Woolworths Financial Ratio Report Analysis - Accounting Report Essay

Words: 3667
Pages: 15
Open Document
Woolworths Financial Ratio Report
Liquidity, Solvency and Profitability

Abstract
This report consists of ratio calculation and analysis of Woolworths’ liquidity, solvency as well as profitability. Liquidity ratios include current ratio, quick asset ratio and inventory turnover. Solvency ratios include debt to total asset and interest coverage. Profitability ratios include return on owners’ equity, payout ratio, return on assets, return on sales, asset turnover, cash return on sales and operating expense ratio.

Ratio Calculation | Formula | Calculation $M | Results | | | 2012 | 2011 | 2012 | 2011 | Current Ratio | Current AssetsCurrent Liabilities | 5,802.16,766.2 | 6,326.98.022.2 | 0.86 : 1 | 0.79 : 1 | Quick Asset …show more content…
For example, increase sales, which in turn increase cash inflow or receivables through quick sales like discounts. Current liabilities can also be paid off to improve current and quick ratios using long-term loans.
To improve inventory turnover ratio, Woolworths has to increase sales maybe with more tempting marketing strategies to attract more customers or search suppliers with lower price so they could offer customers products with more agreeable price. Therefore, their sales will be strengthened seen by an increase in cost of sales. Another way is to decrease the average inventory so it will minimize inventory-holding cost.
Solvency
Solvency ratios are used to measure long-term risk and are of interest to long-term creditors and shareholders (Carey, 2009).
Debt to Total Asset
Debt to total asset ratio calculates the percentage of assets provided by creditors. A lower debt ratio indicates that a company relies less on borrowing as compared to equity for financing its assets. The higher the ratio, the greater risk will be associated with the firm’s operations (Carey, 2009).
In Woolworths’ case, its debt to asset ratio has improved as the percentage declines from 62.33% to 59.61%. This suggests that Woolworths has sufficient amount of assets to cover its debts in the long term. Deducting from the balance sheet, it can be seen that even though its
Show More

Related Documents: Woolworths Financial Ratio Report Analysis - Accounting Report Essay

Essay about Riks Management

risk principles Assignment 1 AS/NZS/ISO 31000:2009 HB 436:2004 Table of contents 1.0 Introduction 1 2.0 Statement of case 1 3.0 Identification and classification of risks 1 4.0 Risks analysis 2 5.0 Risks evaluation 4 Competition 4 Reputation 4 Stock turnover and financial leverage 5 Quality assurance 6 Performance of employees 6 Payment system interruption 7 Supplier and natural disaster 7 6.0 Risk register 7 7.0 Risk treatment 9 Risk treatment schedule 9…

Words 2376 - Pages 10

Financial Analysis of Woolworths Ltd Essay

Financial Analysis of Woolworths Limited 10 October 2011 By: Huatong (Claire) Liu To: Potential investors Executive Summary The primary purpose of this report is to determine whether Woolworths Limited is an appropriate and profitable company to invest in. Specific objectives include analysis of annual reports of Woolworths and its competitors (Wesfarmers) as well as interpretation of relevant government and industry statistics, stock exchange, market information and media comments…

Words 3158 - Pages 13

Essay Acquisition Analysis

Introduction Purpose The purpose of this report is to provide an overview of Australian Agricultural Company Limited (AAC)’s business position, prospects for development and a recommendation of acquisition for potential investors. Methodology The report is prepared based on the economic and industry data as well as financial and non-financial information on the operation of AAC. Financial ratio is calculated based on the data from Fin Analysis and is conducted to make comparisons between AAC’s…

Words 2113 - Pages 9

Hing Yeung Wong 3249438 ACCT5910 Project Essays

been relatively poor mainly as a result of the global financial crisis adversely affecting the firm’s international operations. Strategically, Qantas is likely to continue to dominate the domestic airline industry with the success of Jetstar prompting expansion into the Asia Pacific region. The most significant threats facing Qantas include high fuel prices, the value of the Australian dollar and industrial action. A comprehensive financial analysis reveals that compared to other airlines, Qantas is…

Words 5321 - Pages 22

Critical Perspective In Accounting

Critical Perspectives on Accounting 20 (2009) 875–883 Contents lists available at ScienceDirect Critical Perspectives on Accounting journal homepage: www.elsevier.com/locate/cpa Understanding accounting through conceptual metaphor: ACCOUNTING IS AN INSTRUMENT? Joel Amernic a,∗ , Russell Craig b a b Joseph L. Rotman School of Management, University of Toronto, Toronto, Ontario M5S 3E6, Canada Department of Accounting and Information Systems, University of Canterbury, Private Bag…

Words 7091 - Pages 29

Finance: Capital Asset Pricing Model and Market Risk Premium Essay

LI Zhuochen WANG Yueyao ZHU Qianwen Table of Contents EXECUTIVE SUMMARY This report is first going to utilize the Mean-Variance theory and Capital Asset Pricing Model (CAPM) approach to calculate the expected risk and return of two stocks that are listed on the ASX- Woolworths Limited (ASX: WOW) and Qantas Airway Limited (ASX: QAN). It later critically examined and discussed rationales and assumptions of the two methods, including…

Words 5285 - Pages 22

Efficient Capital Markets A review of theory and empirical work Essay

American Finance Association Efficient Capital Markets: A Review of Theory and Empirical Work Author(s): Eugene F. Fama Source: The Journal of Finance, Vol. 25, No. 2, Papers and Proceedings of the Twenty-Eighth Annual Meeting of the American Finance Association New York, N.Y. December, 28-30, 1969 (May, 1970), pp. 383-417 Published by: Wiley for the American Finance Association Stable URL: http://www.jstor.org/stable/2325486 . Accessed: 02/08/2014 05:59 Your use of the JSTOR archive indicates your…

Words 13832 - Pages 56