BSBFIM501: Wesfarmers Financial Performance Report

This report provides a comprehensive financial analysis of Wesfarmers, covering various aspects of financial management. It begins with an introduction to Wesfarmers, including its industry, vision, mission, values, and strategic goals. The report then delves into key financial concepts such as the financial system, cost of capital, capital structure, and working capital. It explores financial planning, forecasting methods, and the role of the Australian Competition and Consumer Commission (ACCC). The report also examines management principles for budget preparation, budget components, debt and equity financing, and the role of ASIC in financial reporting. Furthermore, it discusses financial statement analysis methods, investment decision-making, comparative financial statements, and changes in budget or financial plans. The report includes several templates for expense budgets, aged accounts activity summaries, profit and loss forecasts, cash flow forecasts, and contingency plans. It concludes with a departmental budget report template.

Running Head: WESFARMERS 0
Wesfarmers

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Table of Contents
Answer 1: Introduction..............................................................................................................2
Answer to question 2..................................................................................................................4
Question 3................................................................................................................................17
Question 5................................................................................................................................17
Part A...................................................................................................................................17
Part B....................................................................................................................................17
Part C....................................................................................................................................17
Part D...................................................................................................................................17
Question 6................................................................................................................................20
PART A................................................................................................................................20
PART 4 & 5.............................................................................................................................22
PART B................................................................................................................................22
Manager:..........................................................................................................................22
Topic:...............................................................................................................................22
References................................................................................................................................24

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Answer 1: Introduction
Name of the organization: Wesfarmers
The industry in which the Wesfarmers operates is the chemical and the fertilizers industry
(Wesfarmers, 2018).
Address and the contact details: Perth, Australia
Brief overview: Wesfarmers is basically the Australia’s largest listed company operating in
the diverse areas with the dynamic operations. It covers a wide variety of the services such as
office supplies, renovation of home, departmental stores, industrial divisions and business
and the energy and the chemicals along with the safety of the products. Wesfarmers is one of
the Australia’s largest employment base companies with 100000 employees and has a
shareholder base of approximately 495000 (Wesfarmers, 2018)..
Organization’s Vision, Mission and Values: The primary vision of the Wesfarmers is to
give the shareholders their momentum in the form of the return with the assistance of the
diversified portfolio and exceptional financial discipline.
The mission of the Wesfarmers is to promote the highly focused culture adherence to the four
most critical issues prevailing in the business such as integrity, openness, accountability and
boldness. Further, the mission statement of the Wesfarmers also includes the building of the
customer base and creating the long term value for the future of the Wesfarmers. The
communities are involved in minimising the impact on the environment by reducing the
emission intensity and the improving the resilience to climate change (Wesfarmers, 2018)..
The core values of the Wesfarmers include the inspiring working employees, trust and
challenge and the quality support to its customers, renewing the portfolio through the value
adding transactions (Wesfarmers, 2018)..

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Organisation’s strategic goals:
The main strategic goals of the Wesfarmers are outlined below
 Measuring the Performance
 Capital Efficiency ratios
 Delivering satisfactory returns to the investors and the stakeholders
Organizational chart showing key departments and positions
(Source: Wesfarmers, 2018).
Departmental chart showing key positions and team details

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Answer to question 2
1. The financial system refers to the system, which permits the funds exchange between
moneylenders, depositors, and mortgagors. The Financial systems work at national
level and international level. The financial system contains the difficult, closely
related service, marketplace, and organisations projected to provide the proper and
consistent connection between financiers and depositors (Dymski, Epstein and Pollin,
2016).
Internal factors and external factors have great influence on the financial system.
Owners of business cannot control external factors, but they should be capable to
expect and regulate to these elements to continue the companies on way. Though, the
owner of business and leader do have essential impact over internal elements, which
influence the business.
2. Cost of capital- cost of capital is useful for the company to decide whether the project
is worth the expenditures of means. It involves the cost of equity and cost of debt. It is
called opportunity cost of investing in businesses.
Capital structure- the capital structure is unpaid debt and equity of the company. The
capital structure permits the entity to know which type of funds of the entity uses to
finance whole actions and development.
PURCHASE LOGISTICS TECHNICAL ACCOUNTS
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Working capital- Working capital refers to an evaluation of the functional
effectiveness and the short-term economic health of the company. The working
capital shows that entity is capable to pay short-term obligations instantaneously.
3. Financial plan refers to the yearly forecast of incomes and expenditures for the entity,
branch, or section. The financial planning is important as it may also be the projection
of money requires and the decisions on how to advance cash like by issuing or
borrowing extra stakes in the entity (Hayden, 2016). Following steps are
recommended by Commonwealth Bank-
 Calculation of set-up cost
 Projection of profit and loss
 Projection of cash flow
 Projection of balance sheet
 Find Break even point
 Seeking expertise advise
4. There are various methods, which may be used for forecasting the financial data.
These methods are covered into two categories such as qualitative method and
quantitative method. These are as follows-
 Qualitative approach- it relies on the data, which may not really be evaluated.
This method is essential at the early level of products or the entity. The
examples of qualitative approach are time series method and casual method.
 Quantitative approach- historical data may be used as basis for analysis. The
examples are market research, Delphi method, and views of well-informed
person.
5. Role of Australian Competition and Consumer Commission (ACCC)- the main
liability of Australian Competition and Consumer Commission is to make sure that

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people and companies comply with laws, rules and regulations related to the
consumer protection as per the Competition and Consumer Act, 2010. Following are
the main role of Australian Competition and Consumer Commission-
 To give information regarding the liabilities as per the Competition and
Consumer Act, 2010 while creating financial claim involving rendering
direction (Altman and Ward, 2018).
 To make consumers aware in respect of the consumer rights as per
Competition and Consumer Act, 2010
 To make enquiry and take steps in against of business who involve in practice
which breach the Competition and Consumer Act, 2010
Further, the financial management system should be designed with proper
interrelationship between workers, processes, software, and information confined in
the system. Companies must use federal financial management system requirements
in acquisition, pre-acquisition, and application of the new financial management
solution.
6. Following are the management principles to prepare budget-
 Accountable fiscal management-
 Simple line of liability
 Significant financial data
 Constancy in decision making procedure
 Suppleness in short-term issues (Gitman, Juchau and Flanagan, 2015).
 Be conservative not optimistic
 Conference and team work
 Expertise in documentation
 Render training

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 Sign-off
Further, the management principles are so relevant to develop knowledge, guidance
for manager’s training, to make part of management concrete, direct to conduct
research in the management. From the management principles, managers can easily
understand the process to manage the company. These principles help the
management to direct the manager in taking significant decisions (Clark and Wójcik,
2018).
7. Budget is procedure to determine the prospective incomes and expenditures to
rationalise the process of expenditure. This is done to keep track of incomes and
expenditures. It is recommended that every department should make budget
separately and later separate budgets will be combined for the master budget. This
will help to get the budgeted expenditure for period of budget. It is required to give
proper consideration to preparation of sales budget by projecting demand properly. It
is also required that the plans related to capital expenditure must be taken in advance
and further they should be included in the process of budget. Budget helps in making
the capital expenditure plans to run business (Yu, Miao, Shen and Leung, 2015).
8. Debt financing permits the entities to invest without having to obligate personal
capital, however main objective is to increase the value of shareholder. Too much
debt is not so good thing in own finance, however little may go long way. Off balance
sheet financing is the accounting method in which entities record some asset or
liability in the way, which precludes the items from stating in balance sheet. Further,
there are two main methods for equity financing such as public stock offering and
private placement of stock with depositors. The first step is to take decision about
debt financing or equity financing. These techniques help to decide pros and cons of
equity financing and debt financing.

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9. ASIC controls the compliance with financial reporting requirements of the financial
reporting for companies subject to the Corporations Act and renders relief from the
requirements in some situations. The active reviewing of compliance of corporation
with these needs make contribution in direct manner to market honesty and faith of
depositors. The corporations should keep proper financial records but some are
require to make financial report (Brown, 2015). Financial report is required to prepare
for every financial year by-
 The public corporations
 Disclosing corporations made in Australia
 The registered scheme
 Big proprietary entities if any 2 criteria is fulfilled-
- Having more than fifty workers
- Having consolidated gross asset of more than 12.5 dollar million
- Having consolidated gross operating revenue of exceeding twenty five
dollar million
Further, it is also required that financial report should conform with accounting
standards and, rules and regulations with some exceptions. Moreover, the disclosing
entities should make half yearly report. It is required by them to make financial report,
director’s report and have financial report audited and lodge the financial report.
10. The financial statements are very significant for the health and image of the company.
It is very essential to evaluate the financial statements to know the financial position
of the company. There are some methods to analyse the financial statements.
Following are the methods-

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 Ratio analysis and trend analysis- the trend analysis is created to evaluate the
trends in the economic position of the companies. Ratios analysis helps in
showing the increasing and decreasing trends in net profit and gross profit.
 Vertical financial data analysis- as per the vertical financial data analysis,
these statements of a company is analysed individually. This method does not
compare the financial statements of one period (months or quarter) with
financial statements of other period (months or quarters).
 Horizontal financial data analysis- this method contains the financial data as it
modifies from reporting time to other reporting time. The comparison of net
profits or COGS of various period help in defining the growth or development
of the company.
 Forecast the financial statements- this method is very useful in defining the
past happenings and latest happenings. However, this cannot forecast the
upcoming period. It cannot have look over the changing variables.
This methods really helps in achieving the objectives and decide the financial
condition of the company at great extent.
11. The expanding business requires to be closely and prudently managed to make sure
the success of new decision of investment and plans to expand. Though, various
owner-managers search that as the business develops they feel more isolated from the
functions. Comprehensive investment decision-making procedures in the entity decide
how correctly the projects are measured and eventually, how it will be succeed. The
daily decision-taking procedures and investment decision-taking procedures shall
follow the practically same patterns with the exception. The reason is that applying
the tactical plans of company closely narrate to applying the provided project though
one usually leads the others against the financial achievements.

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12. The comparative financial statements are the documents which compare the specific
financial statement with similar financial report made by other entities. Income
statement, cash flow statement, and balance sheet are used by the manager of
company for the comparison. This procedure discloses trend in financials and relates
financial performance of one company to financial performance of other companies.
Comparative financial statement is important tool for future budget and associated
resources. With the help of comparative financial statement, budgeted data can be
compared with actual data (AICPA, 2017).
13. Following are stages to make changes in budget or the financial plans regarding the
short term need and long term needs for the company-
 Access the influences of changes in budget and financial plan- before making
changes in budget and financial planning, it is required to know how much this
would influence the budget.
 Cover the differences- the other stage is to cover the differences. Restricting
the expenditures may be difficult; however, this may assist for the shortfall. If
this stage does not work, then alternative methods are also available.
 Adjusting the major goals- when delaying objectives cannot be ideal, then this
can be most accurate resolution. It is required to keep the setback to the
minimum.
14. Following are the major functions of budget to maximize the organisational
performance-
 Planning- the planning is important function in budget to maximize the
organisational performance. This procedure stops the interest conflicts
between the goals of management and the realities of the ability of the
company. With the help of planned budget, the management may recognise

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the resources, which would be essential to get the aims and decide how the
sources should be applied.
 Evaluation- The information in the operational budget serve as the standards
against that to relate the results of manager and the real results of the business
units. Without these standards, the top-level management will have little but
the historical against which to evaluate the latest results. Though present-to-
past comparison can be stimulating from the past viewpoints, they frequently
render little significant assessment of the performance of entity or the
performance of managers. Assessing the latest performance regarding the
historical performance adopts that the current situation of company and
operating atmosphere are the similar as in the previous period (Becker,
Mahlendorf, Schäffe and Thaten, 2016).
The allocation of resources and procedure of budgeting is one of most useful levels of the
plan. The allocation of resources means the allocation of sources, and particularly finance,
from core to marginal level. The Budgeting states the more detailed purpose of exactly how
the funds are to be utilised.
15. Following are the goals and reasons for financial record keeping system-
 To render the financial information, which assist to run more effectively
 To increase the profitability
 To recognise the business asset, incomes and expenses
 To make comparison between the averages of the divisions
 To focus on the weakness and strength of the company
 To maintain the good relations with the banks and the financial systems