ACCG6003 Managing Finance 3 Sample

ACCG6003 Managing Finance

Finance – Report

Instructions for Term Report

This is an individual assignment required for each student. Students are required to keep expanding the analyses in the unit preparation report and provide a comprehensive analysis on the selected company. This term report is expected to be about 15-20 pages long.

In principle, students are expected to analyse the same company they have selected in the unit preparation. Nevertheless, students can consult with the lecturer if they wish to discuss the possibilities of analysing a different company for the term report.

The term report should include the following sections:

1. Introduction

• Provide a clear statement of objectives and an outline of the structure of the report.

2. Environment, Industry and Strategy Analyses

• Describe the core business of this company.

• Discuss the industrial environment in which this company operates.

• Discuss the competitiveness of this company and challenge it faces.

• Summarize the financial ratio analyses you performed in unit preparation report and comment on the company’s condition.

3. Accounting Analysis

• Identify the company’s one key accounting policy.

• Discuss how this accounting policy relates to the company’s business operation

• Identify areas that require the use of management judgment when applying this accounting policy and provide explanations.

• Comment on the appropriateness of the application of this accounting policy.

4. Capital Structure and Payout Policy Analysis

• Discuss type and amount of the financial securities this firm issued for financing (e.g. common shares, preference shares, corporate bond, bank loan, etc.)

• Discuss amount and form of the pay out this company made (e.g. cash dividend and share repurchase).

• Comment on the appropriateness of the company’s capital structure and payout policies.

5. Equity Valuation

• Perform equity valuation using Discounted Cash Flow Model

• Perform equity valuation using Abnormal Earnings Model

• Perform equity valuation using Price Multiple Model

• Perform sensitivity tests and comment on the robustness of your valuations

• Compare your valuation with the current market share price and make recommendation

Solution

1. Introduction

Comprehensive analysis in the financial world refers to the process of conducting an analysis of the financial operation of the company, which will help in providing a clear picture of the status of the company in the present time and future situation. As per the MBA Assignment Expert, The number of financial securities issued by WoolworthsLimited like bonds preference shares, and common shares are being evaluated. The share repurchases and the cash dividends of WoolworthsLimited are evaluated. The Equity valuation of WoolworthsGroup is evaluated using the discounted cash flow model. Equity values are evaluated using the abnormal earnings and model and price multiple models. Comparison of the valuation is correct in the current market share and certain recommendations for equity valuation are being provided. 

WoolworthsGroup is composed of trusted bad recognizable brands, which are involved in dealing with millions of customers every day with choice. It is a South African multinational retail group, which owns South American retail chain Woolworth, and Australian retailer Country Road Group. The study aims to provide a comprehensive analysis of the Woolworths group. The industrial environment, competitiveness and the core business values of the company are being highlighted based on the financial ratios. A particular accounting policy regarding the business of operation of WoolworthsLimited is discussed and addressed which requires management to be evaluated.

2. Environment, Industry and Strategy Analyses

Core Business of WoolworthsGroup

Figure 1: Total food sales of the Woolworths Group in Australia from the financial year 2016 to 2023
(Source: Statista, 2023)

WoolworthsGroup conducts its operation, as a daily need drive and daily retailer. Woolworths specializes in Groceries but also sells health and beauty products. WoolworthsGroup's B2C retail food business provides fresh products and delivers food at the proper price and convenience (Woolworth's Group, 2023). WoolworthsGroup helps customers with more choices and more value through its daily services. WoolworthsLimited is considered the largest supermarket chain of Woolworths that has provided a dramatic lift margin for the Australian food business. WoolworthsGroup is localized in providing groceries and also beauty, household, baby and pet suppliers. As Australia's largest retailer, WoolworthsGroup depends on its teams across distribution centers and stores to provide customers with exceptional service and products (Woolworth's Group, 2023). The company operates metro-branded supermarkets and its business operations are being categorized in Australian Food and Zealand Food. It poses the world's range of products in Australia in comparison to any other retailer. WoolworthsGroup has more than 20000 products depending on each store (SMH, 2023). It operates as a supermarket food and everyday needs retailer. WoolworthsGroup is considered a locally owned publicly listed company that derives its revenue from the retail sale of supermarket food and general merchandise. An increasing number of technologies are available to retailers and service providers, as they possess the potential to enhance both their oppression and the experiences they will be able to provide to customers (Grewal et al., 2020)

WoolworthsGroup conducts its operations in Australia and New Zealand and operates grocery stores and metro-branded supermarkets. It is a locally owned listed public company which derives revenue from the retail sales of supermarket food and general merchandise. It encourages consumer businesses to focus on providing fresher products and how they will be delivered at affordable prices. WoolworthsGroup considers people as the hearts of its business and together they are committed to caution. Woolworths Group is considered a great place to work. It focuses on providing healthier choices for customers and marketing products in a responsible manner to children. Woolworths also conducts responsible retailing for certain products like alcohol with concerns regarding the health of people. As companies expand they use local raw materials and workforce which will benefit the community (Kyere, M., & Ausloos, 2021).
The industrial environment in which Woolsworth Group Operates

External factors like GDP growth, Inflation and exchange rate have a significant impact on the decision-making of the Woodworth group. Thus, an increase in GDP will help in increasing the consumption rate that will help in increasing the sales of WoolworthsGroup. Wool Worth Group aims to implement an inclusive workplace as the company recognizes the value of team diversity that brings to customers and business. The company maintains a moral code of conduct WoolworthsGroup prevents any kind of racism, towards work and maintains flexibility in its operations. At the end of the year 2025, WoolworthsGroup aims to conduct all of its operations running on 100% renewable electricity by 2025 and provide a unique opportunity for making a real impact (Woolworths Group, 2023). The grocery industry has created significant employment for Australians. WoolworthsGroup's Performance has been affected in various negative ways due to the existence of political factors that have tended to block developing companies like Woolworths from eliminating smaller retailers for unfair competition in the market. The retailing industry has undergone tremendous transformation, change and increased complexity (Shankar et al., 2021).

The primary approach of WoolworthsGroup for investing in renewables priorities regarding investment is increasing the availability of green business and community, the product pillar of WoolworthsGroup involves the way WoolworthsGroup conducts business for embracing circular thinking that implies that all age is considered as a resource. It aims to increase the choices of healthier food choices in the basket of customers. The company aims to implement sustainability of packaging for its products. It is focused on eliminating sustainable packaging. Wool Worth Group is involved in partners with industries to reduce the use of plastic and increase the amount of recycled content in the supermarket. Moreover, reconciliation also plays a vital role in the operation of the WoolworthsGroup. As one, the largest retailers in Australia Woolworths group provided tangible opportunities and meaningful changes. The Use of the Internet for purchasing products and services has registered a considerable and heterogeneous diffusion in the category of products and countries (Alaimo et al., 2020). The operation of WoolworthsGroup is driven by values and providing contemporary opportunities to indigenous communities and peoples. Woolworth's groups are driven by values like we listen, we learn and we do the right things for creating better experiences for a better tomorrow.

Competitiveness of Woolworths Group and challenges faced by it

Woolworths is seen as a premium brand by its customers as customers are willing to pay more for quality guarantees on premium brands as it offers an all-in-one shopping experience like customers are able to buy products. It significantly makes it convenient for customers as it saves a significant amount of time from going to different stores. By adopting centralized procurement, Woolworths Group has been able to control its retail cycle by providing uniqueness, innovation and authenticity thereby maintaining its competitive edge. Woolworths that are considered highly competitive in the retail sector of Australia are using integrated cost leadership strategies. The company generates a significant amount of its revenue and profits from the markets, which will help in meeting customer needs, Woolworthshas been able to develop narrow targets for its business-level strategy and competitive advantages.

WoolworthsGroup faces fierce competition from other supermarket chains like ALDI, Coles and Independent Retailers. The completion could lead to margin pressures, and price issue, which will help in increasing the profitability of the company. It faces stiff competition from local and international brands such as Aldi, Coles and Amazon. Changing consumer preferences and increases in the price of raw materials are also significant challenges faced by the WoolworthsGroup while selling its products to customers.

Financial Ratio Analysis

The current Ratio of WoolworthsGroup came at 1.03 in the year 2021(Macrotrend, 2023). As the current Ratio is lower than 1.5, it states that the liabilities of Wool Worth Group exceed its current assets and the company could face significant challenges in meeting its debt obligations. It implies that the business debts due within 12 months are more important than its assets and short-term assets are likely to be anticipated. The debt-to-liquidity Ratio of WoolworthsGroup came at 0.69 in 2021(Macrotrend, 2023). As the debt-to-quality ratio is less than 1 it implies that the company is generally less risky in comparison to firms whose debt-to-liquidity ratio are more than 1. It implies that WoolworthsGroup possesses more assets than liability and the company assets are being defined by quality and not by loans. The pre-tax profit Margin came at 6.5 for the year 2021. The asset turnover ratio for 2021 came at 1.41. It implies that the value of assets used is significantly lower than the income which is generated from them. It implies that a company uses its assets in a very efficient manner for generating income.

Figure 2: Woolworths Holdings Financial Ratios
(Source: Macrotrend, 2023)

3. Accounting Analysis

Identify the company’s one key accounting policy.

One of the key accounting policies that the Woolworths Company considers and uses is the Determination of price. The price of the goods sold to customers must be determinable with a high degree of certainty. This means that any discounts, returns and allowances are taken into account in the calculator of revenue. 

Discuss how this accounting policy relates to the company’s business operation

Woolworths' accounting policy regarding the determination of price is intricately linked to its core business operations in the retail industry. The determination of price plays a pivotal role in shaping the company's financial performance and profitability. Woolworths operates in a highly competitive retail market where pricing strategies are crucial. As per the view of Sudirjo (2023), the determination of price is fundamental in setting competitive and attractive prices for its products. The company assesses market conditions, consumer demands and competitive forces to establish prices that not only maximize revenue but also meet customer expectations. Woolworths frequently runs promotional campaigns and offers discounts to attract customers. These promotions often involve complex pricing structures such as buy one get one free and three for ten dollars deals (Woolworths, 2023). The accounting policy ensures that these discounts are properly accounted for and that the revenue recognition accurately reflects the actual sales value. 

Figure 3: Revenue of Woolworths
(Source: Statista, 2023)

Retail businesses such as Woolworths experience seasonal fluctuations in demand, particularly around holidays and special occasions. The determination of price allows Woolworths to adjust its pricing strategies to capitalize on peak seasons while maintaining profitability during slow periods. Consumer value transparency in the retail sector has been very important for the operational success of an organization. Woolworth's commitment to determining prices fairly and accurately enhances customer trust and loyalty. It ensures that consumers can trust that the price they see is the price they pay with no hidden fees for surprises. Accurate pricing also affects inventory management. 

Figure 4: Revenue of Woolworths compared to its competition
(Source: Kaggle, 2023)

With the recognition of the revenue at the determined price, Woolworths can efficiently manage its inventory level, reduce wastage and make an informed decision regarding product procurement and stock management. Along with this, the transfer of control is also one of the major policies or strategies that the company uses for its profits. Woolworths recognises revenue when it transfers control of the products to the customer. This typically occurs at the point of sale or delivery, depending on the terms of the sale agreement. As per the view of Wait (2022), Woolworths Operates loyalty programs such as everyday rewards that offer customers services, benefits and discounts. The company recognises revenue from test programs based on the fair value of the rewards points earned by customers when they make qualifying purchases. By adhering to these revenue-recognised policies, Woolworths ensures that its financial statements accurately reflect the performance of its core retail operations. This consistency and transparency in accounting policies help investors and stakeholders assess the company's financial health and make informed decisions. 

Identify areas that require management judgment when applying this accounting policy and provide explanations.

The determination of the price accounting policy at Woolworths involves several areas where management judgment plays a critical role in its application. Management makes judgemental calls when they are developing pricing strategies for various product categories. The company needs to consider factors such as market competition, consumer demand elasticity, cost structures and long-term business objectives. Pricing decisions can affect market share profitability and customer perception. As per the views of Ali and Anwar (2021), promotional pricing is yet another area where management judgment is required, pricing decisions need to adapt to changing market conditions. The decision of when and how to offer discounts or promotions requires management judgment. They need to evaluate the potential impact on sales volume, overall revenue and the brand's image. Balancing the need to attract consumers with the need to maintain profitability is a delicate judgment call. 

Henceforth, management needs to assess factors such as inflation rates, consumer sentiment and competitor pricing strategies to adjust prices accordingly. The pricing also impacts the valuation of inventory on the balance sheets. Management judgment is required when determining if the carrying amount of inventory is recoverable based on expected selling prices. Woolworths Group relates to its revenue recognition treatment. Revenue recognition is a critical aspect of financial reporting as it directly influences the company's financial statements and profitability figures. Woolworths primarily derives its revenue from the sale of goods through its various retail formats, including supermarkets, liquor stores and general merchandise stores. The loyalty programs that are given by the company also need to estimate the fair value of rewards points earned by customers through loyalty programmes. This requires judgment in determining the value of these rewards and when they should be recognised as a reduction in revenue.

Comment on the appropriateness of the application of this accounting policy.

The appropriateness of a pricing accounting policy in any business context is a critical factor that can significantly affect financial reporting and decision-making. As per the view of Hancock et al. (2019), the evaluation of the suitability of such a policy is essential to consider several factors including industry norms. The company's objectives and regulatory requirements. The pricing accounting policy should align with the industry standards and best practices. In this case, Woolworth's organization and many industries vary significantly in terms of pricing dynamics, cost structures and market conditions. Companies should benchmark their pricing accounting policy against competitors and industry peers to ensure they are not deviating significantly from the norm that could raise questions from stakeholders and regulators. Companies' objectives also play a vital role in determining the appropriateness of a pricing accounting policy. For instance, if a company aims for rapid market share growth and is willing to operate at a loss initially, a pricing policy that issues aggressive pricing and lower profit margins might be appropriate. For example, Woolworths's objectives are to maximize their value and to grow new businesses, which require the determination of price policy to achieve the expected outcomes (Woolworths Group, 2023). Regulatory requirements are another crucial factor to consider. All organizations must adhere to accounting standards and regulations set by relevant authorities such as international financial reporting standards. Furthermore, transparency and consistency are key principles in accounting policy determination. Companies should document their pricing accounting policy and ensure that it is consistently applied across all financial reporting periods. 

4. Capital Structure and Payout Policy Analysis

Discuss the type and amount of the financial securities this firm issued for financing (e.g.common shares, preference shares, corporate bonds, bank loans, etc.) 

Figure 5: Capital markets debt
(Source: Woolworths, 2023)

Woolworths Group manages its capital structure keeping in mind the long-term objectives and goals of the company. The other main objective is to enhance long-term shareholder value through funding the organization in an optimized manner with an average cost of capital (Woolworths Group, 2023). Woolworths has issued common stock as a means of equity financing. This involves sling ownership of shares in the company to investors. The number of shares issued and the amount raised through common stock offerings can vary depending on the company's growth plans and funding requirements. Woolworths typically issues common stock through initial public offerings, IPOs or subsequent secondary offerings. Another financial security that the company has issued in recent years is the Green Bonds. Woolworths became the first retailer in Australia and it also became the first supermarket in the world to issue Green bonds certified by the climate bond initiatives (Woolworths Group, 2023). 

These bonds are issued to finance projects, expenditures and assets that are essential to deliver positive environmental outcomes or refinance corporate debt that supports such projects and expenditures. These bonds may include both corporate bonds and convertible bonds. Corporate bonds involve borrowing money from investors with a promise to repay the principal amount along with interest over a specified period. Convertible bonds give investors the option to convert their bonds into company shares. The amount raised through bond issuances depends on the interest rate, maturity period and market conditions. The other bonds that Woolworths issues are the sustainability-linked bonds and the company has created this framework to align its sustainability plan with its long-term financing strategy (Woolworths Group, 2023). 

Woolworths has issued preference shares and such bonds offer fixed dividends and have priority over common stockholders in the distribution of assets. The amount of preference shares issued depends on the company's preference for a mix of equity and debt financing. For short-term financing needs, Woolworths has also issued commercial papers. These are unsecured, short-term debt instruments with maturities typically ranging from a few days to several months. The amount raised through commercial paper issuance depends on the company's working capital requirements. The Woolworths group also provides banking facilities such as loans and many other services through WoolworthsTeam Bank (WoolworthTeamBank, 2023). There are multiple services and benefits that the organization provides to the stakeholders and their customers. For example, in Woolworths, there is early repayment without penalty which gives the stakeholders assurance of the amount of money that they are crediting. The company has also provided free monthly loan services fees to the consumers and also they provide loan protection insurance available. 

Discuss the amount and form of the payout this company made (e.g. cash dividend and share repurchase). 

Cash dividend

A cash dividend is a payment made by a corporation to its shareholders in the form of cash. It represents a distribution of the company's profits or earnings to its shareholders. As per the view of Rahmadi (2020), Cash dividends are typically paid on a per-share basis, meaning that shareholders receive a certain amount of cash for each share of stock they own. Woolworths operates a dividend reinvestment plan DRP that allows shareholders to automatically reinvest their cash dividends into additional shares of the company's stock, often at a discounted price. It enables shareholders to compound their investment over time and potentially increase their ownership in the company without receiving cash payouts. There are many key features of DRP such as the option of increasing shareholding where shareholder reinvest the shares without paying in cash (Woolworths, 2023). It provides optional and flexible participation in which any participant can withdraw their participation from DROP at any time and it provides an option of joining as well. The most prominent feature of this initiative is there is no additional cost. There are no brokerage charges that the participants have to pay. 

Figure 6: Dividend history of Woolworths
(Source: Woolworths Group, 2023)

Share Purchase

Share repurchase also known as stock buyback is a corporate action where a company buys its outstanding shares from the open market or shareholders. This reduces the overall shares in circulation, increasing the ownership stake of existing shareholders and potentially boosting the stock value. Woolworths Group has announced that it completed its 2 billion dollar off-market share buyback. The price of the buyback will be determined as the lowest price at which the company can buy back the targeted amount of capital. This process of "buying back” the shares helps the organization to return excess cash to shareholders when the company believes its shares are undervalued (Asx, 2023). It also helps in reducing the number of outstanding shares that can increase the company's earnings per share if profits remain stable. This has led to the company taking its own profit to make the share much more concentrated in the company. 

Comment on the appropriateness of the company’s capital structure and payout policies

Woolworths' capital structure predominantly comprises a mix of equity and debt with an emphasis on maintaining a strong credit rating (Woolworths, 2023). This approach is appropriate as it allows the company to access capital markets at favourable terms when needed while avoiding excessive financial advantage that could jeopardize its financial stability. Being prudent with debt levels, Woolworths has managed to navigate economic downturns and industry challenges effectively. In terms of payout policies, Woolworths has typically adopted a dividend-focused strategy, distributing a significant portion of its earnings to shareholders in the form of dividends. This policy is appropriate for the company's status as a mature and stable player in the retail industry. It attracts income-seeking investors and demonstrates the company's commitment to returning value to its shareholders. 

However, Woolworths has also shown flexibility in its payout policies. In times of economic uncertainty or when significant investment opportunities arise. The company has reduced its dividend payments to retain cash for strategic purposes (Woolworths, 2023). This adaptive approach strikes a balance between rewarding shareholders and preserving financial flexibility. Furthermore, Woolworths has made efforts to diversify its business through investment in complementary industries such as liquor and hospitality. These strategic investments align with the company's long-term growth objectives and reduce its reliance on a single sector. This has enhanced the overall financial resilience of the company. Woolworth's capital structure and payout policies are generally appropriate reflecting a prudent approach to financial management. The company's flexibility in adjusting its dividend payments when necessary demonstrates its commitment to long-term valuation creation for shareholders. The capital structure of Woolworths strikes a balance between rewarding shareholders and maintaining financial stability, positioning the company well for sustained success in the competitive retail sector. 

5. Equity Valuation

Discounted Cash flow model

Discounted Cash flow model refers to the specific types of financial modelling tools, which are used for valuing business, and it is considered a state forecast of the company's unlevered free cash flow. Discounted Cash flow is considered the most popular method for conducting startup valuation by the payback periods and internal rate of return (Laitinen, 2019).

Table 1: Equity Valuation Conducted with discounted Cash flow
(Source: Self-created)

As the company weighted average cost of capital, the company needs to incur an investment of 15 million AUD.DCF model will help in providing detailed assumptions regarding the future performance of the company. It helps provide the cash flow projection, and growth rate of the Woolworthsgroup. The formula of Value of Equity =Value of the firm –outstanding debt +Cash=450000 AUD-100000 AUD+113500=24500 AUD.DCF will help in providing detailed valuation related to the business and provide the major intrinsic value of the business. It can be used for evaluating future expectations. It will help in generating a proper cash flow of generating assets for valuation methodology and help in determining the cash flow availability from the project. 

Abnormal Earnings Model

Abnormal earnings models help in calculating the company's value based on the book value and its expected earnings. Value-based, against representing one of the four evolutionary stages in accounting and econometrics (Ausloos, 2020). The share price of the stock is considered below the book value is the management expertise of the company. It helps in providing a proper estimate of company instrict value in comparison to other valuation methods which are being focused on the earnings of the company other than cash flow. The formula is net income – the cost of equity capital. The net income of WoolworthsGroup in the year 2021 was 1500 million AUD – (1500*9%). It is equal to 1365 million AUD. This model is considered the style most accurate for a situation where firms are required to pay any kind of dividends or pay any kind of predictable dividends as future residual incomes are difficult to forecast. The Abnormal earning valuation model is considered a method for determining the equity value of the company because of the book value and its earnings. It is considered a residual income model that looks at whether management decisions will cause a company to perform better or worse than anticipated.

Price Multiple Model

The price multiple model refers to the ratio where the company's share price is in conjunction with specific per metric for the method for conducting valuation and the share price is typically chosen per share metric for forming ratio. Equity valuation uses a price multiple model using price multiples to evaluate whether an asset is fairly valued or undervalued in relation to the benchmark value of the multiple. In this case, the share price of WoolworthsGroup is used for evaluating the financial metric of the company. The present value of the share of WoolworthsGroup is 37.41 AUD while a year earlier its share price was approximately 39.32 AUD. It implies that the Share price is decreasing. The earnings per share of Woolworthscame at 4.43Aud. The price-to-earnings Ratio came at 8.44. A P/E of 8 is considered as an attractive valuation which implies that the company will be facing financial difficulties. Stock market forecasting and algorithm trading are the areas where machine-learning researchers are focused on developing models which will help in developing real-time working solutions for the financial industry (Ozbayoglu et al. 2020).

Sensitivity Test

Sustainability in business and finance has significantly exploded in popularity for researchers (Atz et al., 2023). The valuation conducted by discounted cash flow helps in estimating the intrinsic value of the business and the future investments to be incurred. It has helped in estimating the current value by taking into consideration future cash flow and comparing the underlying fundamental drivers of business. Abnormal earning models have helped in providing a detailed overview to investors, which accounts for potential growth and risk associated with business while determining a value. Sensitivity analysis is considered one of the variables that affect valuation that is depicted using the variables of the financial metric of WoolworthsGroup and its earnings per share. Wool worth revenue for the year 2020 came at 43.75 billion AUD while in the year 2020; the company obtained a revenue of 41.856 billion AUD, which implies that the company was experiencing a significant decline of 9 %in its revenue. The Net profit after tax of Wool Worth in the year 2020 came to 1.65 Billion AUD while in the year 2022; it came at 1.51 billion AUD.

Comparing Valuation

The current market price of Woolworths Group per share came at 37.41 AUD. A year ago, the share price was significantly higher. In October 22023 the valuation of WoolworthsGroup Valuation came at 28.81 billion USD.

Recommendations

Increasing sales and lower expenses

Woolworth's group must focus on increasing the sales emphasis on sales promotion activities. It will help in attracting new customers and provide insights into customer behaviour. Increasing sales will help the companies in gaining the significant attention of inventors which will increase the value of the company due to increasing market capitalization. Revenue is directly linked to profitability that will help in boosting business value with time. Increase in sales should help the company in increasing its expenditure on research and development that would help in sourcing new products and refining the brand, It would help in creating a positive brand image.

Creating a strategic plan

A strategic plan helps in assessing the recent removal and internal environment, which helps in establishing future goals and targets and helps in describing the activities that are to be implemented to reach them. It will involve setting the company priorities for the next five years and key objectives. It will help in providing a high-level project roadmap. It will help Woolworths in creating a sense of purpose and help in encouraging proactivity in business. It will also help the company in studying its strategic position and gaining a competitive edge.

6. Conclusion

The comprehensive analysis of Woolworths Group's financial operations and business environment reveals valuable insights into the company's status and prospects. The analysis evaluates the financial securities issued by Woolworth’s group such as bonds, preference shares and common shares. Share repurchases and cash dividends are also examined. Investors must understand these financial instruments as they influence the company's capital structure and shareholder returns. The three equity valuation methods such as the discounted cash flow model, abnormal earning model and price multiple models. DCF helps in estimating the intrinsic value of the business. While the abnormal earnings model considers management decisions' impact on performance. The price multiple model considers management decision impact on performance. Sensitivity analysis was conducted to understand how changes in variables like financial metrics and earnings per share affect the valuation. This analysis helps investors assess the impact of different scenarios on the company's value.   The current market price per share is compared to the variations obtained from different methods. This comparison helps investors gauge whether the stock is undervalued, overvalued or priced in the market.  It has also been found that a few recommendations such as increasing sales, lowering expenses and diversification can help the organization achieve further success. The other recommendation that has been put forward is the increment in the sales emphasis on sales promotion activities. It will help in attracting new customers and provide insights into customer behaviour. It has been found that the use of strategic planning will help Woolworths achieve its long-term outcome while maintaining the revenue system and the productivity of the organization.

Reference 

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Smh, (2023) Supermarket suppliers remain 'under pressure' as Woolies, Coles cull product range [Online] Available at : https://www.smh.com.au/business/companies/supermarket-suppliers-remain-under-pressure-as-woolies-coles-cull-product-range-20160923-grmqgc.html#:~:text=Woolworths%20said%20it%20had%20the,store%20depending%20on%20its%20size. [Retrieved on 8th October, 2023]

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https://www.statista.com/statistics/1058341/australia-total-sales-of-food-of-woolworths-group/ [retrieved on 8th October, 2023]

Macrotrend, (2023) Woolworths Holdings Financial Ratios for Analysis 2018-2023 [Online] Available at https://www.macrotrends.net/stocks/charts/WLWHY/woolworths-holdings/financial-ratios [retrieved on 8th October, 2023]