Wesfarmers : Financial Analysis
Wesfarmers : Financial Analysis
Wesfarmers main focus is very simple but an effective objective of providing a satisfactory return to its shareholders. The beauty of this objective is that it is measurable, and they seek to achieve a return on equity, which ranks Wesfarmers in the top 20 percent of Australia’s listed companies and able to manage the portfolio of businesses which make up the group with strong financial focus (Australian Securities Exchange,2008).
The ongoing success of Wesfarmers is based on shareholder focus, financial disciplines and goodwill and hence it has achieved significant financial growth in the preceding 6 years. It is a “ diversified Australian group, provides home improvement products, building supplies, coal mining, gas, industrial and safety products, food, groceries, apparel, office products and insurance (Business Review, 2008).
Wesfarmers key strategy is to grow through acquisitions. In line with the strategy, Wesfarmers made several acquisitions over the years which enhanced their financial position and stability. Over the years the group acquired Linde Gas, which is a major provider of gas to the Australian Industrial market. In 2003 Wesfarmers finalized the acquisition of Lumley Australian and New Zealand insurance business which helped diversify Wesfarmers business operations and finally in 2007, Wesfarmers acquired the Coles group (Greenhalgh, 2008).
Table 1: Major Acquisitions
Business Price EBIT ($m) EV/EBIT multiple
OAMPS 725 58 12.5
Linde Gas 500 73 13.5
Coles Group 19,300 1,150 16.8
Source: www.wesfarmers.com.au
The most common form of financial analysis is undertaken using ratios, using the data from financial statements and other related sources. By analyzing and calculating the figures obtained from the Wesfarmers financial statements of the preceding 5-6 years we can develop an insight to the success and growth of the company (accounting text book).
Over the years Wesfarmers has grown
Wesfarmers main focus is very simple but an effective objective of providing a satisfactory return to its shareholders. The beauty of this objective is that it is measurable, and they seek to achieve a return on equity, which ranks Wesfarmers in the top 20 percent of Australia’s listed companies and able to manage the portfolio of businesses which make up the group with strong financial focus (Australian Securities Exchange,2008).
The ongoing success of Wesfarmers is based on shareholder focus, financial disciplines and goodwill and hence it has achieved significant financial growth in the preceding 6 years. It is a “ diversified Australian group, provides home improvement products, building supplies, coal mining, gas, industrial and safety products, food, groceries, apparel, office products and insurance (Business Review, 2008).
Wesfarmers key strategy is to grow through acquisitions. In line with the strategy, Wesfarmers made several acquisitions over the years which enhanced their financial position and stability. Over the years the group acquired Linde Gas, which is a major provider of gas to the Australian Industrial market. In 2003 Wesfarmers finalized the acquisition of Lumley Australian and New Zealand insurance business which helped diversify Wesfarmers business operations and finally in 2007, Wesfarmers acquired the Coles group (Greenhalgh, 2008).
Table 1: Major Acquisitions
Business Price EBIT ($m) EV/EBIT multiple
OAMPS 725 58 12.5
Linde Gas 500 73 13.5
Coles Group 19,300 1,150 16.8
Source: www.wesfarmers.com.au
The most common form of financial analysis is undertaken using ratios, using the data from financial statements and other related sources. By analyzing and calculating the figures obtained from the Wesfarmers financial statements of the preceding 5-6 years we can develop an insight to the success and growth of the company (accounting text book).
Over the years Wesfarmers has grown
References: Wesfarmers, 2008, ‘Corporate Governance’, retrieved on 27 December 2008, . Bolt, C, 2007, ‘Wesfarmers makes improved offer for coles, The West Australian, retrieved on 27 December 2008, . Wesfarmers, 2008, ‘Submission on the federal government’s Green paper for a proposed carbon pollution reduction scheme’, retrieved on 27 December 2008, . Sustainable Asset Management, 2003, ‘Sustainability Leaders Australia Fund’, retrieved on 27 December 2008, . Wesfarmers, 2007, ‘Annual General Meeting – Chairman’s Address’, retrieved 29 December 2008, .