MBA403 - Woolworths Limited: Financial Analysis and Investor Report

This report provides a financial and economic interpretation of Woolworths Limited, analyzing its suitability as an investment for prospective shareholders. The analysis considers the company's financial performance, cash position, and non-financial aspects, as well as industry and economic factors...Read More

WOOLWORTHS LIMITED
Financial and Economic
Interpretation and
Communication
Financial and non financial evaluation
Student’s Name
6/5/2018

Executive summary:
An investor should always look about the financial and non financial position of an
organization to measure the investment level of the company so that, it becomes easy for the
investor to manage the overall position and return from the investment amount. The report
focuses on an Australian company, Woolworths. Woolworths limited has been founded in
1924. The main operations of the company are supermarkets, liquor and petrol (Home, 2018).
The report has been prepared to measure the investment position of the company and offer an
idea about the investment into the company.
Analysis:
The investment level of the company has been measured on the basis of the
performance measurements, changes into the financial performance, position, cash level, non
financial performance, industry factors and economical factors. The annual report (2017) of
Woolworths limited evaluates that the overall financial position of the company has been
better from last year. The income statement of the company explains that the net margin of
the company has been better from 2016. In 2016, company has faced huge loss due to some
external losses.
In addition, it has been found that the financial position of the company has been
lowered due to few changes into the capital structure and the working capital of the company.
The liquidity ratio explains that the company would be able to pay only 79% of total short
term debt at the time of liquidation. The cash position of the company has been improved
from last year as well as the net profit improvement has impacted on the EPS position of the
company. The EPS amount has been increased from -0.98 to 1.19. With the increment in the
EPS rate, the dividend per cent of the company has also been enhanced. Annual report (2017)
describe that the company offers a good amount of dividends in case of great profit
generation. The overall financial performance of the company presents a better investment
level of the company.
Current Financial information of Woolworths Limited
Net profit liquidity lev Cash position EPS
Dividend per
cent
2017 2016 2017
201
6 2017
201
6 2017 2016 2017 2016
$ m $ m
2.76% -2.12% 0.79 0.83 1212 375 1.19
-
0.98
2
.73 -1.01
(Annual report, 2017)
Interpretation:
On the basis of the annual report (2017) and the financial statement of the company
explains that the changes into the financial performance of the company is quite impressive.
The financial position of the company has been improved by great increment due to the
changes into the industry performance, financial policies, non financial policies, economy
level of the company etc. The changes into the net profitability level have been improved due
to the changes into the total expenses level of the company.
It has been measured on the basis of the annual report of the Woolworths limited that
the management of the company has made few changes into the activities, policies and
strategies of the company to improve the overall position. The financial position of the

company has been mainly lowered due to industry decrement. The current position of
Australian retail industry (2018) explains that the current growth rate of the company is quite
better than the last year. Currently, the growth rate is 2.1% and it has been forecasted that it
would be enhanced to 3.1% in next year (Trading economics, 2018).
The analysis on company explains that the core business of the company is offering
the consumer goods and housing products into the Australian market, Indian market and New
Zealand market. The financial results have been improved in the Australian market. The
current strategy of the company is to diversify the market at other foreign countries. It is
more competitive than its competitors in terms of managing the operations and the activities
of the company. Further, it has been found in Morningstar (2018) that the current market of
the company has been improved and the current strategy of the company would help it to
enhance the future market as well. The employees of the company are assigned on the basis
of the job nature. The international level has helped the company to improve the market base
and diversify the risk level. The management team and its policies have helped the company
to manage the overall performance and position in recent years.
Morningstar (2018) explains that the increment into the profitability level has also
impacted on the overall remuneration of the company. The highest earner of the company is
Brad Banducci. He has earned $ 44,71,735 in 2017. There is no much difference among the
remuneration of the company against the competitors of the company. The management
structure and organizational structure explains about a matrix structure in which every person
is responsible for his work. The main strength of the company is its business, culture,
organizational structure; position etc. there is no non-wage-related benefits of the company.
The overall financial and non financial position of the company explains that the overall
performance of the company has been improved from the last year and the industry and
economical position of Australia and other countries in which company is performing has
also been better. Due to these, the overall position of the company has been better from the
last year.
Recommendation and conclusion:
The evaluation and the analysis report on Woolworth’s financial and non financial
factors, Australian retail industry, economical position etc explains that the Woolworths has
succeed to enhance the level of overall performance which has also influenced on the
investment position of the company. On the basis of report, it is recommended to the
investors to invest into the Woolworths limited for short term and long term both. On both
the cases, company would offer higher returns to the investors.
References list:
Annual Report. 2017. Woolworths Limited. [Online]. Available at:
https://www.woolworthsgroup.com.au/icms_docs/188795_annual-report-2017.pdf (Available
5/6/18).
Australian retail index. 2018. Home. [online]. Available at:
https://www.australianretailindex.com.au/ (Available 5/6/18).
Home. 2017. Woolworths Limited. [Online]. Available at:
http://www.woolworthsgroup.com.au/ (Available 5/6/18).

Morningstar. 2018. Woolworths Limited. [Online]. Available at:
http://financials.morningstar.com/cash-flow/cf.html?t=MYR&region=aus&culture=en-US
(Available 5/6/18).
Trading economics. 2018. Australian retail index. [Online]. Available at:
https://tradingeconomics.com/australia/retail-sales-annual (Available 5/6/18).