Wesfarmers group is one of the largest retail sector in Australian market that are listed in Australian stock exchange. The business operations of organization is diverse that involves hotel, supermarket, liquor, departmental store, home improvement and has several industrial divisions such as chemical, fertilizers and coal.
Statement of comprehensive income:
The profit attributable to the parent company members has reduced drastically from $ 2440 in year 2015 to $ 407 in ear 2015. Component of profit involves comprehensive income, retained earnings and cash flow hedge reserves (Zhang & Ni, 2016). There was no cash flow hedge reserves in current year.
Commenting on several items of group using ratio analysis:
Dividend- Dividend payment is an important component of shareholder return. Payment of dividend to shareholders in year was recorded at $ 2270 million.
Earnings per share- The diluted and basic earnings per share stood at same value in year 2016. Earning per share for year 2016 was calculated at 36.2 as against 216.1 in year 2015 that indicated a considerable fall.
Return on equity-Return on equity indicates the return generated to shareholders and it can be seen from figure that ratio has fallen in year 2016. Return on equity was recorded at 1.71% in year 2016 as compared to 9.61% and 10.34% in year 2015 and 2014 respectively (Marshall, 2016).
Working capital ratio- Working capital ratio is calculated at 0.93 for two consecutive years as against 1.13 in year 2014. This indicates that liquidity position of organization has reduced in recent year.
Risk and mitigation- For managing the risks associated with organization, Wesfarmers group has risk management framework. The importance of identifying, managing and monitoring material risks associated with group’s activities is recognized by organization. Operations of business or competitive dynamics might be affected by affected by several level of risks (Shevelev et al., 2017). In order to deal with issues relating to business activities, organization has appropriate strategies in place.
Sustainability- Sustainability is one of the factors that has helped organization in achieving competitive advantage over its competitors. Consistent performance of organization has helped in remaining sustainable.
Corporate governance- While preparing several reports and carrying out their business activities, Wesfarmers intends to complies with the corporate governance principle that is listed in the standard of ASX corporate governance principal.
Income statement- Income statement of Wesfarmers group provides with status of revenue, expenses, earning before income and tax, earning per share and profits that is attributable to parent company members. There has been significant fall in profit from $ 2440 million in year 2015 to $ 407 in year 2016 (wesfarmers.com.au 2017).
Balance sheet- Balance sheet of Wesfarmers has two main items that involve total value of assets and total value of liabilities. Total value of assets is recorded at $ 40783 in year 2016 that involves the value of current assets and current liabilities. Total value of total for year $ 17834 in year 2016 and other items involve total value of equity that stood at $ 22949 (wesfarmers.com.au 2017).
Net profit after tax-
Amount ($ m)
Net profit after tax
Recommendation to Vikram:
Wesfarmers has been performing consistently in past few years, although there has been fall in profit. Nonetheless, there is scope for improving the efficiency of operations of organization. Performance of Wesfarmers can be enhanced if there is efficient utilization of existing assets. Therefore, Vikram should invest its $ 50000 in organization that would generate stable return in ling-run.
Zhang, L., & Ni, G. A. (2016). Research on Accounting Information System Based on Business Process. International Journal of Simulation--Systems, Science & Technology, 17(7).
Marshall, D. (2016). Accounting: What the numbers mean. McGraw-Hill Higher Education.
Shevelev, A. E., Sheveleva, E. V., & Gvozdev, M. Y. (2017). Methods of internal control in integrated management accounting system of the enterprise. In SHS Web of Conferences (Vol. 35, p. 01115). EDP Sciences.Wesfarmers.com.au. (2017). Retrieved 19 September 2017, from