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1

Accounting Assignment

Deven Costigan Will Tonissen-McGrath Table of contents 1. Title 2. Part 2A 3. Part 2A 4. Part 2B All Ordinaries 5. Part 2B All Ordinaries 6. Part 2B Wesfarmers 7. Part 2B Wesfarmers 8. Part 2B Wesfarmers 9. Part 2C,2D,2E Wesfarmers 10. Part 2B Kogan 11. Part 2B Kogan 12. Part 2C, 2D, 2E Kogan 13. Part 3A 14. Part 3B 15. Part 3B 16. Part 3B 17. Appendix 18. Appendix 19. Appendix 20. Appendix 21. Referencing

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Part 2a

Kogan

Wesfarmers

Products and services

Kogan is Australia’s leading consumer Electronics and appliances brand, and is the premier online shopping destination.

The products and services provided by Wesfarmers are numerous as they own multiple different segments such retail businesses and industrials.

Name of CEO

Ruslan Kogan

The Managing director for Wesfarmers is Richard Goyder.

Salary of CEO

Net worth $349 million

In 2016 Richard Goyder earned $5.489 Million.

Profit/loss from 2016 annual report (full financial year

Revenue $211.2 million Cost $178.5 million Profit $32.7 million

The net profit after tax for Wesfarmers was $407 million.

Latest dividend paid (dividend per share and date paid)

$1.70 16th march 2017

The last dividend paid was on 28/03/2017 and they paid 103c per share.

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Total Assets

$32,443,291

$40,783 Million

Number of employees

150

Approximately 220,000

Share price 52 week high and low at the end of trading period (21st April 2017)

1.320 low 1.800 high

The 52 week low was on 27/06/2016 and was recorded at $38.62, and the 52 week high was recorded on 14/10/2016 and was recorded at $46.06

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Part 2B

ALL ORDINARIES

Date

Closing points

17-Mar-17

5840.8

18-Mar-17

5840.8

19-Mar-17

5840.8

20-Mar-17

5820.5

21-Mar-17

5819.5

22-Mar-17

5732 5754

23-Mar-17 24-Mar-17

5796.1

25-Mar-17

5796.1

26-Mar-17

5796.1

27-Mar-17

5789.2

28-Mar-17

5860.4

29-Mar-17

5910.7

30-Mar-17

5931.8

31-Mar-17

5903.8

01-Apr-17

5903.8

5

02-Apr-17

5903.8

03-Apr-17

5909.7

04-Apr-17

5895.8

05-Apr-17

5915.9

06-Apr-17

5897.3

07-Apr-17

5902.6

08-Apr-17

5902.6

09-Apr-17

5902.6

10-Apr-17

5948.9

11-Apr-17

5964.6

12-Apr-17

5968.9

13-Apr-17

5925.9

14-Apr-17

5925.9

15-Apr-17

5925.9

16-Apr-17

5925.9

17-Apr-17

5925.9

18-Apr-17

5868.7

19-Apr-17

5839.9

20-Apr-17

5854.4

21-Apr-17

5885.6

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WESFARMERS SHARES

WES

# of Shares

Date

113

17-Mar-17

Closing Price $

Total Value $

44.00 4,972.00 113

18-Mar-17

$

$ 44.00 4,972.00

113

19-Mar-17

$

$ 44.00 4,972.00

113

20-Mar-17

$

$ 43.80 4,949.40

113

21-Mar-17

$

$ 43.92 4,962.96

113

22-Mar-17

$

$

7

43.29 4,891.77 113

23-Mar-17

$

$ 43.30 4,892.90

113

24-Mar-17

$

$ 43.88 4,958.44

113

25-Mar-17

$

$ 43.88 4,958.44

113

26-Mar-17

$

$ 43.88 4,958.44

113

27-Mar-17

$

$ 44.00 4,972.00

113

28-Mar-17

$

$ 44.38 5,014.94

113

29-Mar-17

$

$ 44.88 5,071.44

113

30-Mar-17

$

$ 45.49 5,140.37

113

31-Mar-17

$

$ 45.07 5,092.91

113

01-Apr-17

$

$ 45.07 5,092.91

113

02-Apr-17

$

$ 45.07 5,092.91

113

03-Apr-17

$

$ 45.10 5,096.30

8

113

04-Apr-17

$

$ 44.78 5,060.14

113

05-Apr-17

$

$ 44.26 5,001.38

113

06-Apr-17

$

$ 44.44 5,021.72

113

07-Apr-17

$

$ 44.42 5,019.46

113

08-Apr-17

$

$ 44.42 5,019.46

113

09-Apr-17

$

$ 44.42 5,019.46

113

10-Apr-17

$

$ 44.75 5,056.75

113

11-Apr-17

$

$ 44.60 5,039.80

113

12-Apr-17

$

$ 44.98 5,082.74

113

13-Apr-17

$

$ 45.14 5,100.82

113

14-Apr-17

$

$ 45.14 5,100.82

113

15-Apr-17

$

$ 45.14 5,100.82

113

16-Apr-17

$

$ 45.14 5,100.82

9

113

17-Apr-17

$

$ 45.14 5,100.82

113

18-Apr-17

$

$ 44.50 5,028.50

113

19-Apr-17

$

$ 44.36 5,012.68

113

20-Apr-17

$

$ 44.41 5,018.33

113

21-Apr-17

$

$ 43.89 4,959.57

2C.Wesfarmers share price varied by $1.89 over the tracking period reaching as low as $43.29 and as high as $45.14. The share prices dropped by 11c from the start of the tracking period to the end of the tracking period. The Australian share market rose to around the 5900 points area on the all ordinaries 3 days into the tracking period and stayed around that mark until the last 4 days of the tracking period. Wesfarmers shares did reasonably well when the All Ordinaries were around the 5900 points mark and started to drop off again once the All Ordinaries were on the way back down just before the tracking period ended, so it had a similar trend to the all ordinaries however there were some days were the all ordinaries rose and the share price fell but they tended to go back up within a few days. There were no major fluctuations to woolworths share prices that warranted an article being written about changes. The prices rose and fell at a steady rate. 2D. Wesfarmers shares had a starting price of $44 per share allowing 113 to be purchased using $4972 of my $5000 budget and the rest went into buying more kogan shares. At the end of the tracking period my shares were worth $43.89 each meaning i lost 11c a share meaning i lost a total of $12.43 across my shares. 2E. Because my shares have decreased slightly in value I would hold onto them until they gained enough to be worth selling, Wesfarmers is also a blue chip company meaning that the chance of the share price going up or down significantly is low so if you hold onto them they should continue to rise in value.

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closing price

movements

17/03/2017

1.7

18/03/2017

1.69

-0.01

19/03/2017

1.715

0.025

20/03/2017

1.72

0.005

21/03/2017

1.72

0

22/03/2017

1.715

-0.005

23/03/2017

1.715

0

24/03/2017

1.72

0.005

25/03/2017

1.71

-0.01

26/03/2017

1.73

0.02

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27/03/2017

1.74

0.01

28/03/2017

1.75

0.01

29/03/2017

1.76

0.01

30/03/2017

1.775

0.015

31/03/2017

1.755

-0.02

1/04/2017

1.75

-0.005

2/04/2017

1.74

-0.01

3/04/2017

1.725

-0.015

4/04/2017

1.72

-0.005

5/04/2017

1.69

-0.03

6/04/2017

1.7

0.01

7/04/2017

1.675

-0.025

8/04/2017

1.72

0.045

9/04/2017

1.73

0.01

10/04/2017

1.71

-0.02

11/04/2017

1.715

0.005

12/04/2017

1.71

-0.005

13/04/2017

1.7

-0.01

14/04/2017

1.68

-0.02

15/04/2017

1.7

0.02

16/04/2017

1.71

0.01

17/04/2017

1.685

-0.025

18/04/2017

1.68

-0.005

19/04/2017

1.67

-0.01

20/04/2017

1.66

-0.01

12

21/04/2017

1.695

0.035

part 2c KOGAN at the beginning of the tracking period kogan’s share points were worth 1.700 throughout the period there were fluctuations where they reached a high of 1.775 and a low of 1.66 but with very low impact and the closing price at the end of the tracking period on the 21st of April was 1.725 showing a very slight increase of 0.025 points, the all ordinaries saw a similar trend with a progressive upward movement up 40 points from its original starting position at the end of the tracking period which in comparison of ratio is a similar movement to Kogan’s increase of about 2%, throughout the tracking period there was no real substantial movements to note of, although ironically on the last day of the tracking period the Australian newspaper released an article demonstrating that after Kogan’s successful growth they had decided to lift its full year earnings forecast ‘The news lifted Kogan's shares 1.77 per cent on a day when most retail stocks finished in the red.” CEO of Kogan, Ruslan Kogan commented

"Our operating momentum is strong and we are delivering sustainable growth for our shareholders".

Part 2d kogan Kogan opening price was 1.700 Therefore allowing 2957 shares to be brought to fit into $5028 budget ($5027.3 was used) At the end of the tracking period the shares were worth 1.725 1.725 * 2957 = $5,100.80 Therefore showing a $73.5 profit during the tracking period for Kogan Part 2e With such little movement in the starting price to finish price I would be inclined

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to hang onto the shares especially with Kogan's promising growth and expected performances to come along with the ever growing technology industry.this is evident in reference to part c where the article describes Kogan as having ‘momentum’. Part 3a

kogan

Wesfarmers

revenue

$211.2m

$65,981m

Interest expense

$1.1m

$261m

EBIT

$1.6m

$1346

Net profit AT

$800,000

$407m

Net profit BT

$1.5m

$1,038m

Current Assets

$2,689,890

$9,684m

Total Assets

$32,443,291

$40,783m

Current Liabilities

$25,328,760

$10,424m

Total Liabilities

$25,372,551

$17,834m

Total equity

$7,070,740

$22,949m

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Part 3b

kogan

Liquidity ratios Current ratio = current assets ÷ current liabilities = $1.06 meaning there is an extra 6 cents for every $1 of current liabilities Quick asset ratio = currentAssets −Inventory / currentLiabilities = 0.25 or 25% similar to the current ratio but drops the inventory Stability ratios Debt ratio = = $0.78 meaning for every dollar of asset is financed by 78 cents debt Equity ratio = = $0.22 for every dollar of asset is finance by 22 cents equity Asset = 78% debt 22% equity

Profitability Return on total assets = = $0.25 = meaning every dollar invested in assets generates 25 cents profit Profit margin = of profit is made

= $0.0038 for every dollar of sales 0.0038 cents

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Part 3b Wesfarmers Liquidity ratios Current ratio = current assets ÷ current liabilities = $0.93 meaning there is 93c of current assets for every $1 of current liabilities Quick asset ratio = currentAssets-Inventory/currentLiabilities= 0.92 or 92% similar to the current ratio but drops the inventory Stability ratios Debt ratio = = $0.44 meaning for every dollar of asset is financed by 44 cents debt Equity ratio = = $0.56 for every dollar of asset is financed by 44 cents equity Asset = 56% debt 44% equity Profitability Return on total assets = = $0.01 = meaning every dollar invested in assets generates 1 cent profit Profit margin = = $0.0062 for every dollar of sales 0.0062 cents of profit is made Liquidity Ratios

Companies would see different figures due to the discrepancies in their assets and liabilities as each companies have their own assets and their liabilities differ as they are situational and specific to each company. Stability Ratios

Again different companies are going to be in different amounts of debt and also have varied asset values meaning their equity percentage to the dollar will vary.

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Profitability Margin

Profit margin is varied throughout companies as they are all managed differently and have differing costs through the running and maintenance of the business. We decided that wesfarmers would be the more suitable investment as it was clear that the profit margin per dollar of each sale exceeded Kogan by 0.0024 which is substantial considering the volume of sales wesfarmer produces, as well as seeing a clear difference in stability wesfarmers having double the equity ratio with 44% of assets being equity whereas Kogan obviously only had 22%, although that being said Kogan’s liquidity ratio was healthier seeing an extra 13 cents of assets per dollar of liabilities however this wasn’t significant enough to warrant Kogan as the overall preferred

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19

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References berry, p 2017, 'Kogan lifts full year earinning forecasts', The Australian, 21st april, p. 1 Kogan, R 2016, 'Kogan annual report', Kogan, Accessed 9th May 2017, http://www.kogancorporate.com/resources/document/default.html kogan com ltd', asx, 2017, Accessed: 9th May 2017, http://www.asx.com.au/asx/share-priceresearch/company/kgn 'Leadership Team', Wesfarmers, Accessed: 7th May 2017, http://www.wesfarmers.com.au/who-we-are/leadership-team Greeblat, E 2016, 'Wesfarmers slashes CEO Richard Goyder’s pay by 50pc', The Weekend Australian, Accessed 7th May 2017, http://www.theaustralian.com.au/business/companies/wesfarmers-slashesceo-richard-goyders-pay-by-50pc/news-story/8153fcc4889ef917ad2635c70b73069e Goyder, R 2016, '2016 Annual report', Wesfarmers, Accessed 7th May 2017, http://www.wesfarmers.com.au/docs/default-source/reports/2016-annual-report.pdf?sfvrsn=8 'Wesfarmers Limited', ASX, 2017, Accessed: 7th May 2017, http://www.asx.com.au/asx/share-priceresearch/company/WES...