Assignment

Topics: Financial ratios, Financial ratio, Balance sheet Pages: 10 (1983 words) Published: September 18, 2014
UNIT 101 – FINANCE MANAGEMENT

LECTURER:

SUBMITTED ON:03.04.2014

STUDENT NAME:

Table of Contents

Summary…………………………………………………………………………….……………Page 4 Introduction…………………………………………………………………..…………………..Page 5 1. Ratios………………………………………………………………………………………….Page 6 2. Evaluation……………………………………………………………………………………Page 7 2.1. Short term solvency or liquidity ratiosPage 7

2.2. Efficiency ratiosPage 7
2.3. Profitability ratiosPage 8
2.4. Long term solvency ratiosPage 8
2.5. Market based investment and other ratiosPage 8
Conclusion……………………………………………………………………………………………………………………Page 9 Bibliography & References……………………….…………………………………………………………………..Page 10

1. List of Tables

Table 1.1 Short term solvency or liquidity ratios…………………………………………….....Page 6 Table 1.2 Efficiency ratios…………………………………………………………………….....Page 6 Table 1.3 Profitability ratios……………………………………………………………………...Page 6 Table 1.4 Long term solvency ratios…………………………………………………………….Page 6 Table 1.5 Market based investment and other ratios………………………………………….Page 7

Summary
Wesfarmers financial statement shows improvement in majority areas. Revenue has gone up indicating growth,EBIT and net profit has shown an upward trend in company’s net earnings. The liquidity, efficiency profitability, financing and market ratio indicate the state of health of the company. Basically the solvency, efficiency ratio and market based investment ratios are the powerful indicator of a firm’s performance, its ability to meet financial obligation short term or long term. Its investment technique, inventory monitoring evaluation strength, indicates how well the capital budget and capital structure is managed. It’s a tool through which, we can assess its receivable collection efficiency in terms of day and how well purchases and accounts payable are managed, how efficiently the firm utilized its assets. The ultimate aim of any business it to make profits and pay dividend to its shareholder on time. The company needs to be solvent and possess adequate liquidity as well to be in good state.

(Readyratios.com, 2013);(Investopedia, 2009):

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Introduction
Wesfarmers started business in 1914 as western Australian formers co-operative from there the organization has grown into one of Australia’s largest listed companies withheadquarter based in Western Australia. The diversified business operations cover supermarkets, department stores, home improvement and office supplies, coal mining, insurance, chemicals, energy and fertilizers and Industrial & safety products.

This report shall provide financial position of the company, profitability standings for the year 2010 & 2011, future investment capabilities, efficiency on managing inventories & finance, past data shall be analyzed to calculate the key financial ratios mentioned below.

1. Short term solvency or liquidity ratios to determine the company’s ability to meet short term obligations, how well cash flow is managed besides liquid & solvency state of the company.

2. Efficiency ratios generally are an indicator on the collection from debtors, inventory days and sales turnover.

3. Profitability ratios to determine net profit growth, turnover and returns on assets and equity. Primary aim is to show profitability to equity investor.

4. Long term solvency indicate the future prospect of the company to meet long term financial commitment. It should own more than what it owes for long term survival.

5. Market based investment and other ratios, indicates the company’s profits, dividend relatively per shares, and estimates the appreciation in the market value of equity shares. It helps investors in deciding whether to buy shares of a particular company.

(Readyratios.com, 2013);(Investopedia, 2009):

1....

References: (Readyratios.com, 2013);(Investopedia, 2009):
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(Readyratios.com, 2013);(Investopedia, 2009):
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