Financial Accounting: Receivables, Current Ratios, and Debt Analysis

This assignment provides a financial accounting analysis of a company's receivables, current assets, and current liabilities based on its 2017 and 2016 financial data. It examines trade receivables, finance advances, and loans, noting a slight increase in receivables from 2016 to 2017. The analysis includes a discussion of the current ratio, highlighting the company's ability to cover short-term debts, and suggests measures for improving solvency. It also addresses other receivables, credit loss provisions, and the absence of non-current receivables and bad debts, indicating a healthy financial position. The report references the company's annual report and relevant accounting resources to support its findings.

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FINANCIAL
ACCOUNTING

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Answer 1:
The following table shows in the receivables of the company for the year ended 2017:
(Amounts in $ in millions)
Particulars 2017 2016
Change
in $
Change
in %
Receivables - Trade
and other
1,633.0
0
1,628.0
0 5.00 0.31%
Receivables -
Finance advances
and loans -
835.0
0 -835.00
-
100.00
%
-
Total receivables
1,633.0
0
2,463.0
0 -830.00
-
33.70%
Allowance for
provision of
receivables
60.0
0
64.0
0 -4.00 -6.25%
From the above table, it could be seen that the receivables of the company in the year 20178
has increased by $5 million when compared with year 2016. The increase is by $ 5million.
These figures given above are net receivables.
The allowance for receivables are $60 million.

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The classes of receivables disclosed are the trade receivables and others and finance advances
and loans.
No GSTS has been disclosed in the balance sheet.
Answer 2:
The following table shows in the current assets and the current liabilities of the company:
(Amounts in $ in millions)
Particulars 2017 2016 Change in $
Change in
%
Current Assets
9,667.0
0
9,684.0
0 -17.00 -0.18%
Current Liabilities
10,417.0
0
10,424.0
0 -7.00 -0.07%
-
Current ratio 0.928002304 0.929009977
The current ratio is the ratio which shows in the ability of the company to pay off short term
debts of the company. It is also termed as the liquidity ratio.
From the above calculation, it could be seen though the amounts of both the current assets
and the current liabilities have decreased over the years but the current ratio is somewhat the
same. This means that the company does have an immense amount of time when it comes to
raising funds so that its liabilities could be paid off. The current assets include cash or cash
equivalents or that could be converted into money. This means that the company has larger

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amounts of the current assets so that it could pay off its current liabilities thereby generating
in more revenue (My Accounting course, 2018).
The company should even then take some measures for the purposes of improving its
solvency.
Answer 3:
The other receivables comprises of the amounts that arises from the transactions that are
outside the purview of the ordinary course of the trade of the company. These do not contain
the impaired assets are not past due. It is expected that these amounts would be received as
and when they become due.
The totality of provision for the credit losses which amounts to $60 million are allowances
from all of the receivables of the group.
Answer 4:
The company does not have any non-current receivables as per the Annual report of the
company.
Further, as per the Annual report of the company, there no bad debts.
The notes to the financial statements states that the group is not exposed to significant bad
debts.
This is a good sign since no bad debt means more revenue for the company (Wesfarmers,
2017).

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References:
My Accounting Course. (2018). Current Ratio | Formula | Example | Calculator | Analysis.
[online] Available at: https://www.myaccountingcourse.com/financial-ratios/current-ratio
[Accessed 10 Sep. 2018].
www.wesfarmers.com. (2018). Annual report 2017. [online] Available at:
https://www.wesfarmers.com.au/docs/default-source/default-document-library/2017-annual-
report.pdf?sfvrsn=0 [Accessed 10 Sep. 2018].