In the definition of cash, for the sake of preparation of the statement of cash flows, this company has used several terms, explanations and implications. The company has dealt with the operating revenue, earnings that have been made by the firm during that year, the net profit, the operating cash flows, the free cash flows and the dividends to the shareholders. Therefore, the company has dealt with the inflow, as well as the outflow of cash in the company. This way, it is easier to determine how the company has been operating, especially with reference to the cash. The company has also tried to determine the rate of return on investment. This is a general way in which the company can evaluate the viability of its projects in the ended financial year.
For this financial year, the operating revenue of the company was $58.1 billion. The major inflows of cash were earnings, as well as debts acquired form financial institutions. The earnings before tax, as well as interest, were $3.549 billion. The net profit after tax was $2.126 billion. The net debt of the company by the end of this financial year was $4.904 billion. For the major cash outflows, there was expenditure, especially on plant and equipment, property and intangibles. This amounted to $2.626 billion. The company had operating cash flows of $3.641 billion. It also had free cash flow of $1.472 billion. These operating cash flows have a direct relationship with the business. This is because they show the amount of cash that the company handled during the financial year. This is also an indication of the sales and purchases that the company was able to make within the same financial year. Also, the difference between the cash inflow and the cash outflow is an indication of the success that the company is experiencing. This is because it determines the net profit of Wesfarmers. In 2012, the company seems to have been successful.
[...] The second internal user of the company's annual report is the accounting personnel. This is because they need to know if the company can cover the payroll and other expenses that may be immediate. The employees of this company are also users of this annual report. Wesfarmers is a huge company with branches all around the globe. For this reason, every employee might be in need of this annual report to get an idea of how the company is fairing. [...]
[...] However, the cash flow statement reports all the flows of cash that occur during that period, as a result of investing, operating and financing activities. This is done in a manner that is extremely appropriate to a business. Therefore, the examination of these allows the users to establish the impact that was created by the activities that have been mentioned in the same on the financial position of the company Users of the company's annual report. There are several internal, as well as external users of the annual report of the company. However, internal users should be the leading part of the discussion. [...]
[...] Wesfarmers annual report 2012 -Accounting concept and systems 1. What does the company include in its definition of ‘cash' for the purpose of preparing the statement of cash flows? In the definition of cash, for the sake of preparation of the statement of cash flows, this company has used several terms, explanations and implications. The company has dealt with the operating revenue, earnings that have been made by the firm during that year, the net profit, the operating cash flows, the free cash flows and the dividends to the shareholders. [...]
[...] These figures are advantageous to the company. This is because a large portion of the money that the company acquired from investment was reinvested. This shows that the company had enough money to start the following financial year. A substantial amount was also used in the payment of employees. This shows that the human resource departments were taking care of the well being of the employees. The earnings that the shareholders experienced from their investments are also an indication of the success of this company. [...]
[...] Therefore, this was also a major cash outflow of the same amount went to the shareholders. This was for the sake of giving them the dividends on their investment. About of the wealth that Wesfarmers created during this financial year went to the lenders. These are mostly financial institutions that had lent the money to the company, for the sake of investment. Lastly of this wealth went to the government in form of tax and royalties. This shows that the percentage of cash flow that was controlled by investment was extremely large. [...]
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