Financial Management Assignment

David Crocker


Financial Management Assignment

25 February, 2016


1. Introduction 3

2. Ratios 4

2.1 Short-term Solvency or Liquidity Ratios 3

  * 2.2 Efficiency Ratios 3
  * 2.3 Profitability Ratios 4
  * 2.4 Financing Ratios 4
  * 2.5 Market-based Investment Ratios 4

4. Evaluation 5

5. Conclusion 6

6. Bibliography 7


Wesfarmers Limited had its origins in 1914 as a Western Australian farmers’ cooperative. Wesfarmers has since grown into one of Australia’s largest listed companies with diverse operations covering supermarkets, department stores, home improvement and office supplies, coalmining, insurance, energy and fertilizers and industrial and safety products.
This report provides a brief analysis of the financial performance and standing of Wesfarmers Limited between 2010 and 2011 Financial Years through the use of Financial Analysis Ratios. Using Wesfarmers Financial Report 2011 and values from their 2010 report (to obtain yearly averages to remove the effect of seasonal fluctuations), the five key financing ratios are calculated:

  * The liquidity ratios indicate the company’s ability to pay off short-term liabilities.
  * The efficiency ratios demonstration how effective the company’s payments and 
inventories are managed.
  * The profitability ratios show how well the company did in their overall 
  * The financing ratios indicate how the company manages their long term solvency.
  * And the investment ratios help determine whether the company is worth investing 
in and what direction they could be heading. 

These ratios indicate how well Wesfarmers performed as well as provide insight into some changes that have occurred between 2010 and 2011.

Question 1

Short-term solvency or liquidity ratios | 2010 | 2011 |...