Stage 2 links

Following are the links to the blogs with my comments:

Rachel Fettes
Aireen Doodson
Anna Meresi Towan
Cherry Anna Jenna Kees
Kees N Iris Onvlee
Hussein Mohd Jaber

Comments and KCQ's

Comments:
The Annual reports I found under 'Reports' didn't have Financial reports in it. When firms release Financial Accounting for stockholders, creditors and others outside the Organisation, they should be easily traced. I found it really hard to trace the correct ones. That is the only trouble I had with Woolworths Financial Reports. Other than that I am happy about the company I am given. Unlike Woolworths, Myer is presenting its Financial Reports in an easily traceable way.

KCQ

Annual Reports                                                                                                                      
Woolworths http://www.woolworthslimited.com.au/annualreport/2013/downloads/WoolworthsLimited_AnnualReport_2013_FullReport.pdf        
Myer                                            file:///C:/Users/Dheepaapp/Downloads/Myer_Annual_Report_2013%20(2).pdf 

I checked all the above annual reports. The balance date for Myer is 27 July and for Woolworths is 26 June.

There are too many balance dates in my company's changes in equity. I know that the balance date for Woolworths is 26 June, but it has got 24,26,27 and 28th June. Why? Please provide your views about this.

Martin's reply:

Woolworths - like many retail businesses - produces its accounts for 52 weeks each year ... not a full 365 days (52 weeks plus 1 day) or 366 days in leap years, such as 2012 (52 weeks plus 2 days).

This means its balance date keeps changing slightly each year... in the case of Woolworths, 30 June in 2013 (53 week period), 24 June 2012 (52 weeks), 26 June 2011 (52 weeks) and 27 June 2011 (52 weeks).

These dates appear as the date for the closing equity balance each in year in Woolworth's Statements of Changes in Equity. The day after each of these balance dates appears as the date for the opening equity balance each year in Woolworth's Statements of Changes in Equity.

Why do you think many retail businesses might do this - show their accounts for 52 weeks rather than for a full year?

My suggestion is that you use the balance date for 2013 (Woolworth's latest annual report) in the heading in your spreadsheet for each of your firm's financial statements, that is 30 June.

Links to the blogs with my Comments

Following are the links to the blogs with comments:

Aireen Doodson
Anna Towan
Erikai Guerrini
Matthew Gatt Walters
Clifford Power
Rosy La

My way of Viewing Woolworths

A powerful way of viewing business is separating financial activities and operational activities.

                                                 Woolworth’s NOA and NFO

	2013 $m	2012 $m	2011 $m	2010 $m
Net Operating Assets(NOA)	10026	9179	8760	7854
Net Financial Obligation(NFO)	726	732	240	225

The Key benefit of restating Woolworth’s balance sheet is separating NOA and NFO. The above table clearly shows that Woolworth's NOA is continuously increasing from $m7854 in 2010 to $m10 026 in 2013. At the same time its investment that is NFO is far too low compared to NOA. 



   

Annual Reports

1. http://www.woolworthslimited.com.au/annualreport/2012/pdf/WW_AR12_Full.pdf
2. http://www.woolworthslimited.com.au/annualreport/2013/downloads/WoolworthsLimited_AnnualReport_2013_FullReport.pdf
3. http://www.woolworthslimited.com.au/icms_docs/129899_Annual_Report_2011.pdf

KCQ's

Key Questions

1. Question1:

When restating the Woolworth's Balance sheet, Net Operating Assets and Equity plus Net Financial Obligation are always equal. What do you understand from this?

2. Question2: 

When viewing the business, calculating ratios are not uncertain like NPV. It is comparing different figures already present in financial reports. Why can't we consider it as a powerful way of viewing business?

3. Question3:

Dirty surplus are added in Comprehensive income statement. The purpose of restating the statement of changes in equity is to add dirty surplus. 
Is restating the statement of changes in equity necessary when a firm provides comprehensive Income statement?

 

Reflection on "Introducing Financial Statements"

There are 4 inter-connected Financial Statements join together show the Economic and Business reality of a business. They are Balance sheet, Income Statement, Changes in Equity and Cash Flow statements.

This introductory part of financial statements is making me think that to analyse financial statements, ratios are better option as it focus on the relationships between different items of a firm’s financial reports. As financial reports are audited it can be trusted. Whereas PV is not a reliable option as it is present value of future cash flows and future is uncertain.