Woolworths has been one of the important consistent and successful retailer in Australia with the adoption of various strategies like the ‘fresh food people’ and the ‘everyday low prices.’ Net operating cash flows show an increasing trend and also the firm has been paying higher interim dividends to its shareholders each year. The firm has witnessed a 10.1% increase in net profits after tax and an 8.8% increase in earnings per share according to its financial reports. There has been an efficient management of balance sheet and profit and loss statements and approximately $8.2 billion has been paid to shareholders.
Wesfarmers is one of the largest retailers and listed firm in Australia and has retail operations in supermarkets, general merchandise, fuel and liquor operations etc. Wesfarmers has reported an increase of 15.8% earnings growth in 2010, as compared to 2009, with Cole’s supermarket alone delivering a 21% growth.
a) Budgetary processes that exist in two of the Australian Public Companies:
Budgetary process is used for formulating budgets by referring to certain principles, procedures and practices. This process should involve people at different levels in the preparation of a budget. It requires careful planning and appropriate fixation of authority and responsibility. The budget targets should be realistic, and a good accounting system should be incorporated within the organization. An efficient reporting system should be incorporated so that performance appraisal can be undertaken. Budgeting process should be established in all segments of business, therefore, there arises a need for the active participation of all employees. The budgets should be flexible because there should always be room for each employee of the firm to participate. The budgetary process involves the set up of an organization for budgetary committee, a budget officer, a budget centre and a budget manual. The budget officer presides on the budget committee. The budget committee can be further divided into various segments which consist of production manager, sales manager, finance manager, accounts manager, personnel manager and research and development manager. The production manager prepares the production and plant utilization budget. The sales manager prepares the sales and advertisement cost budget. The finance manager prepares the receipts and payments budget. The accounts manager prepares the cost budget while the personnel manager prepares the labor budget. The research and development manager prepares a research budget. A budget manual is a document in which the responsibility of several executives should be documented and the budgetary control systems are clearly defined. On the basis of time, budgets can be classified as long, short or current budgets. On the basis of functions, budget can be classified as operating, financial and master budgets. Similarly, budgets can also be classified as fixed or flexible. Both these firms follow an appropriate operating budget and there is a very important role of the CEO as well as the top financial management. b) Who is responsible to prepare the budget? Budget is thought to be one of the most powerful financial tools used by the companies. Budget is the plan or proposal, which determines the activities of an organization. As mentioned earlier, budget may be long term and short term budget, where short term budgets cover a period of one year whereas long term plans cover a period of