ACCY801: Accounting and Financial Management Assignment

Running head: ACCY801
Accy801
Name of the student
Name of the university
Author note

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Table of Contents
a. Introduction and company summary..................................................................................2
b. Details of board of directors...............................................................................................3
c. Details of board...................................................................................................................6
d. Financing or investment decision of JB Hi-Fi....................................................................7
e. Corporate governance recommendation.............................................................................8
f. Details of auditors...............................................................................................................8
g. Code of ethics.....................................................................................................................9
h. Top investors of JB Hi-Fi.................................................................................................10
i. Ratio..................................................................................................................................10
j. Conclusion and recommendation......................................................................................11
Reference..................................................................................................................................13

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a. Introduction and company summary
One of the largest retailers in the home entertainment sector from Australia, JB Hi-Fi
is the leader in the Australian market with their wide range of products, competitive price, big
brands. The products they deal with are wireless speakers, headphones, laptops, mobile
phones and iPads. Further, the company recognizes the importance of corporate governance,
social and environmental matters with regard to the suppliers, stakeholders and customers (JB
Hi-Fi | JB Hi-Fi - Australia's Largest Home Entertainment Retailer 2017). Various other
details of JB Hi-Fi are detailed as below –
 Industry sector – the company is under the retail sector of Australia and is expected to
grow at a positive rate in the coming years. However, the growth of the retail sector in
the Australian is slower as compared to 2015. It has been identified that in the retail
sector Wesfarmers is the biggest competitor of JB Hi-Fi and their main earnings are
driven through the home products. Thus, in the coming years also the company is
expecting a tough competition with Wesfarmers.
 Primary activities – the largest retailer in home entertainment from Australia, JB Hi-
Fi are famous for their low prices, wide range of products and biggest brands. The
products they deal with are wireless speakers, headphones, laptops, mobile phones
and iPads. The customer can check out with latest entertainment and car sound, digital
cameras, GPS Nav, drones, fitness watches, ink and printers, accessories, memory
cards, musical instruments and JB Hi-Fi gift cards.
 Recent performance – as per the recent financial statement of the company dated 30th
June 2017, the gross profit of the company amounted to $ 1,231 million, out of which
the company was able generate the net income of $ 172 million. Further, the share
price of the company as on 30th June 2017 was $ 23.37 per share and the company

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paid a final dividend of 46 cents per share to the shareholders (JB Hi-Fi | JB Hi-Fi -
Australia's Largest Home Entertainment Retailer 2017).
b. Details of board the of directors
Name Gender Age Education Career history Remuneration
Greg
Richards,
Non-
Executive
Director
Male 52 B. EC
(Honours)
He has more than 25 years of
experience in the industry
related to investment
banking. He was also the
equity partner of Goldman
Sach’s JBWere for 17 years.
Further, he was non-
executive Chairmen in Vitaco
Holdings Limited during
2015 August to 2016
November.
$ 299,000
Stephen
Godard,
Non-
executive
director
Male 58 BSc (Hons),
MSc
He has experience in retail
sector for more than 30 year
as the senior executive. These
include senior management
post in Myer, operation
director and finance director
in David Jones. He is even
the non-executive director in
GWA group limited and also
$ 126,189

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has the experience of as the
chair and nonexecutive
director of Audit and risk
management committee
under Surfstich Group Ltd
and Pacific Brands.
Beth
Laughton
, Non
executive
director
Female 55 B.Ec,
FAICD,
FCA
She is a qualified Chartered
accountant and has more than
25 years of experience in
corporate finance. She also
has an experience in
telecommunication,
information technology and
entertainment for more than
12 years.
$ 175,000
Mark
Powell,
Non
executive
director
Male 56 BSc (Hons),
MBA
(Distinction)
, MSc, MA
(Hons),
BApp.
Theol.
He has more than 25 years of
experience in the wholesale,
retail and logistic sector. He was
also the advisor of board of The
Good guys for more than 18
months.
$ 45,044
Wai
Tang,
Non
Female 51 MBA,
BAppSC,
GAICD
He is extremely experienced
in retail industry and has
gained knowledge from the
$ 156,191

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executive
Director
senior executive and the
board roles. He is the ex-
senior executive and
operation director of Just
group and the chief executive
office. Ms Wai is also the
audit committee member and
non executive director of the
Vicinity Limited and the non-
executive director of the
Kikki K, Visit Victoria and
Melbourne Festival.
Richard
Uechtritz,
non
executive
director
Male 57 Ha has more than 30 years of
experience in the retail sector.
Further, he was the co-
founder of smiths Kodak
express and rabbit photo
$ 134,000
Richard
Murray,
Executive
director
and
Group
CEO
Male 49 B. Comm,
Applied
Finance and
investment,
Grad Dept,
FCA
He has more than 20 years of
experience in the finance and
retail sector. Further, he
worked for more than 10
years in Deloitte. He is also
the chairmen in Australian
Charities fund employer
leadership group.
$ 30,54,708

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Gary
Levin,
non
executive
director
Male 53 B. Comm,
LLB
He was the member of audit
and risk management
committee and Remuneration
committee
$ 53,333
c. Details of board
Role of the board – primary role of board is to increase and protect the long-term value of the
shareholders. Further, the board is accountable towards the shareholders for the company’s
performance and they monitor and direct the affairs and business of the company on the
shareholder’s behalf. The board is also responsible for overseeing the affairs and business of
the company, setting-up the financial and strategic objectives. Further it oversees the integrity
and reliability of the company’s financial management, accounting, disclosure policies,
financial reporting, overseeing the disclosure policies and establishing the transparent and
formal process for the review, appointment and selection of the directors (Bailey et al. 2015).
The executive officer of the group who is also answerable to board, is accountable for
promoting, directing and managing the profitable development and operation of the company.
A copy of the Board charter is found in the website of the company at the www.jbhifi.com.au
through the governance and investors section (JB Hi-Fi | JB Hi-Fi - Australia's Largest Home
Entertainment Retailer 2017).
Composition of board – the board assure that the member’s combination offers the
appropriate range for the skills, experience, knowledge, perspective, diversity for allowing
them to perform its responsibilities and obligations. The board are aware of the fact that the
wide range of skills, experience, gender and backgrounds assures the diverse viewpoints that

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will facilitate the decision making and efficient governance. Further, the company believes
that the experience and skills in below mentioned areas are preferable for the board for
performing the role efficiently. The board also takes into consideration the fact that the
present composition plays an efficient mix of the experience and skills that allow the
company to govern the business efficiently add value to the business and operate effectively.
The board includes the following expertises those are having the following experiences –
 Management and executive experience
 Expertise with risk management experience
 Expertise with retail experience
 Experienced with executive remuneration set up
 Experienced and expertise in operational management
 Property expertise
 Financial expertise
 Other board expertise
 Experienced and expertise in governance
JB Hi-Fi maintains the non executive director’s majority it their board. At present, the
board is comprised of seven directors, out of which 6 are non-executive directors including 1
executive director and Chairman.
d. Financing or investment decision of JB Hi-Fi
Cash outflow from the investing activities amounted to $ 885.50 million related to the
acquisition of the company – The Good Guys. Other investing activities carried out by the
company were as follows –

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 $ 49.1 million were invested within the year in the capital expenses projects including
opening of new stores, stores upgrades and relocations, it and online projects (JB Hi-
Fi | JB Hi-Fi - Australia's Largest Home Entertainment Retailer 2017).
e. Corporate governance recommendation
The organization recognizes the importance of the corporate governance associated
matters to the stakeholders, customers and suppliers. Further, the board monitors and reviews
the developments in the corporate governance regularly that are relevant to company.
The management and the directors of the company are committed toward assuring
that the business of the company is ethically conducted and it is as per the corporate
governance standards. Further, the board believes that the except otherwise it is disclosed
with regard to the statement of corporate governance –
 During the year 2017, the company was complied with spirit of principles included in
the ASX recommendations
 The company’s practices and policies are complied with the 3rd edition of ASX
Corporate Governance Council Principles and Recommendations (ASX
Recommendations) in all the material aspects
f. Details of auditors
The audit of the company for the financial year ended 2017 was conducted by
Deloitte Touche Tohmatu. As per the auditor in accordance with the Corporation act 2001,
Section 307C, they are happy to declare the independence of the directors from JB Hi-Fi
Limited. Further, they declared that there were no contravention found regarding –
 The applicable code for the professional conduct with regard to the audit

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 The requirement of auditor’s independence for Corporation Act 2001 with regard to
the audit
The objective of the auditor regarding the accounting information are to find out
whether the report is free from the material misstatement irrespective of the fact that it is
owing to error or fraud. Further, the auditors regularly communicate with the directors for
planning the timing and scope. The audit was carried out as per the Australian Auditing
standards and as per the requirement of auditor’s independence. Further, the auditors are
independent as per the requirement of Corporation Act 2001 and ethical requirement of
Accounting Professional and the APES 110 Code of Ethics as per the ethical standards board
those are relevant to the audit of financial report from Australia (JB Hi-Fi | JB Hi-Fi -
Australia's Largest Home Entertainment Retailer 2017).
Total remuneration of the auditor group Deloitte Touche Tohmatsu for the year
ended 2017 was amounted to $ 723,000.
g. Code of ethics
The company accepts the requirement for employees, executives and directors for
observing the ethical standards to the highest level of the corporate behaviour. Further, the
company adopted the code of ethics to deliver the employee with the guidance regarding
what the organization deems as the acceptable behaviour (Bodie 2013). The major elements
of the company’s code of ethics are focussed on –
 Reinforcing the commitment of the company towards the highest standards of the
professional and business ethics
 Complying with the laws and regulations

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 Assures that the financial interests and personal business do not conflict with their
duty towards JB Hi-Fi
 Respecting the sensitive and personal information as per the privacy legislation
Further, none of the services of the company violates the general principles with
regard to the code of conduct for APES 110 code of ethics for the professional accountants
that are issued by the Australian professional & ethical standards board (Post and Byron
2015).
h. Top investors of JB Hi-Fi
Name of the shareholder Number of share
held
% of the issued
shares
J.P. Morgan Nominees Australia Limited 23,338,582 20.40
HSBC Custody Nominees (Australia) Limited 21,189,769 18.52
Citicorp nominees Pty Limited 13,534,438 11.83
BNP Paribas Nominees Pty Ltd 11,792,331 10.31
National Nominees Limited 6,633,226 5.80
i. Ratio
TYPE FORMULA 2016 2017
Industr
y
average
Liquidity ratio
Current ratio Current asset/current liabilities 1.57 1.32 1
Efficiency ratio
Receivable turnover ratio
Credit sales/Average accounts
receivable 40.35 38.21
More
better
Leverage ratio

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Debt-Equity ratio Total debt/total equity 0.27 0.65 0.5
Profitability ratio
Net profit margin Net profit/net sales *100 3.85 3.06 7%
Cash flow management ratio
Cash flow to asset ratio Cash flow from operation/total assets 0.19 0.08 0.2
Market strength ratio
Price earnings ratio Price/earning 18.66 15.08 29
Ratio analysis – it can be identified from the above calculation that the company’s liquidity
ratio has been reduced from 1.57 to 1.32 over 2016 to 2017. Though it is reduced, the ratio is
still enough to pay off the current obligation (Graves and Shan 2014). Further, looking at the
receivable turnover ratio of the company it can be said that the company is efficient in
collecting their debt as the receivable ratio during 2017 is 38.21. However, the leverage ratio
of the company for the year was more than the industry average and it can be identified that
the company improved the ratio from significantly lower ratio of 2016 (Wagner et al., 2015).
If the profitability ratio of the company is to be considered, it can be identified that the
profitability ratio of the company is almost 50% lower as compared to the industry average. It
was also identified that though the cash flow management ratio of the company for 2016
found to be satisfactory as compared to the industry average, the ratio for 2017 is
significantly low as compared to the industry average. Moreover, the price earnings ratio of
the company was almost 50% lower than the industry average for both 2016 and 2017.
j. Conclusion and recommendation
From the above discussion and analysis it can be concluded that the performance of
the company can be quite stable and steady. However, the profitability ratio of the company
is comparatively low as to the industry average. Moreover, the company’s price earnings

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ratio for both 2016 and 2017 is comparatively low as to the average of the industry that is 29.
Therefore, the company is suggested to find out the wastages and curtail the expenses
wherever possible. Further, JB Hi-Fi shall take the necessary steps to increase the sales
through offering discounts or advertising the brand. Moreover, the company must try creating
the value of the shareholder through generation of income from increasing of sales and
creating the value of the shareholders.

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Reference
Bailey, J., Price, R., Pyman, A., and Parker, J. 2015. Union power in retail: contrasting cases
in Australia and New Zealand. New Zealand Journal of Employment Relations
(Online), 40(1), 1.
Bodie, Z. 2013. Investments. McGraw-Hill.
Graves, C., and Shan, Y. G. 2014. An empirical analysis of the effect of internationalization
on the performance of unlisted family and nonfamily firms in Australia. Family Business
Review, 27(2), 142-160.
JB Hi-Fi | JB Hi-Fi - Australia's Largest Home Entertainment Retailer. 2017. Jbhifi.com.au.
Retrieved 13 September 2017, from https://www.jbhifi.com.au/
Post, C., and Byron, K. 2015. Women on boards and firm financial performance: A meta-
analysis. Academy of Management Journal, 58(5), 1546-1571.
Wagner, D., Block, J. H., Miller, D., Schwens, C., and Xi, G. 2015. A meta-analysis of the
financial performance of family firms: Another attempt. Journal of Family Business
Strategy, 6(1), 3-13.