Corporate Financial Analysis Assignment Sample

Part 1: Executive Summary

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The management team, particularly the Chief Executive Officer, periodically reviews internal documentation on the company's various divisions to discover reportable sections from maintaining operations in order to distribute money to the segment and evaluate how it is performing. The subject to reporting sections from continuing activities of the Organisation have varied degrees of interconnectedness. This covers routine use of resources, offerings, and management duties. Pricing for inter-segments is decided on a commercial basis. The aforementioned companies are run autonomously and supply various goods and services or cater to various consumers.

Additionally, the impact of the uncertainties is represented in the time frame in which the choice is taken if it is not expected that the therapy will be authorized. Any tax approach used by the Group when theme's unclear if the correct tax authority will approve it qualifies as an ambiguous tax procedure. The directors of Coles Group Limited (the "Company") designated the release of the financial statements on behalf of the business in question and the businesses that it governed on the date of reporting or during the 52-week time frame finished on June 26, 2022 (collectively, "Coles" or "the Group") on the 24th of August, 2022.

Part 2: Financial Analysis

i) Ratio Analysis

Woolworths (WOW)

Profitability

Results	2022	2021
Return on Equity (ROE) =	30.06%	91.47%
Return on Assets (ROA) =	5.96%	5.36%
Results	2022	2021
Gross (Profit) Margin	42.15%	41.44%
EBIT Margin	6.28%	7.01%
Net Profit Margin =	18.56%	5.43%
Operating Cash-Flows to Revenue	5.55%	8.30%

Table 1: Profitability Ratios

(Source: Self-Created)

Asset efficiency

Results for the 2022 Year	2022	2021
Asset Turnover	0.91	0.69
Days Inventory	49.69	47.86
Days Debtors	20.30	15.32
Inventory Turnover	7.35	7.63
Debtors Turnover	17.98	23.82

Table 2: Asset Efficiency Ratios

(Source: Self-Created)

Liquidity

Results	2022	2021
Current Ratio	0.54	0.27
Liquid Ratio	0.21	0.09
Accounts Payable Days	44.80	84.39
Operating Cycle	0.31	0.26
Days Working Capital Requiring Financing	6,341.89	6,302.35
Operating Cash flows ÷ Current Liabilities	0.31	0.26

Table 3: Liquidity Ratios

(Source: Self-Created)

Capital structure

Results	2022	2021
Debt to Equity ratio	4.54	27.19
Debt to total Assets	81.7%	95.6%
Times Interest Coverage	4.49	4.61
Long-term debt Coverage	4.86	3.11

Table 4: Capital Structure Ratios

(Source: Self-Created)

Market-based performance measures

Results	2022	2021
Earnings Per share (basic) - cents per share	$1,071.900	$1,091.900
Dividends cents per share	$644.80	$164.20
Dividend Payout Ratio	60.15%	15.04%
Earnings yield	19.93%	86.13%
Dividend yield	11.99%	12.95%
Price/earnings (times)	5.0	1.2
Total shareholder return	661.97%	231.14%

Table 5: Market Based Performance Ratios

(Source: Self-Created)

Coles (COL)

Profitability

Results	2022	2021
Return on Equity (ROE) =	175.79%	186.33%
Return on Assets (ROA) =	5.56%	5.78%
Results	2022	2021
Gross (Profit) Margin	26.76%	26.39%
EBIT Margin	5.75%	5.96%
Net Profit Margin =	2.66%	2.60%
Operating Cash-Flows to Revenue	6.77%	7.28%

Table 6: Profitability Ratios

(Source: Self-Created)

Asset efficiency

Results	2022	2021
Asset Turnover	2.11	2.15
Days Inventory	28.46	26.00
Days Debtors	3.86	2.96
Inventory Turnover	12.83	14.04
Debtors Turnover	95.09	92.31

Table 7: Asset Efficiency Ratios

(Source: Self-Created)

Liquidity

Results	2022	2021
Current Ratio	0.58	0.59
Liquid Ratio	0.20	0.23
Accounts Payable Days	0.08	0.08
Operating Cycle	0.42	0.49
Days Working Capital Requiring Financing	6,386.50	6,386.44
Operating Cash flows ÷ Current Liabilities	0.42	0.49

Table 8: Liquidity Ratios

(Source: Self-Created)

Capital structure

Results	2022	2021
Debt to Equity ratio	14.68	15.33
Debt to total Assets	83.4%	84.5%
Times Interest Coverage	4.72	4.39
Long-term debt Coverage	3.46	3.35

Table 9: Capital Structure Ratios

(Source: Self-Created)

Market-based performance measures

Results	2022	2021
Earnings Per share (basic) - cents per share	$1,071.900	$1,091.900
Dividends per share	$644.80	$164.20
Dividend Payout Ratio	60.15%	15.04%
Earnings yield	27.10%	37.23%
Dividend yield	16.30%	5.60%
Price/earnings (times)	3.7	2.7
Total shareholder return	529.13%	383.65%

Table10: Market Based Performance Ratios

(Source: Self-Created)

ii) Segment operations

Woolworths		Coles
2022	2021	2022	2021
Segment Revenues	60,849	55,733	39,369	38,585
Segment Expenses	10,701	9,838	8,756	8,392
Segment EBIT	2,691	2,823	1,869	1,873
Segment EBIT margins (EBIT ÷ Revenue)	4.42%	5.07%	4.75%	4.85%
Growth Considerations?	(2022 - 2021) ÷ (2021)		(2022 - 2021) ÷ (2021)
Segment Revenue Growth	9.18%		2.03%
Segment Expenses Growth	8.77%		4.34%
Segment EBIT Growth	-4.68%		-0.21%

Table11: Operational Segmentation

(Source: Self-Created)

An administrative categorization is a division of the market that informs operational choices such as how every consumer and prospective customer is welcomed, which customers receive which provides, and what prices consumers have to deal with on a day-to-day basis. As per the opinion of Alshehhi et al. (2018), an administrative categorization is a division of the market that informs operational choices that include how each and every consumer and potential client is welcomed, which clients receive which provides and what prices they are presented with on a day-to-day basis (colesgroup.com, 2023). In the process of segmentation, there is no straightforward connection between virtual addresses and physical locations.

iii) Governance

Woolworths		Coles
2022	2021	2022	2021
Total Board Remuneration ($millions)	$2,332.000	$3,252.000	$12,773.000	$15,793.000
Number of Directors	35	32	42	36
Board Compensation ÷ Total Revenue	19.4301%	24.1006%	58.8128%	39.3469%
Total Executive Compensation (KMP Remuneration) ($million)	$18,492.000	$20,171.000	$27,136.000	$31,182.000
Number of Executives (KMP)	578	682	272	312
Total Executive Compensation ÷ Total Revenue	30.390%	36.192%	68.927%	80.814%
Total Fees Paid to Auditor for Both Audit & Non-Audit Services ($millions)	$21,197.000	$23,155.000	$27,195.000	$22,175.000
Auditor Remuneration ÷ Total Revenue	20.9913%	22.1269%	25.7944%	28.8506%
Auditor Remuneration ÷ Total Assets	38.3885%	31.4303%	53.9127%	61.4247%
Total OPERATING Revenue as per Income Statement ($Million)	$61,146	$55,885	$39,746	$38,955
Total Assets as per Balance Sheet	$33,273	$39,236	$18,836	$18,123

Table12: Governance Segmentation

(Source: Self-Created)

In order to broaden into emerging markets and enhance the amount they make, businesses may be able to use segmenting of the market to find areas that are neglected. In fact, 81% of directors cited segmentation of the market as a key factor in increasing earnings in a 2008 study by Bain & Company research (Xie et al. 2019). Segmenting suppliers to select the important (strategic) vendors with whom to participate in SRM, it is necessary to categories suppliers in accordance with a predetermined set of characteristics.

Part 3: Social Analysis

i) Employee benefits

Woolworths		Coles
2021	2020	2021	2020
Employee Benefits Expense ($Million)	$8,812	$7,742	$9,875	$12,455

Table13: Employee Benefit

(Source: Self-Created)

ii) Number of employees

Total Number of Employees (Actual Number)	1,97,000	44,113	1,20,000	1,21,000
Average Salary per employee	21,722	21,195	23,143	24,133

Table14: Number of Employees

(Source: Self-Created)

iii) Employee benefit expenses / Total revenue

Employee Benefits Expense ÷ Total Revenue	14.48%	13.89%	16.23%	22.35%
Total OPERATING Revenue as per Income Statement ($Million)	$61,146	$55,885	$39,746	$38,955
Total Assets as per Balance Sheet	$33,273	$39,236	$18,836	$18,123

Table 15: Employee Benefits

(Source: Self-Created)

iv) Employee benefit expenses / total number of employees

Employee Makeup - Based on Total Employees	-71,270	81,617	5,730	4,730
Total Employees	1,97,000	44,113	1,20,000	1,21,000
Female	78,800	17,645	48,000	48,400
Male	1,18,200	26,468	72,000	72,600
Gender
Indigenous Team members as % of total workforce	11.03%	48.05%	19.29%	19.94%

Table16: Employee Makeup

(Source: Self-Created)

Putting makeup must be voluntary unless there currently is a trustworthy commercial need, such in models. Employers usually possess the right to impose a physical appearance and clothing code on those who work for them; provided that it is administered equally to both sexes and that its requirements are equivalent. As per the opinion of Balasubramanian et al. (2019), considering the fact that false lashes may be your greatest companion at work, if it is applied improperly, it can go from showing up neat and competent to a full and total disaster.

Continue reading to learn what's effective along with what doesn't in the workplace. There are several explanations for organization culture, and each one expresses an alternate perspective of how the concept manifests itself in an organization. An updated, extended, and worldwide collection of information confirms the highly significant relationship between a more varied group of leaders and financial greater success found three years ago.

Part 4: Environmental

Environmental performance of the two Companies

Receipt of revenue is deferred in contracted receivables under commercial and other invoices in the overall contention of economic condition when expenditure for the consequences has been made before authority decrees to the consumer (Xie et al. 2019). Additionally, at each date of reporting, the total amount of carrying value of tax-deferred assets is evaluated and lowered to the extent that it no longer appears anticipated that there will be enough taxable earnings to allow for the recovery of all or a portion of the assets. Insofar as it is likely that taxable profits will be provided to offset deductible momentary variations, tax deferral assets are recorded.

Forecasted cash flows for the future are calculated based on the Company's most recent internally five-year projections for the entire company that has been authorized by the Supervisory Board, and they represent the company's most accurate forecast of revenue, costs, capital expenditures, and capital flows for each asset or CGU (Gangi et al. 2018). The kept going effects of the COVID-19 pandemic on revenue and costs have been taken seriously in internal predictions. Expected potential earnings have been lowered to their current worth using discounted values that are modified for asset- or CGU-specific concerns to represent the average, weighted cost of capital for the Group.

Part 5: Conclusions

Based on the above discussion it can be concluded that the ratio analysis has been done for the two companies such as Woolworth and Coles Limited for the financial year of 2021 and 2022. The leadership's projection of anticipated shifts in the markets in the Group participates and previous experiences are used to determine adjustments in the price of sales and direct expenses. This is done until the items have been shipped to, or recovered by, the customers. Any tax approach used by the Group when themes unclear if the correct tax authority will approve it qualifies as an ambiguous tax procedure.

A qualitative evaluation of the Group's projections regarding the financial hazards associated with the impact of climate change has also been done with the goal to take into account any possible negative financial effects on the accumulated value of goodwill. As a result, actual earnings might deviate from estimations, changing the amount of depreciation that would be recognized in the subsequent quarters. There were no significant financial reporting consequences found in this assessment. The conclusions and projections used to determine depreciation are approximates based on the present and anticipated market dynamics and are subject to revision in the event that operations and economic circumstances shift.

References

• Alshehhi, A., Nobanee, H. and Khare, N., 2018. The impact of sustainability practices on corporate financial performance: Literature trends and future research potential. Sustainability, 10(2), p.494.
• Balasubramanian, S.A., GS, R., P, S. and Natarajan, T., 2019. Modeling corporate financial distress using financial and non-financial variables: The case of Indian listed companies. International Journal of Law and Management, 61(3/4), pp.457-484.
• Gangi, F., Mustilli, M. and Varrone, N., 2018. The impact of corporate social responsibility (CSR) knowledge on corporate financial performance: evidence from the European banking industry. Journal of Knowledge Management, 23(1), pp.110-134.
• Xie, J., Nozawa, W., Yagi, M., Fujii, H. and Managi, S., 2019. Do environmental, social, and governance activities improve corporate financial performance?. Business Strategy and the Environment, 28(2), pp.286-300.
• Xie, X., Huo, J. and Zou, H., 2019. Green process innovation, green product innovation, and corporate financial performance: A content analysis method. Journal of business research, 101, pp.697-706.

Website

• colesgroup.com, 2023, About us. Available at: https://www.colesgroup.com.au/FormBuilder/_Resource/_module/ir5sKeTxxEOndzdh00hWJw/file/Annual_Report.pdf [Accessed on: 15^th July, 2023]
• woolworthsgroup.com, 2023, Annual report. Available at: https://www.woolworthsgroup.com.au/content/dam/wwg/investors/reports/2022/full-year/Woolworths%20Group%20Annual%20Report%202022%20print%20friendly.pdf [Accessed on: 15^th July, 2023]