Accounting Systems and Processes: Wesfarmers Financial Analysis 2016

This report provides a financial analysis of Wesfarmers, an Australian public company, based on its 2016 annual report. The analysis includes an executive summary, an introduction to Wesfarmers' business operations, and a detailed examination of its financial performance. Key metrics such as total comprehensive income, dividends per share, earnings per share (EPS), return on equity (ROE), revenue, and free cash flow are presented and compared to the previous year. The report also calculates and comments on the working capital ratio to assess the company's short-term solvency. The conclusion of the report suggests that Vikram should not invest $50,000 in Wesfarmers based on the financial data presented. The report is supported by references to the 2016 and 2015 annual reports of Wesfarmers.

RUNNING HEAD: ACCOUNTING SYSTEMS AND PROCESSES
ACCOUNTING SYSTEMS AND PROCESSES

ACCOUNTING SYSTEMS AND PROCESSES 1
Executive Summary
The Wesfarmers was established in 1914 and is located in Western Australia. The
Wesfarmers is publicly listed company in Australia (ASX: WES). The main operations of
Wesfarmers are hotels, liquor, supermarkets and department stores, home improvement,
business supplies and also covered its business operations in industrial divisions such as
chemicals, fertilisers, coal etc. This report will provide the financial firmness of Wesfarmers
of 2016. This report contains business activities, dividends, return on Equity, EPS, working
capital ratio etc. of Wesfarmers. Further it concludes that Vikram should invest its $ 50000 in
Wesfarmers.

ACCOUNTING SYSTEMS AND PROCESSES 2
Contents
Ques.13.................................................................................................................................................3
REFERENCES..........................................................................................................................................6

ACCOUNTING SYSTEMS AND PROCESSES 3
Ques.13.
Introduction
The Wesfarmers is an Australian public company and was established in 1914. Its
headquarter office is located in Western Australia. The Wesfarmers is one of the largest listed
companies of Australia. The chairman of the company is Michael Chaney AO.
Business Operations
Wesfarmers has various businesses such as hotels, supermarkets, liquor, department stores,
office supplies etc. and also cover its business activities in industrial divisions which includes
chemicals, coal, fertilisers etc. Wesfarmers has employed of over and above 220,000
employees in 2016 and has around 530000 shareholders (Wesfarmers, 2016).
Comprehensive income
The total comprehensive income for the year 2016 was decreased to $ 2440 million which
amounts to 3% from the previous year.
Particulars 2016 ($ m) 2015 ($ m)
Net profit after tax 2353 2440
(Source: Annual Report, 2016; 2015).

ACCOUNTING SYSTEMS AND PROCESSES 4
Other Financials
Particulars 2016 2015
Dividend per share 186 cents 200 cents
EPS (basic) 209.5 cents 216.1 cents
ROE 9.6% 9.8%
Revenue 39242 $M 38201 $M
Free cash flow 1233 $M 1893 $M
(Source: Annual Report, 2016; 2015).

ACCOUNTING SYSTEMS AND PROCESSES 5
Working capital ratio
The short term wealth position of the company is computed from the working capital ratio.
Formula of working capital ratio is Current Assets/Current Liabilities
Particulars 2016 ($ M) 2015 ($ M)
Current Assets 9684 9093
Current Liabilities 10424 9726
Working Capital 0.93 0.93
(Source: Annual Report, 2016; 2015).
Comment
After the above computation, there is no change in solvency performance of Wesfarmers in
2016 in comparison to 2015.
Conclusion
Hence, the conclusion drawn from the above graphs is that Wesfarmers is not sound for
investment purposes. Therefore, Vikram should not invest $ 50, 000 in Wesfarmers.

ACCOUNTING SYSTEMS AND PROCESSES 6
REFERENCES
Wesfarmers. (2016). Annual report. Retrieved on 11 September 2017 from
http://www.wesfarmers.com.au/docs/default-source/reports/2016-annual-report.pdf?
sfvrsn=8.
Wesfarmers. (2015). Annual report. Retrieved on 11 September 2017 from
http://www.wesfarmers.com.au/docs/default-source/reports/2015-annual-report.pdf?
sfvrsn=8.