Financial Statement Analysis of Kogan.com and JB Hi-Fi Limited

Advance Financial Reporting
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Contents
Introduction................................................................................................................................3
Liquidity ratio and Z-score.........................................................................................................4
Operating and Financial Review section....................................................................................8
Strengths and weaknesses of performance issues....................................................................10
Conclusion................................................................................................................................12
References................................................................................................................................13
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Introduction
Financial statement analysis is one of the most important strategies to compare a financial
position and other factors of a particular business organization with its competitors. The
primary advantage of financial statement analysis is that it uses actual historical data that is
published by the business organization through financial statements. This report will be
focused on evaluating the liquidity of kogan.com and comparing it with one of its major
competitors that is JB Hi-Fi Limited. In addition to that operational and financial issues in the
company will be evaluated with the help of financial statements (Robinson, Henry, Pirie &
Broihahn, 2015). Therefore it can be said that the primary objective of this report is to
conduct an overall analysis of financial statements for kogan.com.
Reference-
Robinson, T. R., Henry, E., Pirie, W. L., & Broihahn, M. A. (2015). International financial
statement analysis. John Wiley & Sons.
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Liquidity ratio and Z-score
Liquidity ratio- the Main objective of liquidity ratio is to evaluate the short term liquidity
position of a company by evaluating the data available in financial statements. Two ratios
will be used for evaluating the liquidity of kogan.com and comparing it with JB Hi-Fi
Limited i.e. current ratio and quick ratio. Both of these ratios help in evaluating the
availability of financial assets to pay for short term debts.
It is important for evaluating the liquidity position of a company as there are various
stakeholders that evaluate liquidity position before getting into business with the
organization. For example, a supplier will decide its credit limit for the business organization
on the basis of liquidity (Wahlen, Baginski & Bradshaw ̧2014). If the supplier is satisfied that
management of the company has sufficient financial assets for regular payment then raw
material will be provided on credit otherwise contract will be done in cash.
Reference-
Wahlen, J. M., Baginski, S. P., & Bradshaw, M. (2014). Financial reporting, financial
statement analysis and valuation. Nelson Education.
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