Financial analysis of Woolworths Limited (WOW) and Foster's Brewing Group Limited (FBG)

Essay by frozzerUniversity, Bachelor'sB+, April 2004

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Introduction and Overview

This report is to compare the performances of Woolworths Limited (WOW) and Foster's Brewing Group Limited (FBG) using the two respective 1996 Annual Reports, and to assess the investment value of the two companies since investment value depends on past, current and future performance. Investment value can be determined by looking at the return and risk and understanding the future plans of a company.

WOW is primarily a retailer, selling food and general merchandise through chain store operations within Australia, while FBG is an international corporation which produces and markets alcoholic and non-alcoholic beverages, as well as having a major investment in licensed properties.

Within this report, we disclose various details about the two companies, and see that the performance of WOW and FBG during 1996 is good. WOW has continued to be a stable company, and FBG has continued to expand and restructure its operations.


When comparing the return on assets for WOW and FBG, WOW has a higher ratio of 12.63%

compared to FBG's 7.19%. However, it does not immediately follow that FBG's performance was poorer than WOW's. The nature of the business must first be considered. Although the two companies have similar EBIT, the large difference in the two ratios is accounted for by a considerable difference in the value of the total assets. FBG, a producer of beverages, has a lot of non-current assets (84% of total assets) as well as inventory on hand, while WOW is a retailer, and thus would have less need for non-current assets, with inventory being the largest component of its assets (44%).

FBG is continuing to develop and grow in two main areas. Firstly, FBG has invested in setting up Foster's China, currently operating at a loss. However, once this is developed, there will be a...