Woolworths Financial Ratios

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Introduction Woolworths is the largest supermarket/grocery store chain in Australia, owned by Woolworths Limited. It is the largest retail company in Australia and New Zealand by market capitalization and sales. Along with Coles, Woolworths form a near duopoly of Australian supermarkets, together accounting for about 80% of the Australian market. Woolworths currently operates 933 Woolworths stores across Australia. FY14 Key Financial Highlights 2014 2013 Sales $60.8b $58.6b Gross Profit $16.4b $15.7b Earnings Before Tax (EBIT) $3775m $3595m Net Profit $2451.7m $2259m Total Assets $2.4b $2.2b Total Liabilities $1.3b $1.2b Shareholder’s Equity $10b $9300m Key Profitability Ratios: Profit Margin = Net Income/Net Sales…show more content…
Favorable liquidity ratios are critical to a company and its creditors within a business or industry that does not provide a steady and predictable cash flow. They are also a key predictor of a company’s ability to make timely payments to creditors and to continue to meet obligations to lenders when faced with an unforeseen event. The inventory turnover ratio is an efficiency ratio that shows how effectively inventory is managed by comparing cost of goods sold with average inventory for a period. This measures how many times average inventory is "turned" or sold during a period. The inventory turnover ratio for Woolworths is 10, which is comparable to the baseline of 10. The Receivable Turnover Ratio measures how many times a business can turn its accounts receivable into cash during a period. In other words, the accounts receivable turnover ratio measures how many times a business can collect its average accounts receivable during the year. From a 5 yr. standpoint, Woolworths collects its receivables every 20 days where the baseline is a month. Higher efficiency is favorable from a cash flow standpoint as well. If a company can collect cash from customers sooner, it will be able to use that cash to pay bills and other
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