Accounting for Decision Making Assignment

Running Head: Accounting for decision making
1
Project Report: Accounting for decision making

Accounting for decision making 2
Contents
Introduction.......................................................................................................................3
Company Overview..........................................................................................................3
Financial analysis of the company....................................................................................3
Ratio analysis................................................................................................................3
Analysis............................................................................................................................6
Conclusion........................................................................................................................7
References.........................................................................................................................8
Appendix...........................................................................................................................8

Accounting for decision making 3
Introduction:
This report has been prepared to analyze the financial strength, stability, performance
and profitability of JB HI FI limited. In this report, financial tools have been taken into the
context to perform this study. This report depicts that how many changes have taken place
into the performance of the company from the last 5 years. For this study, financial figures
and annual report of the company has been taken into the consideration.
Company Overview:
JB HI FI limited operates its activities and the business in the industry of the music
since 1974. Mainly, this organization was just a store in beginning in 1974 which has been
opened by John Barbuto in East Keilor, Victoria. Further, in the year of 2000, the
organization has been obtained by the equity banking and after that it has been recorded in
ASX (Australian stock exchange) and right now this is considered as top companies of the
Australian market and music industry (Home, 2017). This company offers numerous products
to its clients such as DVD music, recorded music, games, DVD movies and TV shows.
Currently because of many changes into the Australian market, performance, stability and
profitability of the company is getting affected. Annual reports of the company have been
studied to analyze the company deeply. For this study, financial figures and annual report of
the company has been taken into the consideration.
Financial analysis of the company:
Financial analysis of a company is a study which evaluates the projects. Budgets,
business and various financial related entities of a company are used to evaluate the
suitability and performance of the company (Deegan, 2013). Mainly, the financial analysis is
done to investigate and analyze the organization’s liquidity, solvency and stability position.
In this report, ratio analysis has been taken into the context to analyze the performance of the
JB HI FI Limited.
Ratio analysis:
Ratio analysis is a process of financial analysis. This process is done to analyze a
quick indication about the financial performance and position of a company. It takes the
concern of various key financial figures. Ratios have been categorized into various forms to
make a better decision. The study of ratio analysis of JB HI FI is as follows:

Accounting for decision making 4
Profitability ratios:
Profitability ratios are a study to analyze the profit condition of the company.
Basically profitability ratios are the financial metrics which is used to assess the ability of the
business to generate expenses and other relevant cost during a particular time. In this report,
return on assets, return on equity, asset turnover, financial leverage and earnings per share
has been analyzed to identify the profitability position of the company (Elliott & Elliott,
2007).
2017 2016 2015 2014 2013
Profitability
Return on
equity
Net
profit/revenue
s
0.030561
5
0.038442
1
0.037513
7
0.036739
4
0.0350
7
Return on
assets
Net
profit/Equity
0.201405
2
0.375308
6
0.399416
9
0.433898
3
0.4773
7
Financial
leverage
EBIT / EBIT -
Interest
1.042801
6
1.018433
2
1.030769
2
1.049450
5
1.0595
2
Asset
turnover
total assets /
total sales
*365 159.0876
91.66540
2
89.45098
6
90.09758
9
93.015
4
Earnings per
share
Net income -
pref div /
shares
outstanding
0.391799
5
3.102040
8
2.403508
8
2.206896
6
1.8412
7
Through the reports, it has been analyzed that the position of the company has been
bit lower from last year. Few changes have taken place and due to which the profits of the
company has become lower from 2016 and due to which the financial performance of the
company has been affected (Annual report, 2017).
Liquidity ratios:
Liquidity ratios are a study to analyze the liquid position of the company.
Basically liquidity ratios are the financial metrics which is used to assess the ability of
the business to meet the current obligation of the company during a particular time. In
this report, return cash ratio, current ratio, quick ratio, inventory turnover ratio and
asset turnover ratio has been analyzed to identify the liquidity position of the company
(Corporate governance, 2017).
Liquidity