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Introduction and Overview This report is to compare the performances of Woolworths Limited WOW and Fosters Brewing Group Limited FBG using the two respective 1996 Annual Reports and to assess the investment value of the two companies since investment value depends on past current and future performance Investment value can be determined by looking at the return and risk and understanding the future plans of a company WOW is primarily a retailer selling food and general merchandise through chain store operations within Australia while FBG is an international corporation which produces and markets alcoholic and non-alcoholic beverages as well as having a major investment in licensed properties Within this report we disclose various details about the two companies and see that the performance of WOW and FBG during 1996 is good WOW has continued to be a stable company and FBG has continued to expand and restructure its operations Return When comparing the return on assets for WOW and FBG WOW has a higher ratio of 1263 compared to FBGs 719 However it does not immediately follow that FBGs performance was poorer than WOWs The nature of the business must first be considered Although the two companies have similar EBIT the large difference in the two ratios is accounted for by a considerable difference in the value of the total assets FBG a producer of beverages has a lot of non-current assets 84 of total assets as well as inventory on hand while WOW is a retailer and thus would have less need for non-current assets with inventory being the largest component of its assets 44 FBG is continuing to develop and grow in two main areas Firstly FBG has invested in setting up Fosters China currently operating at a loss However once this is developed there will be a greater return for FBG as China has the worlds largest population and potentially has the largest beer market
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