Financial Statement Analysis: Woolworths Limited

The report intends to provide an in-depth analysis of the financial performance of Woolworths Limited for the last 6 years. In order to conduct this analysis, major items from the financial statements have been considered. In addition, financial health of the company has been assessed with the help of profitability, solvency, efficiency and leverage ratio. Analysis of the financial statements has shown the growth in revenues. However, net profit margin of the company has experienced instability due to the operational mismanagement. However, analysis of the cash flow statement has revealed the firms’ investment in fixed assets. From the ratio analysis, it has been found that the firm is solvent enough and has been operating under low risk factor. However, the management of the company is required to focus on improving the firms; operational efficiency in the upcoming years. Stable dividend policy of the company has been reflected from the pay-out ratio.
1.0 Introduction
Woolworths Limited is a popular retail brand that extensively operates in Australia and New Zealand. The brand is considered as second largest company in Australia after retail conglomerate Wesfarmers (Woolworths Limited, 2016). Moreover, the firm is also considered as the largest liquor firm of Australia (Woolworths Limited, 2016). The company has been established on 1924 and its’ headquarter is located in New South Wales Australia. The firm has a employee base of 202,000 (Woolworths Limited, 2016). Woolworths Limited mainly operates as supermarket in Australia and New Zealand. However, it has diversified operations in hospitality and liquor retailing.
This report intends to focus on an in-depth financial analysis of Woolworths Limited for the last six years. In order to perform the financial analysis, items from income statement, balance sheet and cash flow statement has been performed. In addition, ratio analysis has also been conducted to analyse the financial health of the company. The recent stock performance has been assessed in the report.
2.0 Analysis of income statement
Income statement depicts the financial performance of the firm over a certain accounting period of time (Laurent, 2009). It reveals the revenues and expenses of the firm that enables the analysts to determine the profitability of the company for a particular period of time. In this section, three key items from income statement of Woolworths Limited has been analysed.
Total revenues: Revenues are considered as one of the most significant component that enables the individuals to analyse the business performance of the company over a certain time period. Total revenues of Woolworths Limited for the last six years have been represented as under:
From the above data it can be inferred that the revenues of the company has experienced a positive growth for the period of last 6 years. In the last 6 years’ time period, Woolworths Limited has been able to enhance the revenues by almost $10 billion. This positive growth can be considered as the result of high demand of retail product. In addition, diversified operation has also enabled the company to maximise turnover.


Financial Statement Analysis: Woolworths Limited

Type: Report
Domain: Financial Performance Analysis
Words: 1750
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