Essay: Contemporary Strategy Analysis For Text And Cases Method.

Financial Analysis

Discuss about the Contemporary Strategy Analysis for Text and Cases Method.

The current paper considers understanding the concerns based on the contemporary accounting within the world of accounting. In the report, two Australian companies was selected those are listed within Australian Securities Exchange (ASX). This encompasses Wesfarmers Limited and Woolworth Limited and both of the companies are associated with the retail sector of the nation. The annual reports of the selected companies namely west farmers Limited and Woolworth Limited over the years from 2014 and 2015. This has been considered in order to perform and compare the financial positions of both the companies (Freeman et al. 2014). Additionally, the adherence to annual reports along with conceptual structure and the AASB standards have been discussed in this paper. In addition to that, several screenshots have also been presented describing the calculations and relevant concepts for increased understanding. In addition, several other aspects of the yearly report of the selected two companies have been taken into consideration that encompass prudence, statements of finance notes and differentiation among the companies considering disclosures of each organization.

In consideration to the detailed research, it can be stated that the Wesfarmers Limited Company’s annual report abides by the AASB standards along with the conceptual structure. It is dependable in consideration to the approaches of the exposure draft of IASB (Grant 2016). The specific company complies with the “year 2013 Exposure Draft” and it is also included in the tax declarations of the company and is even mentioned within the report and the sector. For this reason, it is revealed that Wesfarmers considers invitation valuable gained after carrying out IASB initiatives specifically on the lease projects of the year 2012.

In contrast, Horngren et al. (2013) revealed that Woolworth Limited Company is a firm that has an objective to attain several opportunities after the elaboration of the specified concern within the previous comment letter. It indicates the leases possession that relies on the planned routine of leases. This link considers the leases along with several fiscal substitutes, which is aligned with the actuality of the economy. It was revealed that the specific company abides by IAS 17 for identifying the leases those are employed for the accounting treatment. This is because it supports the organization to deal with the economic implications within extended term arrangements along with the service contracts.

As per Li (2013) the prudence of the conceptual framework and the dependability that has an objective to deal with the disparities that is existent in the business reporting in a specific manner. In addition, it can be stated that such alternatives indicates such disparities these are observed only after the fair accountability and representation of the annual report declarations. For this reason, it has been revealed that the specific company encompasses several strategies that enhance the simplicity of the annual report declarations along with generating such declarations knowledge among the investors. Additionally, such disparities are revealed within the annual report declarations those are deemed as major concern for the accountability issue along with fair representation. This is because these are presented by means of IFRS consideration mentioned within the accounting standards of IASB and AASB (Parker 2012).

Conceptual Structure Analysis- Prudence in Business Treatment

Within the conceptual structure, both the prudence and the reliability concepts are taken into account in order to gain dependable fiscal data for the likely consumers and the investors of the Wesfarmers Limited Company. It can also be stated that such concepts facilitate in bringing in advancement among the likely consumers. This is majorly conducted through attaining the conclusions from the initial point in order to bringing out the conclusion from the administration. Therefore, the included prudence in the fiscal declarations of Woolworths Limited decides to present the fair representation of the fiscal information in consideration to the particular organization. Additionally, Quinn Jr (2014) indicated that such declaration offers fair view along with true value to the financial situation and operational aspects of two of the companies. This indicates that corporate reporting supports the governance of two of the companies.

As per Carey et al. (2014) the Wesfarmers Limited Company’s annual report for the year 2014, it can be stated that the specific company attained a revenue percentage of 6.1% other than the asset sales along with the amount of “pre-tax earnings” of Cole was deemed to be $ 167 billion. In contrast to that, the specific company is deemed the one among the largest supermarket that ranges from 4.5% and has an amount of $ 37.4 billion. Therefore, it signifies that the remuneration within the working place derives at 10.8 % rate that is close to a value of $ 103 million. For this reason, it was revealed that e revenue of Kmart is around 6.4% that serves as an amount of overall $ 366 million. In contrast, it has been stated that Woolworths Limited it generates 6.8% for the twelve months returns for over four years. After the comparison of both the companies, the rate has decreased by 23% for Woolworth Limited Company and was able to decrease the sufferers by less than 2% on annual basis.

It is observed that the needs of the AASB and IASB standards are extremely reliant on the expenses of accounting. The highlighted companies focus on developing a disclosure in consideration to managerial recompense along with regarding the employee advantages. Moreover, it was revealed that the AASB standards prepare the list of those companies those are within ASX and facilitates in disclosing the employee compensation plan along with the employee benefits every year (Guide 2013). The improving conducts are majorly centered and such concerns the major aspects of the corporate governance for two of the companies. It was revealed that in several plans in consideration to Corporate Disclosure, the company’s needs to represent the level of integrity along with for concerning the operations accountability for the businesses and their yearly accomplishment.

Assessment and Inequality among Annual Reports of Wesfarmers and Woolworths

Usually, the theoretical structure signifies the major parts of the annual reports. It is also seen that the financier usually employ the annual reports for gaining relevant information and knowledge in order to make any decision in consideration to the capital of the companies. Moreover, the business revelations consider the AASB and IASB standards into account for generating the tax declarations along with management disclosures. It was elaborated that in the IASB and AASB guidelines that the fiscal declarations supports and explains the company’s annual reports starting from notes to accounts (Henderson et al. 2015). This offers the company’s descriptions along with its financial situation in the marketplace. For this reason, it can be stated that the notes and the fiscal declarations focus on assisting the likely users in attempt for the upcoming evaluations.

In consideration to the annual report of the companies, both the companies namely Woolworths and Wesfarmers executive compensation offered with suitable share plans, incentives, and salaries along with payments of bonus. In addition, it can be stated that the company offers all such amounts to their employees with rewards within the financial period. Two of the companies have specific committee for remuneration that facilitates setting the compensation packages for its employees (Humphrey et al. 2014). Moreover, the corporate governance disclosures supports in compensating the employees for both the services and offer those are offered by the organizations. For this reason, the remuneration policies for the two organizations those are taken within the deliberation structure for the senior executives with the vital principles. The intentions of the major features those are associated within the companies in order to attain and retain the best person for efficiently performing within the place of work and for generating the revenue for the upcoming years.

These are the calculations for analyzing the inventories of Wesfarmers Limited and Woolworths Limited that have been conducted for 2014 and 2015. Considering the graph above, it can be observed that the inventories of Wesfarmers Limited Company boosted over the years 2014 and 2015. In contrast, the inventories of Woolworth Limited also boosted over the year from 2014 and 2015 (Kober et al. 2012). This is the reason for which, it is considered a vital factor for the two companies in effectively managing their current stocks for better production control and for dealing with the production shortages.

Considering the evaluation above, it was gathered that accounts receivable of Wesfarmers Limited Company’s reduced over the year from 2014 to 2015. In contrast, accounts receivable of Woolworths Limited Company reduced a bit from the year 2014 to 2015. For this reason, it can be stated that Woolworth Limited Company’s accounts turnover remained constant over two years from 2014 to 2015 (Kober and Ng 2013). For this reason, the companies must have increased current ratio in order to address the short-term compulsions.

Disclosure Identification of Both Companies

Considering the evaluation, it is stated that the companies namely Wesfarmers Limited and Woolworths limited signifies PPE intangibles to be negative. This indicates that the companies require acquiring assets that are more fixed in future.

It is seen by observing the graph above and the calculations, that the liabilities of Wesfarmers Ltd boosted by 2015 and 2014 and equivalently it resulted in case of Woolworths Ltd. Considering this, it can be stated that both the companies experience high debt and require increasing their assets in order to develop effective financial situation.

Wesfarmers Limited Company holds a lease for over fifteen years for choices and because of the same; its turnover in the year 2015 is observed to be $ 62.4 billion. In contrast to that, Woolworths Limited has a lease for over 12 years for the options that facilitates in accomplishing the future objectives of the company.

Wesfarmers Limited Company considers selecting the incentives metrics for the taxation policies and Woolworths Limited Company desires to select redesigning the anticipated level of transparency for effectible future evaluation.

In the Wesfarmers limited company, the prices of shares enhanced by 49% and amounted to $ 42.27

In the Woolworths Limited company, the price of share enhanced by 0.43% and amounted to $ 23.10.

Conclusion

It was gathered from the paper that both the organizations namely Woolworth Limited and Wesfarmers Limited must consider managing their inventory and must address their short-term business necessities. For this reason, both the companies must gather fixed assets for a particular year. The annual reports majorly consider the fiscal accounting reporting those are relied after taking into account the qualitative aspects of the fiscal declarations. Therefore, this paper has great focus on remuneration report, the basic pay, its concept and the incentives gained by the Executive Directors of the company. Additionally, this report identifies the significance of implementing the AASB standards within fiscal declarations in order to bring out the transparency along with the uniformity in the operational elements.

Reference List

Carey, P., Potter, B. and Tanewski, G., 2014. Application of the Reporting Entity Concept in Australia. Abacus, 50(4), pp.460-489.

Freeman, R.J., Shoulders, C.D., Allison, G.S., Smith Jr, G.R. and Becker, C.J., 2014. Governmental and nonprofit accounting: theory and practice. Jpaejournal Of Public Affairs Education Volume 20 Number 3, p.441.

Grant, R.M., 2016. Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.

Guide, P., 2013. Introduction to the Financial Framework. Financial Management.

Henderson, S., Peirson, G., Herbohn, K. and Howieson, B., 2015. Issues in financial accounting. Pearson Higher Education AU.

Horngren, C.T., Sundem, G.L., Schatzberg, J.O. and Burgstahler, D., 2013. Introduction to management accounting. Pearson Higher Ed.

Humphrey, C., O’Dwyer, B. and Unerman, J., 2014. The Rise of Integrated Reporting: Understanding Attempts to Institutionalize a New Reporting Framework. Centre for Social & Environmental Accounting Research (CSEAR), St Andrews.

Kober, R. and Ng, J., 2013. GAAP, GFS and AASB 1049: perceptions of public sector stakeholders. Accounting & Finance, 53(2), pp.471-496.

Kober, R., Lee, J. and Ng, J., 2012. Conceptual framework issues: perspectives of Australian public sector stakeholders. Accounting and Business Research, 42(5), pp.495-518.

Li, J., 2013. Accounting conservatism and debt contracts: Efficient liquidation and covenant renegotiation. Contemporary Accounting Research, 30(3), pp.1082-1098.

Parker, R., 2012. Comparative international accounting. Financial Times, Prentice Hall.

Quinn Jr, E., 2014. The Evolution of Accounting Theory in Response to Market Changes. International Journal of Academic Research in Business and Social Sciences, 4(10), p.509.

Wesfarmers.com.au. 2016. Reports. [online] Available at: https://www.wesfarmers.com.au/investor-centre/company-performance-news/reports [Accessed 9 Aug. 2016].

Woolworthslimited.com.au. 2015. Reports - Woolworths Limited. [online] Available at: https://www.woolworthslimited.com.au/page/Invest_In_Us/Reports/Reports [Accessed 9 Aug. 2016].