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Scenario Analysis: Woolworths Ltd Accounting Analysis

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 following questions using the consolidated income statement, balance sheet, statement of cash flows and the notes to the financial reports.

1.    Does Woolworths Ltd use historical cost accounting or some other basis?
2.    What were the total assets at the end of the financial year?
3.    State the accounting equation for Woolworths Ltd in dollar figures at balance date for the end and beginning of the 2012 financial year.
4.    What changes have occurred in the company’s non-current liabilities over the year? Explain these changes.
5.    Does the change in total assets equal the change in total liabilities and the change in total equity? Explain.
6.    Did Woolworths Ltd have a 100 per cent beneficial interest in all its subsidiaries?
7.    What were the total revenue, net profit attributable to members of Woolworths Ltd and EBIT.
8.    Compare the net profit with the net cash flows from operating activities. Which amount is larger? Is this normal?
9.    What changes have occurred in the company’s financing activities? Explain these changes.
10.    What investment activity did Woolworths Ltd’ undertake during 2012? Was there a net investment or a divestment?

Summary

The question belongs to Accounting and it is about an Australian company named Woolworths Ltd. Several  questions about the company such as the historical cost accounting, total assets of Woolworths, its net profit and net cash flows analysis, etc have been answered in the solution.

Total Word Count 368

 

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