Wesfarmers Financial Analysis
FACULTY OF BUSINESS AND LAW
MPA702- FINANCIAL INTERPRETATION
Unit chair: Dr. Wen Qu
Written assignment T2-2014
Analysis and interpretation of the performance of Wesfarmers
Group No: 03
Prepared by: Zafer Han (700270889) Kaustav Pandey (214362404) Yujie Yin (212520114) Gavin Van Arkadie (214349824) Yuthi Srivastava (212358103) Words count: 1021
“We certify that the attached work is entirely our own, except where material quoted or paraphrased is acknowledged in the text. We also declare that it has not been submitted for assessment in any other unit or course.”
Table of Contents
1.0 Introduction
Wesfarmers is a highly reputable entity listed on the Australian Stock Exchange, with approximately 200,000 staff and 500,000 shareholders (Knight, 2014). The entity that started as a small Western Australian farmer co-operative has now diversified into sectors such as retail, resources and insurance and now earn revenue of over $50 billion per annum.
This report will examine the performance of Wesfarmers over the 2011 to 2013 financial periods. The areas of profitability, efficiency, solvency and liquidity have been assessed and would be of great interest to all of their stakeholders, who trades in a highly competitive business environment.
2.0 Financial Analysis (Profitability and Efficiency)
2.1 Return on Equity
One of the major areas of interest to all stakeholders of Wesfarmers is its recent profitability, defined as ‘the ability to retain profit compared to a base such as sales, total assets or owner’s equity’ (Simmons and Hardy, 2013). The return on equity measures the amount of profit that has been retained compared to the amounts invested by ordinary shareholders.
In $million
2011
2012
2013
Net profit after tax
01,922
02,126
02,261
Shareholder’s Equity
25,329
25,627
26,022
Return on Equity
7.7%
8.4%
8.9%
MPA702- FINANCIAL INTERPRETATION
Unit chair: Dr. Wen Qu
Written assignment T2-2014
Analysis and interpretation of the performance of Wesfarmers
Group No: 03
Prepared by: Zafer Han (700270889) Kaustav Pandey (214362404) Yujie Yin (212520114) Gavin Van Arkadie (214349824) Yuthi Srivastava (212358103) Words count: 1021
“We certify that the attached work is entirely our own, except where material quoted or paraphrased is acknowledged in the text. We also declare that it has not been submitted for assessment in any other unit or course.”
Table of Contents
1.0 Introduction
Wesfarmers is a highly reputable entity listed on the Australian Stock Exchange, with approximately 200,000 staff and 500,000 shareholders (Knight, 2014). The entity that started as a small Western Australian farmer co-operative has now diversified into sectors such as retail, resources and insurance and now earn revenue of over $50 billion per annum.
This report will examine the performance of Wesfarmers over the 2011 to 2013 financial periods. The areas of profitability, efficiency, solvency and liquidity have been assessed and would be of great interest to all of their stakeholders, who trades in a highly competitive business environment.
2.0 Financial Analysis (Profitability and Efficiency)
2.1 Return on Equity
One of the major areas of interest to all stakeholders of Wesfarmers is its recent profitability, defined as ‘the ability to retain profit compared to a base such as sales, total assets or owner’s equity’ (Simmons and Hardy, 2013). The return on equity measures the amount of profit that has been retained compared to the amounts invested by ordinary shareholders.
In $million
2011
2012
2013
Net profit after tax
01,922
02,126
02,261
Shareholder’s Equity
25,329
25,627
26,022
Return on Equity
7.7%
8.4%
8.9%
References: Business and Industry Portal, 2014, Gross Profit, retrieved 20 September 2014, http://www.business.qld.gov.au/business/running/making-and-managing-money/making-your-business-more-profitable/calculating-profit-margins Evangeline Marzec, eHow contributer Investing, Live Quotes, retrieved 20 September2014, http://www.investing.com/equities/wesfarmers-limited-ratios Knight, E., 2014 Money-Zine, 2014, Debt or leverage ratios, retrieved 15 August 2014, http://www.money-zine.com/investing/investing/debt-or-leverage-ratios. Simmons, A., Hardy, R. (2013), VCE Accounting: Units 3 and 4 – 2nd edition, Cambridge. Wesfarmers, 2013, Annual report, retrieved 15 August 2014, http://www.wesfarmers.com.au/. Woolworths Limited, 2013, 2013 Financial report to shareholders, retrieved September 20 2014, http://www.woolworthslimited.com.au/annualreport/2013/downloads/WoolworthsLimited_AnnualReport_2013_FinancialReportToShareholders.pdf