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Cash Flow Analysis of Harvey Norman and JB Hi-Fi

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Added on  2019-11-26

Cash Flow Analysis of Harvey Norman and JB Hi-Fi

   Added on 2019-11-26

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Running head: ACCOUNTING FOR MANAGEMENT DECISION MAKINGAccounting for management decision makingName of the UniversityName of the studentAuthors note
Cash Flow Analysis of Harvey Norman and JB Hi-Fi_1
1ACCOUNTING FOR MANAGEMENT DECISION MAKINGTable of ContentsIntroduction:....................................................................................................................................2Discussion:.......................................................................................................................................2Analyzing the cash flow statements of Harvey Norman by incorporating ratio analysis:..............2Analyzing the cash flow statements of JB Hi-Fi by incorporating ratio analysis:..........................3Conclusion:......................................................................................................................................4References:......................................................................................................................................5
Cash Flow Analysis of Harvey Norman and JB Hi-Fi_2
2ACCOUNTING FOR MANAGEMENT DECISION MAKINGIntroduction:The report discusses the analysis of the information that is retrieved from cash flowstatement of tow selected companies that is Harvey Norman and JB Hi-Fi. Harvey Norma is alarge multinational retailer of small appliances, bedding, flooring, furniture, informationtechnology provider based in Australia. On other hand, JB Hi-Fi is one of the fastest growingbusinesses that specializes in wide variety of consumer goods services in Australia and NewZealand (Anderson et al., 2015). In the current report, analysis of financial performances of boththe organizations has been demonstrated through the application of ratio analysis tool. Discussion:Analyzing the cash flow statements of Harvey Norman by incorporating ratio analysis:While analyzing the cash flow statement, it is required it consider various componentssuch as cash flow for operating activities, cash flow from investing activities and cash flow fromfinancing activities (Butler & Ghosh, 2015). It can be ascertained that net cash flow fromoperating activities for financial year 2016 was recorded at $ 437691 as compared to $ 340448 infinancial year 2015. This is indicating that there has been increase in cash generated fromoperating activities. Net cash used in investment activities has also witnessed an increase asdepicted by figure. Value stood at $ 179853 in year 2016 compared to $ 81803 in year 2015.Furthermore, net cash used in financing activities has also increased by considerable amount.Amount of cash used in financing activities increased to $ 307427 in financial year 2016. Working capital ratio of Harvey Norman is 1.26 and this indicates that organization iscapable of paying its liabilities using their assets. Cash flow adequacy ratio is recorded at 0.91that is indicative of the fact that a sufficient cash flow is generated by firm and there is norequirement of equity or debt funding in current scenario. Debt to total asset ratio stood at 0.39and debt coverage ratio is 16.20. Debt to assets is lower than one which is indicative of the factthat for funding the assets, organization is relying more on equity. Debt coverage ratio depictsthat there is sufficient operating profit generation. Cash flow to sales ratio for Harvey andNorman stood at 24.37% depicts that Harvey’s ability to efficiently convert its sales into cash.
Cash Flow Analysis of Harvey Norman and JB Hi-Fi_3

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