Some questions on a case study (1 Viewer)

[olegna]

Ok, we're supposed to research the balance sheets and revenue statements for two consecutive years of a business. I chose Woolworths 2004 and 2005 (http://www.woolworthslimited.com.au/shareholdercentre/financialinformation/annualreports.asp)

Now, this is my problem.
Firstly, I'm trying to calculate the Current ratio. That's fine, the one problem is this: On the balance sheet for Woolworths, they have two different values for everything: one for "Consolidated", the other for "Woolworths Limited". I don't know which of these I should use the values to calculate the ratios. What is consolidated anyway? Doesn't that just mean all the branches and outreaches?

Second. Everyone knows that the solvency ratio is total debts over owners equity x 100.
Now, is the total debts the same as total liabilities?
and is owner's equity equal to "Equity attributable to the members of Woolworths Limited" or "Total equity" (the latter which includes Total Outside Equity Interest)????? And then once again there is the problem over whether i use consolidated or woolworths limited! ack!

now, finally. the return on owner's equity ratio is net profit over owner's equity x 100, right.
is net profit in relation to this ratio the same things as "Net profit from ordinary activities AFTER income tax expense"??

Anyhelp on any of these 3 points would be GREATLY appreciated. I don't see my business teacher for another 9 days as we have the week off for a retreat on Wednesday.


THANK YOU IN ADVANCE!

 

[olegna]

Thanks.

Can someone help me with my other questions?

 

[macoboi]

now, finally. the return on owner's equity ratio is net profit over owner's equity x 100, right.
is net profit in relation to this ratio the same things as "Net profit from ordinary activities AFTER income tax expense"??

My teacher and i were arguing the same point and reached an agreement that tax was most definately an expense, and must be taken out of net profit for such a ratio

(however, the arguement was over the fact that between two different textbooks, one used before tax and another used after tax figures)

and in repsonse to

Now, is the total debts the same as total liabilities?
and is owner's equity equal to "Equity attributable to the members of Woolworths Limited" or "Total equity" (the latter which includes Total Outside Equity Interest)?????

I would use "Equity Attributable to the members of Woolworths Limited", however, I'm not 100% sure on that

hope that helps

 

[gelo]

Thank you so much!!

 

[macoboi]

*EDIT*

on my above advice re. net profit before/after tax, use before tax amount.

Reason?

I handed in my financial management assessment, and lost a mark for using before tax.

I really felt like strangling my teacher for giving me one peice of advice, having me bother to remember it, then marking the opposite way

his excuse

"yeah, i checked up on it with a friend in sydney a while back, and he said he teaches his class to do it before tax"

so, sorry, i was wrong

 

[herbie0822]

Did you have to give an insight into the future prospects of Woolworths based on the financial statements? because I am doing the same thing as you are... and I dont know what to write for this bit... if someone could give me an example would be muchly appreciated....