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ACCT2077 Accounting for Managers

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Accounting for Managers (ACCT2077)

   

Added on  2019-11-19

ACCT2077 Accounting for Managers

   

Accounting for Managers (ACCT2077)

   Added on 2019-11-19

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TABLE OF CONTENTSQuestion 2..................................................................................................................................3Cash flow from operating activities.......................................................................................3Cash flow from investing activities........................................................................................3Cash flow from financing activities.......................................................................................4Question 3..................................................................................................................................4Evaluation of short term credit risk........................................................................................4Adequacy of cash resources with both the companies...........................................................4Survival for longer term of both companies..........................................................................4Comparison of cash generating capacity................................................................................4References..................................................................................................................................5
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INTRODUCTIONPresent study is based on comparative cash flow analysis of JB HI FI and HarveyNorman by considering relevant financial facts and figures. Study aims to determine cashefficiency of both business entities to evaluate aspect such as short term credit risk, adequacyof cash resources, survival for longer term and cash generating capacity. QUESTION 2Cash flow from operating activitiesYear201620152014Cash FlowfromoperatingactivitiesJB Hi-FiHarveyNormanJB Hi-FiHarveyNormanJB Hi- FiHarveyNorman$185.14million$437.69million$179.89million$340.45million$41.326million$338.9million(Source: Annual report of JB HI FI, 2016 and Annual report of Harvey Norman, 2016)Year2016JB Hi- FiHarvey NormanCash flow to sales ratio0.05.24Working capital ratio1.571.26Cash flow adequacy ratio1.211.21By considering cash flow from operating activities of both companies, it can benoticed that operational performance of Harvey Norman is better as it is showing increasinggrowth trend while growth percentage of JB Hi- Fi is comparatively lower. Coming to JB Hi-Fi, its retail business is more successful compared to Harvey Norman's counterpart, itseffectiveness in making utilization of its equity and assets was comparatively high thanHarvey Normanand same approach is applicable for cash flow generation efficiency (Park &Jang, 2013). Coming to financing framework and stability, JB Hi-Fi has depended largely ondebts but contained on issue regarding liquidity in both short and long term.With regard toHarvey Norman, its business of franchises guaranteed a larger and more consistentprofitability, but in its business of retailing, business adversely failed, its effectiveness in
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