Executive Summary

In this report, we are working out the financial ratio figures of Woolworths ltd for the year 2012 to find out whether it is beneficial to invest in the business or not. We will talk about the chairman's and managing director's report too. The financial analysis of Woolworths has revealed some facts like it still has liquidity problems, which can be concluded on the basis of the current ratio, inventory turnover, and quick ratio. It shows that Woolworth's does not have the ability to cover its current liabilities using its current assets; there is no satisfactory improvement of Woolworth since the last year. If we look at the solvency ratio, the company has not improved from the previous as shown the adjusted debt to total asset ratio is only 1% increase, and declining interest coverage.. Woolworths has shown quite a declining rate for its overall profitability. For Woolworth's, right now it has decreasing sales and profits condition.

Woolworths in the Sydney CBD

English: Woolworths Limited headquarters in the No...

Caltex Woolworths Petrol Station, Wagga Wagga, New...

Woolworths needs to receive more investments to improve the future sales of company rather than sharing its earning with the shareholders. Woolworths has to control its expenses to improve its return on sales relative to the profit generation. It has to be very careful in its credit collection policies. The inventory should not be ordered at bulk. Woolworths should decrease the operating expenses accordingly. Woolworths have to do some promotional activities or the other way is to increase its receivables so that the company could receive the cash from the customers and thus it will increase the cash return on sales.

Introduction

In this report, we will focus on the some main areas of Woolworths ltd to see if it is a good industry to have investment with. Firstly we will discuss about the company, give a brief overview of its...