Scenario Analysis: Accounting Review of Woolworths Ltd

Question

During 2012 the Australian company Woolworths Ltd (WOW) sold its subsidiary business called Dick Smith Electronics. Within 8 months of the FOR SALE sign going up Anchorage bought the Dick Smith Business for $20 million. This is the same amount Woolworths Ltd bought the Dick Smith Business for 30 years ago. (Woolworths Ltd bought the business from Dick Smith the man.) Refer to the 2012 preliminary financial report of Woolworths Ltd (WOW) on their Web site http://www.woolworthslimited.com.au/. (Actual report address is http://www.woolworthslimited.com.au/icms_docs/135571_FY12_Preliminary_Final_Report.pdf) Answer the question
Comment on the similarity between the purchase price 30 years ago from Dick Smith and the sales price to Anchorage. Specifically, do you feel that the $20 million investment was worthwhile for the shareholders of Woolworths Ltd? Why or Why not?
 
Summary

The question belongs to Accounting and it is about accounting review of an Australian company Woolworths Ltd. This particular question is purchase price and sales price comparison of an investment by Woolworths Ltd.

Total Word Count 48

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