accounting group work
Introduction :
This report will be analysing Wesfarmers financial statements provided in their 2010 annual report by: horizontal analysis, trend analysis, vertical analysis and ratio analysis. With the numerical data obtained and the conclusions drawn from them, a generalised discussion on the limitations of financial statement analysis and examining possible factors influencing the position of Wesfarmers shares in comparison to others; this report will enable people in the business world to make an informed decision on whether to invest Wesfarmers.
Established in 1914 in Western Australia as a farmers’ co-operative, Wesfarmers focused on the provision of services and merchandise to the rural community. Today it is known as one of Australia’s largest listed company with 200,000 employees and more than 450,000 shareholders. Their main objectives include: providing a satisfactory return to shareholders and making a contribution to the communities in which it operates.
Horizontal Analysis:
Horizontal analysis is an analysis of the change from year to year in individual statement items. An analysis of the preceding year’s financial statements is generally performed as a starting point for forecasting future performance. Cash flow from operations increased by 9.3 per cent to $3,327 million and was driven by earnings growth and a continued focus on improving working capital management.
From appendix 2, the net profit after tax for the Group in 2009/10 of $1,565 million was 2.8 per cent ahead of last year, despite a foreshadowed significant drop in earnings from the Resource division, due primarily to lower global export coal prices. Total revenue has increased 1.7 per cent from $50,982 million to $51,827 million.
Although having an increase in revenue is relatively good, it has been negated by the increase in the amount of expenses. Total expenses increased by 2.2 per cent from $48,154 million to $49,202 million. Property, plant and equipment rose 9.1 per cent
This report will be analysing Wesfarmers financial statements provided in their 2010 annual report by: horizontal analysis, trend analysis, vertical analysis and ratio analysis. With the numerical data obtained and the conclusions drawn from them, a generalised discussion on the limitations of financial statement analysis and examining possible factors influencing the position of Wesfarmers shares in comparison to others; this report will enable people in the business world to make an informed decision on whether to invest Wesfarmers.
Established in 1914 in Western Australia as a farmers’ co-operative, Wesfarmers focused on the provision of services and merchandise to the rural community. Today it is known as one of Australia’s largest listed company with 200,000 employees and more than 450,000 shareholders. Their main objectives include: providing a satisfactory return to shareholders and making a contribution to the communities in which it operates.
Horizontal Analysis:
Horizontal analysis is an analysis of the change from year to year in individual statement items. An analysis of the preceding year’s financial statements is generally performed as a starting point for forecasting future performance. Cash flow from operations increased by 9.3 per cent to $3,327 million and was driven by earnings growth and a continued focus on improving working capital management.
From appendix 2, the net profit after tax for the Group in 2009/10 of $1,565 million was 2.8 per cent ahead of last year, despite a foreshadowed significant drop in earnings from the Resource division, due primarily to lower global export coal prices. Total revenue has increased 1.7 per cent from $50,982 million to $51,827 million.
Although having an increase in revenue is relatively good, it has been negated by the increase in the amount of expenses. Total expenses increased by 2.2 per cent from $48,154 million to $49,202 million. Property, plant and equipment rose 9.1 per cent