Business Valuation and Analysis

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Business Valuation and Analysis

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Executive summary
The report has covered all the information which is presented in the financial statements of the
company. For the identification of the trends, there has been carrying out of the vertical and
horizontal analysis which has been performed. By the help of that, all of the changes which are
taking place are identified and help in the evaluation of the position of the company. The
changes which are taking place in respect of the cash flows have been identified and in that the
cash flow for equity and firm both have been calculated separately. They show that company has
adequate cash balances which are maintained. The several ratios have been calculated and by
that the analysis has been made in respect of the income, liquidity, coverage, and solvency. In all
the aspects the business is gaining improvements. The risk and returns of the business have also
been taken into consideration and they are maintained adequately. The financial statements have
been projected and represented for further evaluation.

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Table of Contents
Executive summary.........................................................................................................................2
Introduction......................................................................................................................................4
a) Company background and mission..............................................................................................4
b) Common size & horizontal analysis............................................................................................5
c) Cash flow analysis.......................................................................................................................7
d) Liquidity analysis........................................................................................................................8
e) Income analysis...........................................................................................................................9
f) Solvency analysis.........................................................................................................................9
g) Coverage....................................................................................................................................10
h) Growth and risk analysis...........................................................................................................11
i) Prospective analysis...................................................................................................................11
Conclusion.....................................................................................................................................12
References......................................................................................................................................13
Appendixes....................................................................................................................................15

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Introduction
In the company, there are various financial aspects which are involved and required to be
analyzed in an appropriate manner. There will be analysis which will be performed for the same
by the use of the financial information that is available in the annual report of the company. The
proper evaluation will be made possible by considering the information for some years in the
past. In the report the financial analysis will be performed in context of Harvey Norman. The
information about the company and its mission will be provided. With that there will be
horizontal and vertical analysis that will be performed in respect of the financial statements of
the company. The cash flow which is involved in the business will also be analyzed to identify
the cash position of the business. It will be determined whether the company has appropriate
amount of cash available to meet the obligation. The liquidity of the company will be evaluated
and with that other analyzation will also be made in respect of income, capital structure,
coverage, and risk. There will also be the presentation of the prospective financial statements
which will be determining the position of the company in coming year.
a) Company background and mission
Harvey Norman is the retail group in Australia which is very successful and operated around 150
stores. The company was founded by Ian Norman and Gerry Harvey. The stores provide home
entertainment equipment, computers, and various home appliances. There is a unique franchise
model which is used by the company in which the properties are leased and owned. Under that a
part of the earnings is required to be expended on the local community and their welfare. All the
retail operations in the company are controlled in a very tight manner. The company adopts
various formats and the latest among them are Domayne which is an upscale store, furniture
store format and rebel sports chain (Harvey Norman, 2019). There are stores in various countries
and company is expanding in fast manner. The main mission of the company is to become the
world’s largest retail service provider and have integrated retail, franchising and property entity.
It is dealing with the fast-moving consumer goods in which growth is attained faster. It also aims
at providing the stakeholders with the appropriate returns and makes the company a place where
everyone likes to work by improving the workplace facilities.

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b) Common size & horizontal analysis
The analysis of the financial statements is made and in that there is the undertaking of horizontal
and vertical analysis. By the help of that, the trend which is prevailing from many years is
analyzed and also the growths can be taken into account. In the horizontal analysis there is the
comparison which is made among various years by taking one year as base year. In case of the
vertical analysis the evaluation is made among the values of one year by taking a variable as the
base. The trends which are identified in relation to various aspects are provided below.
2014 2015 2016 2017 2018
4,80,000
5,00,000
5,20,000
5,40,000
5,60,000
5,80,000
6,00,000
6,20,000
6,40,000
6,60,000
6,80,000
5,69,057
5,52,603
5,80,805
6,25,112
6,60,337
Property, plant and equipment
Property, plant and
equipment
Linear (Property,
plant and equipment)
The graph shows the increase and decreases which is taking place in case of the plant, property,
and equipment due to various acquisitions and disposals. It can be identified that the decline was
faced in 2015 but after that there is continuous increase (Harvey Norman, 2018). Appendix 1
shows that highest increase was made in 2018 with 16.04%.

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2014 2015 2016 2017 2018
0
5,00,000
10,00,000
15,00,000
20,00,000
25,00,000
15,13,662
16,17,151
17,95,75918,33,123
19,93,760
Sales revenue
Sales revenue
Linear (Sales
revenue)
The sales of the company are fluctuating and it can be noted from the graph as well as appendix
1. There was rise all the years which is made and the frequency of the increase is getting higher.
There was increment of 6.84% in 2015 and then 18.64% in 2016 which rose to 21.11% in 2017
and finally 31.72% in 2018. By the help of this it can be said that further increment will be made
at even higher rate. This is taking place because of the expansion which is made by the company
in various places which yield more revenue.
2014 2015 2016 2017 2018
0
50,000
1,00,000
1,50,000
2,00,000
2,50,000
3,00,000
3,50,000
4,00,000
4,50,000
5,00,000
2,12,238
2,68,914
3,51,340
4,52,966
3,80,050
Profit after tax
Profit after tax
Linear (Profit after
tax)
The changes which have been made in terms of the net profitability of the company have been