How would your recommendation in part b change if

How would your recommendation in Part (b) change if Wesfarmers chose to ra
million shares at $35.00 per share?
How does the decision of if Wesfarmers raising $1,575 million via a rights iss
share impact on Wesfarmers’ capital structure? Is this new capital structure c
of growing by investing in underperforming businesses?

NWC = operating cash + receivables + inve
Days Inventory = Average inv
Accounts Receivable = Averag
Accounts payable = Average A
operating cycle cash cycle COGS Days in year operating cycle = Inventory days+ accoun
54 18 Cash Cycles = days inv. + days acc. rec. – d
33 -8
101 36 $ 22,012.00 365
167 74 $ 4,896.30
66 38
in inventory
urbishments internally? What steps do
old (cash/COGS) suggests it is operating (not
including Bunnings absent Coles (Exhibit 2) and 2008
rovement is inventory, accounts receivable already less than
reduction in total inventory days 92 to 77 days.
1 days.
6 days
GS = 24*60.31 = $1.4 billion
spond to reduced inventory holdings and impact on
aise $1,575 million via a rights issue of 45
How was Wesfarm
Unclear. Incorrect com
Bunnings) not firm as
63% of EBIT from reta
which is hardware (Bu
(Mining and Chemical
receivable than Woolw
(but franchise and wa

Total Debt 10654
Market cap 29817.62 40471.62
Leverage 0.2632461957
new market c 31392.62
new leverage 0.2533854089
Insurance Au
QBE Insuranc
AMP
AWB
leverage
woolworths
7.5%
Metcash 15.8%
Industry Aver 11.65%
aise $1,575 million via a rights issue of 45
ent can be met with rights issue plus a limited
ventory or 13 days from the retail division.
sue of 45 million shares at $35.00 per
consistent with Wesfarmers’ strategy
9.4+45) = $37.17 as a consequence of rights issue.
ng a smaller fall in leverage.