................................................................................5
Reference....................................................................................................................................6

2MANAGE BUDGET AND FINANCIAL PLANS
Project 1
Answer 1
The report is disseminated to shareholders, management, creditors, analysts, suppliers,
governments and employees. It is done through e-mail or newsletter or website that is
wesfarmers.com.au or through post (Hussey and Ong 2017).
Answer 2
Annual report is required by the users for various purposes as follows –
Suppliers – through highlighting the internal measurement including innovation, liquidity and
commitment the annual report can provide an idea regarding expectation of the vendors from
the company.
Shareholders - as the shareholders are concerned about return and risk as compared to their
investment, they will need information for deciding whether they shall be continued to invest
in the business or not (Kent and Zunker 2013).
Analysts – they require detailed financial as well as other information for analysing the
competitive performance of the company with other companies in the same sector.
Government – government required financial information of the company to levy various
types of taxes.
Employees – the employees require the financial and operational details of the company to
assess its position in the market as it has direct impact on their dues and entitlements (Kent
and Zunker 2013).

3MANAGE BUDGET AND FINANCIAL PLANS
Creditors – creditors require evaluating the financial viability of the company before lending
any fund to the company and the required information can be obtained from annual report of
the company.
Answer 3
The report included detailed information regarding –
 Financial and operating review
 Director’s report
 Director’s declaration
 Remuneration report
 Income statement
 Cash flow statement
 Balance sheet (Rowe et al. 2014)
 Statement of changes in the equity
 Notes regarding financial statement
 Independence declaration of the auditor
 Auditor’s report
Successful business activities were as follows –
 Net profit after tax has been increased from $ 407 million to $ 2873 million in 2017 as
compared to last year
 Earnings per share went up from 36.2 cents to 254.7 cents in 2017 as compared to
previous year
 Operating cash flow went up from $ 861 million to $ 4226 million in 2017 as
compared to previous year

4MANAGE BUDGET AND FINANCIAL PLANS
 Return on equity went up from 9.6% to 12.4% in 2017 as compared to previous year
(Wesfarmers.com.au 2018)
Unsuccessful business activities during the year were as follows –
 Earnings before interest and tax reduced from $ 1,860 million to $ 1,609 million in in
2017 as compared to previous year
 Return on capital employed of the company was in reducing trend and reduced to
9.7% from 11.2% as compared to previous year
Answer 4
Fiscal condition and profit
The annual report of the company for the year ended 2017 shown a profit amounted
to $ 2873 million. Further, the Net profit after tax has been increased from $ 407 million to $
2873 million in 2017 as compared to last year. Moreover, earning per share went up from
36.2 cents to 254.7 cents in 2017 as compared to previous year. The company was also able
to increase the cash and cash equivalent from $ 611 million to $ 1013 million that will help in
maintaining the liquidity (Wesfarmers.com.au 2018).
Answer 5
As the net profit of the company during previous year fell significantly, it was
recommended to control the expenses, wherever possible to increase the net profit of next
year (Haryono and Iskandar 2015). Further, to reduce the finance cost of the company it was
suggested to reduce the amount of long-term borrowing that will also improve the leverage
position of the company.

5MANAGE BUDGET AND FINANCIAL PLANS
Answer 6
The company during 2016 projected to reduce its expenses for improving the profit. It
is found that the expenses of the company are reduced from $ 64,984 million to $ 64,477
million over the years from 2016 to 2017. Further, as per the recommendation the finance
cost also reduced from $ 303 million to $ 264 million. Moreover, to improve the company’s
leverage position it reduced its long term borrowing from $ 5,671 million to $ 4,066 million.
It raised additional fund through issuance of equity as the equity amount increased from $
21,937 million to $ 22,268 million. Therefore, it can be stated that through there may be
variance in projections in amount aspect however the projection head and related projections
were accurate in the previous year (Shauki 2016).
Answer 7
In accordance with the recommendations made by the company during the year 2016
for improving its profit and improving the gearing position, improvements were found in the
year 2017. The improvements were as follows –
 Operational expenses of the company has been reduced by 1% as compared to
previous year
 Net profit has been significantly increased by 606%
 Finance cot of the company reduced by 13%
 Long term debt repaid and additional fund raised through issuing equity to improve
the leverage position.

6MANAGE BUDGET AND FINANCIAL PLANS
Reference
Haryono, U. and Iskandar, R., 2015. Corporate social performance and firm
value. International Journal of Business and Management Invention, 4(11), pp.69-75.
Hussey, R. and Ong, A., 2017. Corporate Financial Reporting. Macmillan International
Higher Education.
Kent, P. and Zunker, T., 2013. Attaining legitimacy by employee information in annual
reports. Accounting, Auditing & Accountability Journal, 26(7), pp.1072-1106.
Rowe, A.L., Nowak, M., Quaddus, M. and Naude, M., 2014. Stakeholder engagement and
sustainable corporate community investment. Business Strategy and the Environment, 23(7),
pp.461-474.
Shauki, E., 2016. Is this a case of self-enlightened interest or genuine accountability: a study
on different reporting media in the Australian retail industry. Asia Pacific Journal of
Accounting and Finance, 2(1), pp.51-76.
Wesfarmers.com.au., 2018. [online] Available at:
http://www.wesfarmers.com.au/docs/default-source/reports/j000901-
ar17_interactive_final.pdf?sfvrsn=4 [Accessed 27 Aug. 2018].