Analysis of Financial Performance And Position

JB Hi-Fi Limited (JBH)
FIN600 TX YYYY
NAME: STUDENT ID:

Student name – ID FIN600 TX YYYY
Assignment – Company
Executive Summary
The main aim of this report is the analysis of financial performance and position of JB Hi-Fi
Limited (JB Hi-Fi) with the help of four types of ratios; they are profitability and market
performance ratios, efficiency ratios, liquidity ratios and gearing ratios. The main ratios are
undertaken for this analysis. The outcome of the report states that the company has
performed well in the areas of profitability, efficiency and liquidity. However, JB Hi-Fi has
certain issues in the areas of gearing because of the fact that the company does not have
adequate equity capital in the presence of high amount of debt capital that makes the
business highly leverage and risky. The report also undertakes the assessment of the
analysis of performance between the two years.
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Student name – ID FIN600 TX YYYY
Assignment – Company
Contents
Page Number
1 Introduction - Background and Business 2
2 Company Analysis - Current Financial performance, economic outlook
3 Ratio Analysis
3.1 Profitability ratios
3.2 Efficiency ratios
3.3 Liquidity ratios
3.4 Gearing ratios
4 Recommendations and overall assessment
5 References/Bibliography
Appendices – attached Excel Spreadsheet
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Student name – ID FIN600 TX YYYY
Assignment – Company
1 Introduction
1.1 Background and Business
The main aim of this report is the financial analysis of one of the ASX
listed major companies and JB Hi-Fi is selected for this report. This report
undertaken the financial analysis of JB Hi-Fi with the help of four types of ratios;
they are profitability ratios, efficiency ratios, liquidity ratios and gearing ratios.
In addition, the key ratios are taken into consideration under these types of
ratios. Based on the whole discussion, the financial performance and
investment decisions of JB Hi-Fi is taken into consideration. JB Hi-Fi is considered
as one of the major Australian companies having operations in the retail
industry of Australian. The main business products of JB Hi-Fi are consumer
electronics, major appliance and small appliance. The company has a large
employee base in order to serve its large customer base in different parts of
Australia. This report undertakes the ratio analysis of JB Hi-Fi (jbhifi.com.au,
2019).
2 Company Analysis
2.1 Financial statements, Current Financial performance,
economic outlook
It can be seen from the 2018 Annual Report of JB Hi-Fi that the company
has provided the financial information through certain financial statements;
they are statement of profit or loss, statement of profit or loss and other
comprehensive income, balance sheet, statement of changes in equity,
statement of cash flows and notes to these consolidated financial statements
(investors.jbhifi.com.au, 2019). JB Hi-Fi has an effective financial performance
in the current year. It can be seen that the sales of the company has increased
from $5.63 billion to $684 billion that is a growth of 21.8%. The same can be
seen in case of EBIT since this increases from $306.3 in 2017 to $350.6 million
in 2018 which is a growth of 14.5%. A healthy growth can also be seen Net
Profit after Tax (NPAT) that is from $207.7 million to $233.2 million with a
growth rate of 12.3%. Growth can also be see in Earnings per Share and total
dividend by 9.2% and 11.9% respectively. Apart from all these, total number of
stores of JB Hi-Fi has increases in 2018 from 303 to 311
(investors.jbhifi.com.au, 2019). All these aspects indicates towards a good
overall performance of JB Hi-Fi in the coming years. At the same time, it is
expected that there will be increase in retail sales due to increased demands of
the customers along with increase in per capital income. In 2019, the private
consumption growth is 2.5% and it is expected to expand by more 2.7% in the
coming years. All these aspects are good for the business of JB Hi-Fi
(investors.jbhifi.com.au, 2019).
3 Ratio Analysis
3.1 Profitability and Market ratios
(see appendix for
calculations) 2018 2017 Industry average
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