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Financial Analysis of Warehouse in New Zealand

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Submitted By echo273
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Financial analysis of The Warehouse

As one of New Zealand’s largest retailers, known and loved by Kiwis for its wide range of products from clothing, entertainment, technology and music to sporting, gardening, grocery and many others, The Warehouse has been providing Kiwis with "a bargain" since 1982. With 88 stores throughout New Zealand they remain a New Zealand owned and operated company employing nearly 9,000 team members from Kaitaia in the north to Invercargill in the south (The Warehouse, 2011).

In order to judge the financial health of the company, let us look at its annual figures for 2009 and 2010. Based on the below table we can see that the total sales for the company has decreased from $1,720,755 to $1,672,695 in 2009 to 2010 respectively. There has also been a significant drop in its cost of goods sold. Their opening inventory reduced that means that the company has been able to sell most of its inventory which is a good sign for the shareholders and shows constant cash flows of the company in the two years.

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Though their net profit before tax for the year 2010 was much higher than that of the previous year, their net profit after tax fell from $76,996 to $60,540. The company paid more in interests and income tax. This can be attributed to the increased tax rates.

The company had less equity at the beginning of the year 2010 compared to its previous year which reflected in the decline of the closing equity. Nonetheless, the company distributed more equity to its shareholders in 2010 as compared to the previous year. The contribution from the shareholders also increased during this period.

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As seen from the statement of financial position, the company figures have shown a significant change in the two years. The share capital remained at a constant level but their retained earnings decreased massively. Their

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