FINANCIAL ACCOUNTING APPROACH FOR DECISION MAKING: A CASE ON FOOD RETAILER COMPANY
Abstract: This paper aims to
evaluate food retailer company based on the financialaccounting approach by
analyzing statement of financial performance, statementof financial position,
statement of cash flow, common size and key marketindicators. The research
focuses on Woolworths’ Company Limited over period of five years from 1999 to
2003 and compare with competitors Coles Myer Limited and Foodland Limited. The
results show Woolworths’ performance over the fiveyears period is improving
with gradual increase in net profit margin, return on assets, and the decrease
in tax rate and interest expense. Whilst, In short term, working capital ratio and quick assets ratio
has been decreased over the past fiveyears which means its current assets is
not able to cover up its current liabilities.However, in examining debtor’s
turnover (in days), inventory turnover andoperating cycle the company is able
to sell out its inventories and collect debts quickly which may increase the
company’s ability to raise funds when it is needed.Furthermore, in the long
term financial stability, Woolworths is using a high levelof debt which
contributes two thirds of the company’s total assets. Meanwhile,shareholders’
funds only increased as half as it liabilities from 1999 to 2003. Therefore,
based on all the analysis, Woolworths is predicted to remain in thefood and
drug retailing industry.
Author: Yuniarti Hidayah
Suyoso Putra
Journal Code: jpakuntansigg110008
