Financial performance analysis is one of the basic needs for an organization. It shows the capabilities of the company to survive in the market in short as well as long-run. Analyzing the financial performance in a detailed manner the companies can develop better strategies for the future because proper financial analysis helps in forecasting the situation in a better way. Moreover, in the current competitive era of business the financial performance analysis helps the company remaining competitive in the market. At the same time the efficient financial analysis can make the decision making process easier for the company. In this study the financial performance of Woolworths Limited will be analyzed using their financial statements and financial ratios as the tool for analysis. Mainly four types of financial ratios will be analyzed and these are – profitability ratio, efficiency ratio, liquidity ratios and gearing ratio
Woolworths Limited is one of the major retail firms in the market of Australia and in the international belt. The company is operating business in the Australian Market since a long period. The company is currently operating different developed and developing countries (Woolworths.com.au, 2018). It has a wide product range including different types or diversified products. The company also has a strong employee base of more than 10000 employees. The company is operating a successful business not only in Australia, but also in New Zealand and India. However, in the current scenario due to the presence of several new retailers the company that is Woolworths Limited is facing major trouble in handling its financial performance. The company is facing trouble in enhancing its customer base and meeting the needs of the customers properly. However, with the help of this study the actual financial state of the company will be disclosed and proper recommendations will be made for the betterment of the company (Woolworths.com.au, 2018).
A financial statement can be referred to as the source, which provides with financial data and information related to an organization (Wahlen, Baginski & Bradshaw, 2014). The financial position and performance of a company can be analyzed and evaluated from its financial statements. For example, a detailed idea can be developed on the financial stability and performance of Woolworths Limited from analyzing the financial statements of the company. Financial statements prepared and presented in a company can be of several types. For example, the four obligatory financial statements that every organization requires preparing include the income statement, the statement of financial position, the cash flow statement and the statement of changes in equity. The following discussions evaluate the financial statements, the present financial performance and the economic outlook of the company Woolworths Limited -
(a) Evaluation of the profit and loss statement
From the interpretation of Woolworths Limited’s profit and loss statement, it can be evaluated that there has been quite an improvement in the financial performance of the organization from Year 1 (2016) to Year 2 (2017). It can be noticed that the level of income earned by the company has improved in the last two years. The huge loss that it had incurred during 2016 has been recovered during 2017.
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Woolworths.com.au. (2018). [online] Available at: https://www.woolworths.com.au/[ [Accessed 17 Aug. 2018].
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