The efficiency ratio helps understand the manner in which the assets and liabilities are managed by the company (Mersland & Urgeghe 2013). The ATO of Wesfarmers has increased from 0.72 times in 2018 to 1 time in 2019 implying the better usage of assets. through the total assets declined in 2019 to $18333 million yet the company made an effective contribution with the available assets (Wesfarmers 2019). Similarly, the fixed asset turnover increased from 0.98 times in 2018 to 2.32 times in 2019 indicating a positive usage of the fixed assets. It indicates at present the company is generating 2 times more sales than the net book value of the assets.

3.3 Liquidity ratios

Liquidity enables the company to convert its liquid assets into cash to repay the liabilities and maintain a cordial relationship with the creditors and suppliers (Deegan 2016). Based on the computation, it can be commented that Wesfarmers is having a balanced liquidity ratio where the liquid assets are sufficient to meet the current liabilities. With a current ratio of 1:1 in 2019 Wesfarmers has the desired current assets to meet the current liabilities. Though the standard ratio is 2:1 where $2 of current assets is needed for every dollar of current liabilities yet the present ratio is justified for a giant company like Wesfarmers. However, the quick ratio of the company is below to the standard ratio of 1:1 implying that the business has lack of quick assets to honor the obligations. The stocks are excluded in a quick ratio meaning the stock will not be sold to repay the obligations. Hence, the liquidity perspective of the company is average.

3.4 Gearing ratios

Discussion
Maintaining the solvency is an important aspect of the business because it helps the business to procure loans and ensure expansion (Bellandi 2017). However, the company should have debt, and equity is proportion as a high geared company is exposed to higher stakes. Therefore debt in proportion is beneficial for the company. Going by the debt to equity and debt ratio, it can be commented that the company is having a higher proportion of debt (Vernimmen 2017).

The debt-equity of the company increased from 62.31% in 2018 to 83.86% in 2019 indicating that the company is borrowing more and hence might be exposed to risk. Moreover, the debt ratio of the company is below 50% that defines a good structure of debt by the company. Debt is expensive and at present, the company is having the desired ratio to flourish.

4 Recommendations and overall assessment
Has Year 1 been better than Year 2 for the company?
Wesfarmers projected a better performance in 2019 as compared to 2018. Better revenue and reduction n debt was the major highlight for the company. The increment in revenue by 4.3% to $27.9b was followed by an increment of net profit by 13.5% to $1.9 billion indicating the strength of the performance (Wesfarmers 2019). Moreover, the profitability of the company increased to a significant extent in 2019 that was highlighted by an increment in ROE and ROE. Both the ratios posted 33.67% and 19.94% respectively. Furthermore, the liquidity of the company is justified ensuring the company has sufficient liquid assets to meet the obligations. Lastly, the solvency ratio indicates a reasonable debt level used by the company.

Will the company succeed in the future?
Wesfarmers Limited tries to improve its sales with the help of proper expertise in the supply chain, shareholders value, and diversified portfolio. The recent research and industry conversation have also provided reports where the acquisition of Health scope can be very profitable for the organization shortly. This will not only add up to the organization's diverse holdings in retail, coal, agricultural, and manufacturing markets but also will increase the overall pressure exerted by the organization over the market. Hence, it is destined to succeed in the future.

The likelihood of a merger or acquisition?
Consider the relevant ethical considerations if the organisation becomes insolvent
As per the announcements of Wesfarmers, the company has entered into a Scheme Implementation Deed with Kidman Resources Limited whereby it proposed to acquire 100 percent of the shares outstanding for $1.90 per share through arrangement scheme. Another announcement made by the company is that of acquisition of Catch Group Holdings Limited for a whopping amount of $230 million (Wesfarmers 2019).

At present, the company is not contained in any legal disputes arising out of illegal paperwork, failure in claim settlement of the creditors, vendors, and suppliers The liquidator will take the in-charge of realizing the assets of the organization and will ensure that the funds that are raised from this disposal of assets will be used for settling the financial obligations of the creditors. The appointed liquidator will also be responsible for dealing with pending contracts, delisting the name of the organization from the Companies House’ Register, updating the creditors with necessary information from time to time throughout the liquidation process, conducting investigations and interrogating the directors of the organization as and whenever required

Suggest what should the company be doing help it succeeds?
The organization should try to improvise the supply chain processes by inducing forward-thinking processes and inventory solutions that can maximize the value of shareholders. The organization has constantly surpassed analytics and expectations of the market. The major difference in the organization’s approach is the conglomerate structure which provides the investors with part ownership in the various operations conducted by the organization (Wesfarmers Stakeholder engagement 2019). This will provide both personal and professional accountability solutions to the group. This is both a strategic advantage for the company as well as for the shareholders because this will help to provide exposure to the operations of the organization in the industry.

The impact of the political competitive environment on the business
External factors that need to be taken into consideration
Political
Many political factors influence the Retail Industry of Australia. The consistency of the organization in the market and the immense progression has not only created high competition for small businesses but also has forced the government to formulate new policies. These can stop the organization from gaining a monopoly in the market. Many other decisions that can provide a positive impact on the coal industries and barriers to electricity are affected by political matters (Andreou, Louca & Petrou 2016). The organizations need to have strong operations and positive impact over the business with the help of political factors to attract the investors and engage them to bring more investment in the company.

Economic
Australian economic market influences a lot of operations of the Wesfarmers performance. The success of an organization depends on the buying and selling structure of the market. Various micro environmental factors of the country like inflation rates, rate of interest, rate of Savings, and foreign exchange rate are observed to make variations in the demand and investment programs (Herremans, Nazari & Mahmoudian 2016). A proper analysis of all the practices can help the organization to gain a competitive edge in the market. The organization should try and induce measures to understand the trend of consumer spending and the industry growth rate. The profitability of the organization will be affected if the government will intervene in business operations. Therefore, the organization needs to look into the production and business strategy so that they can provide the investors with proper returns.

Social
The Australian population is having a trend of purchasing necessary items once a week. Also, the customers try to buy products under the same roof and choose places where all the items are available. They have a one-stop-shop mindset. Wesfarmers provide such services to the customers which makes it convenient for them. Also, the demographics of the population are properly analyzed by the organization to determine the operational strategies. Targeting the acquired audience is very important for the organization to get a better response from the market.
Technological

Australia is having one of the best and innovative technological measures that can be used by businesses to diversify the product chains. The organizations should try to make application of these technological measures to cater to the needs of the market. The diversified businesses consist of various provisions like chemical, fertilizers, and energy which make it necessary for the organization to organize the data professionally. Using technological measures can help the organization to maintain the information. The organization can also use technological variations to come up with the One-shop state of Technology. This for the society and the customers because it will help not only improve the consumer experience but also at the same time will help the organization to generate more revenue.
Legal

The retail business of Australia is highly impacted because of the imposition of carbon tax policies by the government. Businesses need to conduct operations fairly and ethically. Ethical measures will not only help the organization to have a strong background in the market but also will increase the morale of the business in front of investors. Also as per the government laws, the organization needs to safeguard employees and ensure fair treatment to the workers.
Environmental factors

Various environmental factors affect the business of the organization and the overall Retail Industry of Australia. Various measures and ecological operations have been carried out by the organizations to protect the Earth from environmental degradation. The organization also invests in different technologies to reduce wastage of resources, enhance the definition of climatic changes, and proper uses of water. Maintaining high standards towards the protection of the environment is necessary so that a high CSR ratio can be maintained.

Would you invest in this company?
Wesfarmers is observed to conduct diversified business activities. It owns various businesses including Office works, Kmart, Target, Catch, Bunnings, and other industrial divisions. It also has stakes in various other businesses which helps it to generate income investment in various market segments.

The organization is observed to stand financially stable in the market with an increase in revenue of 6% for the half-year which amounts to $15.25 billion (Wesfarmers 2019). Also, huge growth in the sales of various businesses of the organization is observed. The net profit after tax amounted to $1127 million which represented a 5.7 % increase over the previous financial period (Wesfarmers 2019). The organization is observed to have a strong balance sheet with diversifying the portfolio of cash-generating activities which makes it economically efficient.

It was observed that the organization made a few acquisitions including Lithium producer, Kidman resources, and few others throughout the year 2019. The organization also seeks to improvise the businesses and diversify the business strategies to advance the revenue growth streams. Hence, it can be stated that investment in the organization will be profitable in the long run.

5 References/Bibliography
Andreou, P., Louca, C., & Petrou, A. (2016). Organizational learning and corporate diversification performance. Journal of Business Research, 69(9), 3270-3284. doi:10.1016/j.jbusres.2016.02.022

Bellandi, F. (2017) Materiality in financial reporting. Bingley: Emerald Publishing Limited.

Chen, A., & Gong, J. (2019). Accounting comparability, financial reporting quality, and the pricing of accruals. Advances in Accounting, Incorporating Advances in International Accounting, 45.

Deegan, C. M. (2016) Financial accounting. 8e edn. North Ryde, N.S.W.: McGraw-Hill Education. doi:10.1016/j.adiac.2019.03.003

Herremans, I., Nazari, J., & Mahmoudian, F. (2016). Stakeholder relationships, engagement, and sustainability reporting. Journal of Business Ethics, 138(3), 417-435.

Mersland, R., & Urgeghe, L . (2013)International Debt Financing and Performance of Microfinance Institutions, Strategic Change. 22, 36-47, DOI 10.1002/jsc.1919.

Peirson, G, Brown, R., Easton, S, Howard, P. & Pinder, S. (2015). Finance, 12th ed. North Ryde: McGraw-Hill Australia.

Rakow, K. (2019). Incorporating financial literacy into the accounting curriculum. financial management assignment Accounting Education, 28(4), 384-400. doi:10.1080/09639284.2019.1578247

Varadarajan, R. (2017). Innovating for sustainability: A framework for sustainable innovations and a model of sustainable innovations orientation. Journal of the Academy of Marketing Science : Official Publication of the Academy of Marketing Science, 45(1), 14-36. doi:10.1007/s11747-015-0461-6

Vernimmen, P. (2017) Corporate finance : theory and practice. Fifth edn. Hoboken: Wiley.

Wesfarmers Stakeholder engagement. (2019). Stakeholder engagement. Retrieved from: https://sustainability.wesfarmers.com.au/our-reporting/stakeholder-engagement/

Wesfarmers. (2019). Wesfarmers 2019 annual report & accounts. Retrieved from: https://www.wesfarmers.com.au/docs/default-source/asx-announcements/2019-annual-report.pdf?sfvrsn=0

Appendices – attached Excel Spreadsheet
Ratios