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When downloading the annual reports it's a good idea not to print the whole report as they can be over 100 pages long.
When downloading the annual reports it's a good idea not to print the whole report as they can be over 100 pages long. From the following link download Woolworths Limited's annual report for 2017
https://www.woolworthsgroup.com.au/icms_docs/188795_annual-report-2017.pdf
Go to page 53 where you will find the financial statements.
In the 2016 annual report the financial statements can be found on page 55. Here's the link:
https://www.woolworthsgroup.com.au/icms_docs/185865_annual-report-2016.pdf
You will need the 2016 results when calculating average inventory and average receivables for the 2016 efficiency ratios. You can access the closing market price of Woolworth's shares at
https://au.finance.yahoo.com/quote/WOW.AX/history?period1=1492180200&period2=1498746600&in terval=1d&filter=history&frequency=1d
Required
A Calculate the following ratios for 2017 and 2016: Current and Acid Test ratios Inventory turnover and days in inventory Gross profit percentage, accounts receivable turnover and days sales in receivables Debt ratio and debt to equity ratio Rate of return on net sales ratio and rate of return on total assets ratio Asset turnover ratio and the rate of return on ordinary shareholders equity Dividend yield and dividend payout. (24 marks)
B Using the ratios calculated in Part A and information gathered from elsewhere in the Annual Reports write a report to a potential investor with your recommendations as to whether Woolworths Limited would make a good investment.
(The report should not be just a re-statement of the ratio calculations but an interpretation of them. Any calculations should be contained within an appendix and not in the body of the report. Remember the report is to a potential investor so the ratios must be of interest to them. Remember a business report will need: a report structure, title (including reference to whom the report is addressed), author, executive summary, introduction, findings, and a conclusion. Marks will also be awarded for presentation, business English, content, and where relevant, references.) (20 marks)
C As a rule of thumb the Current Ratio for businesses should be 2:1 and the Acid Test between1.5 to 1 How would you explain these ratios for Woolworths Limited when compared to this rule?
