Introduction
This report has focused on Wesfarmers that has been established in 1984 by Westralian Farmers Cooperative Limited. It was formed by taking requirements of farmers in Western Australia for providing services and financial support to Westralian Rural Community. Wesfarmers has been enlisted in the Australian Stock Exchange. It compromises of various departmental stores, supermarket, coal mining, energy resources and industrial product. Wesfarmers has been one of the largest employer having 217,000 employees and around 49500 shareholders (Wesfarmers.com 2019). This report include four financial statements of the company that include statement of financial position, change in equity statement, income statement and cash flow statement. These statements provide financial analysis of the Wesfarmers.
Statement of Financial Position
| Particulars | 2017 (AUD in billions) | 2018 (AUD in billions) | Percentage change |
| Total Current assets | 9667 | 8706 | 9.61 % |
| Total Noncurrent assets | 30448 | 28227 | 22.21 % |
| Total Current Liabilities | 10417 | 10025 | 3.92 % |
| Total Noncurrent Liabilities | 5757 | 4154 | 16.03 % |
| Total shareholders’ Equity | 23941 | 22754 | 13.67 % |
(Source: Wesfarmers.com 2018)
Statement of financial position has been a type of financial statement that helps in focusing on financial performance of an organization in an accounting year. It helps in providing data related to the financial performance of organization in one year. It has been identified and analysed that financial performance of Wesfarmers have been decreasing in the market including its value of shares from 2017 to 2018. The total current asset of the organization has reduced by 9.61 % in 2018 than that of previous year (Wesfarmers.com 2019). Therefore, it refers that financial strength of Wesfarmers has decreased in 2018 with compare to 2017. The noncurrent assets of Wesfarmers has gone down by 22.21 % in 2018 which reflects that organization has released fixed assets in 2018 than that of 2017. The current liability of this organization in 2018 had decreased by 3.92 %. The noncurrent liabilities of Wesfarmers has declined in 2018 that means the company has long term liabilities has reduced by 16.03 % (Wesfarmers.com 2019). Therefore, it can be analysed that organization has been meeting strong financial position in long term debts. The long-term asset has been increased but are not converted into cash. Along this this, equity of shareholders of 2017 have been more than that in 2018.
Shareholder’s Equity
It is the statement that shows change in the equities of the company in a financial year. The equity shareholders statement gives clear picture of fluctuations in equity of the company.
| Particular | 2017 (AUD millions) | 2018 (AUD millions) | Percentage change |
| Common stock | 23,708 | 22,965 | 7.43 % |
| Retained earnings | 3241 | 3042 | 1.99 % |
| Treasury stock | 565 | 463 | 1.02 % |
(Source: Wesfarmers.com 2018)
The above table interpret about shareholder’s equity of the Wesfarmers during the year of 2018. The common stock of Wesfarmers has been AUD 23708 million during 2017 that has been decreased to AUD 22965 million during the year 2018. The retained earnings of the Wesfarmers have been decreasing. The net income of the company increases, the retained earnings of the company have decreased to AUD 3049 million by June 2018. This indicates that the net income of company increases. The retained earnings of the company have decreased in 2018. The treasury stock has decreased in 2018 and it was AUD 565 million in 2017 which has decreased in 2018 by AUD 463 million. There has been reduction in treasury stock by 1.02 % (Wesfarmers.com 2019). It has been analysed that this organization has not been able to perform well in the market with respect to previous year. Wesfarmers has been losing their effectiveness and market value.
Profit and Loss Statements
Profit and Loss statements has been known as income statement that helps in revealing expenditure and income of an association in one financial year. It helps in reflecting net profit and loss of the association. It include different types of income and expenditure of the organization in two columns. In case, expenditure of the company get increased than that of income, it shows loss of the company and accordingly vice versa. It incorporates all expenses excluding factory expenses on the left side column. If the expenses get increased, the revenue of the company, it generates net loss of the company.
| Particular | 2017 (AUD in millions’) | 2018 (AUD in millions’) | Percentage change |
| Total Operating Revenue | 3865 | 4015 | +1.5 % |
| Cost of goods sold | 44963 | 47296 | + 23.33 % |
| Total expenses before income tax | 59343 | 61983 | +26.40 % |
| Non-operating gains and losses | 387 | 498 | + 1.11 % |
| Earnings per common share | 257 | 209 | -0.48 % |
(Source: Wesfarmers.com 2018)
The above data focuses on total operating revenue of the Wesfarmers in 2018 has increased by 23.33 % that means the company has been able to cut down and increase profit. The cost of goods sold has been increased by 23.33 % while expenses has been increased by 26.40 % that shows that decreased efficiency of the company has reduced with cost comparison of 2017 (Wesfarmers 2016). The other expenses have been increasing that giving the high cost to the company in turn increasing cost of the goods.
Cash Flow Statement
Cash flow statement helps in showing cash position of the company. It depicts cash inflow n outflow of the company.
| Particular | 2017 (AUD in millions’) | 2018 (AUD in millions’) | Percentage change |
| Net cash inflow/used in from operating activities | 4226 | 4080 | 1.46 % |
| Net cash inflow from/used in financing activities | 3771 | 3752 | 0.19 % |
| Net cash inflows from/used in investing activities | 53 | 658 | 6.05 % |
| Net increase or decrease in cash during the year | 1013 | 683 | 3.3 % |
(Source: Wesfarmers.com 2018)
It has been found that the Wesfarmers earned $4080 million from operating income in 2018 that has been higher than cash inflow from operating activities in 2017 is $4226 million. The net cash inflow from operating activities increased by 1.46 % in the year 2018. The cash has been used in financing condition which is helping in minimizing payment and borrowing.
Conclusion
The above analysis has discussed on financial performance of association which has not been able to maintain its performance in 2018 compared to 2017. The analysis helps in providing data and information related to weak points of association. This analysis might help in identifying issues in the association and implementing proper steps to recover losses in year 2018. It can be analysed Wesfarmers has experienced problem of liquidity in the year 2018. The cash inflow of association has been decreased and the cash outflow has been increased in 2018.
References
Bari, A., Peidaee, P., Khera, A., Zhu, J. and Chen, H., 2019, March. Predicting Financial Markets Using The Wisdom of Crowds. In 2019 IEEE 4th International Conference on Big Data Analytics (ICBDA) (pp. 334-340). IEEE.
Nwogugu, M.C., 2016. Corporate Governance, Financial Stability and Evolving Insurtech: The Case of Insurance Australia Group (2011-2016). Financial Stability and Evolving Insurtech: The Case of Insurance Australia Group (2011-2016).
Wesfarmers, (2019) Wesfarmers: who we are [Online]. Available at: https://www.wesfarmers.com.au/.
Wesfarmers.com (2018), Wesfarmers.com, Available at :https://www.wesfarmers.com.au/docs/default-source/asx-announcements/appendix-4e-and-2018-full-year-results.pdf?sfvrsn=0
Wesfarmers.com (2018), Wesfarmers.com, Available at:https://www.wesfarmers.com.au/docs/default-source/asx-announcements/2018-annual-report.pdf?sfvrsn=0.
