DECISION MAKING IN THE SHARE MARKET

Decision Making in the Share Market



Table of Contents

PART 1: Introduction1

PART 2: Company Research / Graphs / Investor Information1

A. Description of Company - Wesfarmers Ltd Australia1

B. Graphs - Share Prices Performance3

C. Overview of Share Performance / Trend of Share-market3

D. Calculation of Gain / Loss on Portfolio4

E. Recommendation on the Share Portfolio5

PART 3: Identification of Key Financial Data and Ratio Analysis5

A. Key Financial Data5

B. Ratio Analysis5

References7

.Wesfarmers Ltd. Australia

PART 1: Introduction

Financial statement analysis is an important statement for evaluation of overall performance of the company and to assist in better investment decision making. The company selected for the portfolio is Wesfarmers Ltd. Wesfarmers Ltd is a public limited Australian company this is part of the index S & P/ ASX 50. It is the largest employer in the country with more than 200,000 employees.

PART 2: Company Research / Graphs / Investor Information

A. Description of Company - Wesfarmers Ltd Australia

Wesfarmers Ltd is counted amongst the major public limited companies of Australia. The Group is a conglomerate of various industries such as fertilizer production, coal mining, chemicals, gas, power, building materials, insurance and more. The company was founded in 1914 as an agricultural cooperative. In 1984, the company was listed on the Australian Stock Exchange. The Managing Director of the company is Richard Goyder. The managing director took a salary package of $3,170,173 in 2011 (Wesfarmers, 2012).

Profit after Tax - 2011: $ 1,922m.

Dividends Paid - 2012: 165 cents per share totaling $1,909m.

Size of Business (Total Assets): $ 40,814m.

Number of Employees: 200,000

52 Week Stock Price Data (Sep 01, 2011 - Sep 07, 2012)

Week

Date

Open

High

Low

Close

Volume

Adj Close

1

9/1/2011

30.96

31.45

30.13

30.28

3586800

29.57

2

9/5/2011

29.85

31.17

29.21

30.85

3790100

30.13

3

9/12/2011

30.2

31

29.92

30.73

3851000

30.01

4

9/19/2011

30.5

31.02

29.65

29.85

2989500

29.15

5

9/26/2011

30.34

31.99

30.09

31.59

4668400

30.85

6

10/3/2011

31.03

31.51

29.87

31.32

3481100

30.59

7

10/10/2011

31.39

31.99

31.24

31.64

2296500

30.9

8

10/17/2011

32

32.33

30.74

31

3035200

30.27

9

10/24/2011

31.24

32.88

31.22

32.69

3539200

31.92

10

10/31/2011

32.52

32.79

31.19

32.03

2351800

31.28

11

11/7/2011

32.15

33

31.81

33

2105400

32.23

12

11/14/2011

33.15

33.38

31.95

32.09

2790700

31.34

13

11/21/2011

32

32.43

30.57

30.66

2871800

29.94

14

11/28/2011

30.9

32.45

30.3

32.41

4562200

31.65

15

12/5/2011

32.69

32.83

31.32

31.48

2584300

30.74

16

12/12/2011

31.31

31.39

30.28

30.5

4124400

29.78

17

12/19/2011

30.1

30.41

29.52

30.29

3857100

29.58

18

12/28/2011

30.2

30.34

29.49

29.5

1172400

28.81

19

1/3/2012

29.68

30.84

29.5

30.37

2246300

29.66

20

1/9/2012

30.55

30.91

30.06

30.4

2256400

29.69

21

1/16/2012

30.15

30.76

29.91

30.24

2177000

29.53

22

1/23/2012

30.39

30.69

30.16

30.33

2049400

29.62

23

1/30/2012

30.17

30.39

29.39

29.47

3170000

28.78

24

2/6/2012

29.8

29.88

29.34

29.35

2455500

28.66

25

2/13/2012

29.69

29.88

29

29.44

2926000

28.75

26

2/20/2012

29.95

29.99

28.96

29.23

3827400

29.23

27

2/27/2012

29.34

29.55

28.8

29.3

3246400

29.3

28

3/5/2012

29.25

29.48

28.34

28.52

3830000

28.52

29

3/12/2012

28.42

29.16

28.25

29.07

3812400

29.07

30

3/19/2012

29.39

29.43

28.52

28.84

2701000

28.84

31

3/26/2012

29.04

30.21

28.66

30.02

3377200

30.02

32

4/2/2012

30.21

30.23

29.43

29.94

2266700

29.94

33

4/10/2012

29.51

29.7

29.1

29.51

2152500

29.51

34

4/16/2012

29.17

29.57

28.93

29.47

2655500

29.47

35

4/23/2012

29.6

30.28

29.2

30.16

2984400

30.16

36

4/30/2012

30.35

30.92

30.23

30.6

2134300

30.6

37

5/7/2012

30

30.87

29.97

30.78

2927900

30.78

38

5/14/2012

30.87

30.99

29.33

29.55

3685000

29.55

39

5/21/2012

29.63

30.19

28.95

29

2753200

29

40

5/28/2012

28.94

29.38

28.58

29.1

3037000

29.1

41

6/5/2012

28.81

29.64

28.73

28.99

2453900

28.99

42

6/12/2012

29.3

29.3

28.78

29

1881300

29

43

6/18/2012

29.47

29.9

29.11

29.5

2880400

29.5

44

6/25/2012

29.41

30.08

29.03

29.9

2609800

29.9

45

7/2/2012

30.1

30.46

29.69

30.36

1624600

30.36

46

7/9/2012

30.06

32.56

30.06

32.56

3396400

32.56

47

7/31/2012

32.6

32.99

32

32.06

2004800

32.06

48

8/6/2012

32.49

32.9

32.24

32.27

1749100

32.27

49

8/13/2012

32.65

34.85

32.34

34.67

2556000

34.67

50

8/20/2012

34.75

35.2

33.8

33.91

3789900

33.91

51

8/27/2012

34.2

34.67

34.02

34.52

2106100

34.52

52

9/3/2012

34.68

35.97

34.53

35.06

2804300

35.06

B. Graphs - Share Prices Performance

C. Overview of Share Performance / Trend of Share-market

Share Price Performance

The above graph entails that Wesfarmers' price has a constant trend throughout the month while there are considerable fluctuations in Australian securities exchange inn this month. Technical indicators and stock chart patterns show bullish direction and recommend stopping short positions or entering, long position or bullish spread options strategy in online trading. The graph shoes that the company maintains its revenue trend in this one month (Wesfarmers, 2012).

The major refuse was within august and September which was faced in 23rd august where the Australian securities exchange index declined by 3%. Hence, it can be reached that Wesfarmers' shares prices have positive prospects in the coming months.

ASX 200 Share Performance

From the technical point of view, the share performance of Wesfarmers reveals that there is a direct relationship between the ASX 200 and Wesfarmers. With the fluctuation in ASX 200, the share price of Wesfarmers also fluctuates. Furthermore, the ASX 200 has witnessed a major decline on 5th September but the share price rather increased with 0.2% instead of falling. This is due to the demand that increased on that date. The strength of an economy will determine whether a company meets earnings expectations of investors (Australian Securities and Investments Commission, 2011).

D. Calculation of Gain / Loss on Portfolio

Here, we assume that $15, 000 has been invested in this company from ...