Accounting Financial Analysis Report

Running head: ACCOUNTING FINANCIAL ANALYSIS REPORT
Accounting financial analysis report
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1ACCOUNTING FINANCIAL ANALYSIS REPORT
Table of Contents
Shareholder analysis........................................................................................................................2
Understanding of the business.....................................................................................................2
Types of investors those will invest in the company...................................................................2
Chairman’s or director’s message...............................................................................................3
Top 20 shareholdings...................................................................................................................3
Risk –return analysis........................................................................................................................4
Risk disclosures...........................................................................................................................4
Return to the shareholders...........................................................................................................6
Capital projects undertaken by the company...............................................................................6
Cost of capital guide........................................................................................................................6
CAPM..........................................................................................................................................6
WACC (weighted average cost of capital)......................................................................................7
Dividend growth model...............................................................................................................7
Selecting between CAPM and DGM method..............................................................................8
Business loans..............................................................................................................................9
Financial statement analysis..........................................................................................................10
Computation of ratios................................................................................................................10
Time series analysis for the ratios.............................................................................................11
Cross section analysis for the ratios...........................................................................................12
Reference.......................................................................................................................................14

2ACCOUNTING FINANCIAL ANALYSIS REPORT
Harvey Norman is the largest successful Australian retail group that controls more than
150 departmental stores. Most of these stores provide home entertainment equipment, computers
and the home appliances are operated on the unique model of franchise where the company
leases and owns properties and have tight controls on the retail operations though taking the
licensing fees. It operates under the main store format of Harvey Norman and three other formats
including patterned after the Ikea format, format of the furniture store and Space. The growth of
the company took off in 1990s while it introduced the new retail concept of ‘Category killer’ that
was brought over from US- the superstore. For initiating the new retail formula, the entity took
risk on relatively small market that is the computer sales (Harvey Norman Holdings 2019)
Shareholder analysis
Understanding of the business
Harvey Norman, the multi-national retailer based in Australia deals with bedding,
furniture, communications, computers and the products related to consumer electrical. Mainly
the entity operates as the franchise with its main brand and all the company operated stores that
owned by Harvey Norman Holdings Limited. For long time the company has been the staple for
the Australian retail however, in future the entity may lie well in the overseas. Last year the
company recorded $ 222 million net profit after tax that was an increase by 7.3% as compared to
the previous year as per the results published by the company. Most amazing fact about the
company is it is not only the leader in Australian or New Zealand retiling but also they are the
leading retailer of Europe and Asia (Harvey Norman Holdings 2019)
Types of investors those will invest in the company
24.59% ownership by the institutional owners are sufficient to lead the movements of
share prices in case of significant sell-off or the acquisitions of the shares by the institutions,
specifically when low level of the public shares are there in the market for trading. Although the
entity has high level of institutional ownership like stock moves, in short run they are more
commonly associated with the particular type of the active institutional investors that is the
hedge funds. Major parts of the shareholders of the company are the company insiders. Insider
ownership are concerned regarding the how the entity is managed and are less concerned with
direct impact of magnitude for share trading in market (Harvey Norman Holdings 2019). Insiders

3ACCOUNTING FINANCIAL ANALYSIS REPORT
hold significant part stake of 37.99% in the entity. Next the general public has 19.69% of holding
in the entity. Size of ownership gives the retail investors a collective power for deciding on the
major policy decisions like director’s appointment, business acquisition and executive
compensation. Another potential investors group in the entity is the private companies those hold
18.32% of the stake. These kinds of ownership provide the entity with predominant strategies
and can provide them with significant power for affecting the business strategies of the company
(Harvey Norman Holdings 2019)
Chairman’s or director’s message
Looking into the chairman’s report that addressed the shareholders of Harvey Norman, it
can be stated that the report is closely associated with the financial performance of the entity.
Further, it can be stated that the report mentioned the strength in context of financial
performance and future plan regarding investment in growing offshore network of the company.
Apart from the chairman’s report the Director’s report is also focused on the financial
performances of the company and mentioned about the future plans of the company. However,
both the reports did not mention anything about the unaudited disclosures of the company that
was considered to be important. However, the reports have implications of both content and form
of future narrative disclosures by the management (Static1.Squarespace.Com 2019)
Top 20 shareholdings
Among the top 20 shareholders of the company some are marginal investor including the
banks and nominees. Marginal investors are the representative investors whose activities reflect
the people’s belief who are trading at the stock at present (Static1.Squarespace.Com 2019). Apart
from the marginal investors details of other top shareholders are as follows –
No. of ordinary
shares
Shareholders Percentage of ordinary
shares
349439179 Mr. Gerald Harvey 31.36%
183,323,726 Mr. Christopher Herbert Brown 16.45%
52,262,874 Ms. Margaret Lynette Harvey 4.69%
17,896,300 Enbeear Pty Limited 1.61%
17,507,642 Ms. Kay Lesley Page 1.57%
5,213,182 Argo Investments Limited 0.47%