Business Finance

Running Head: Business Finance
Business Finance
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Business Finance
Part I (Business Description)
1. Company Name- JB Hi-Fi Limited
GICS SECTOR- Consumer Discretionary
GICS Industry Group- Retailing
GICS Industry- Specialty Retail (Morningstar, 2019)
2. Total Market Capitalization of JB Hi-Fi Limited- $2,901.95m (Morningstar, 2019)
3. JB Hi-Fi Limited (JBH) deals in consumer electronics, whitegoods and softwares like
music, games as well as movies. The group is a speciality discount retailer of highly
branded home entertainment related products. It conducts its business from standalone
destination sites, shopping centres and the online stores operating in Australia and
New Zealand.
The JB HI-FI Limited deals in the following products and services:
i. Televisions
ii. Audio equipment
iii. Computers
iv. Cameras
v. Telecommunications products and services
vi. Software
vii. Musical instruments
viii. Whitegoods
ix. Cooking products
x. Small appliances
xi. Digital content
xii. Information technology and consulting services
The company is working under the stewardship of Mr Gregory (Greg) Richards, the
Chairman and Mr Richard Murray, the Managing Director (MD) and Chief Executive Officer
(CEO) of JB HI-FI Limited.
4. The market risk (beta) of JB HI-FI Limited stands at 0.95 (Morningstar, 2019).
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Business Finance
5. The market risk (beta) of Industry stands at 0.96 (Morningstar, 2019).
6. The market risk of JB HI-FI Limited is 0.95 and the company operates its business in
retailing industry whose beta or market risk is 0.96. The difference between the beta
figures of market and company are differing by 0.01 which cannot be considered a big
gap. However, if we compare both these figures, then JB HI-FI Limited is little less
risky than its industry counterpart. From here, we can interpret that both industry and
JB HI-FI Limited are less volatile/unstable than the market because their beta fall in
the range of 0-1. If we look from an investor’s point of view, then the ones who are
more risk averse may opt for making investment in the companies operating in
retailing industry and one of those companies could be JB HI-FI Limited whose
market risk is less than the industry too.
7. 5 year holding period return for JB HI-FI Limited stands at 12.46% (Morningstar,
2019).
8. JB HI-FI Limited started its journey from one single store situated at East Keilor,
Victoria. It was established in the year 1974 by the owner whose name was Mr John
Barbuto (JB) and his major intention was to provide the best range of Hi-Fi along
with the recorded music at a price which stands the lowest in whole Australia. In the
year 1983, Mr John Barbuto sold his business and more nine stores came into
existence by the year 1999. When the business became successful then in order to
take the efficacious business model nationally it was acquired by the private equity
bankers as well as the senior management in July, 2000. Later, the business got itself
listed on the Australian Stock Exchange (ASX) in the month of October, 2003.
Presently, the company has become the largest retailer, dealing in home entertainment
products which is growing on a very fast pace. In the year 2004, JB HI-FI Limited
acquired the Queensland Clive Anthony chain of stores and these stores deals in the
products like white goods, air-conditioning, consumer electronics and cooking
appliances. At present, in all these stores a consumer can find all the products of JB
plus more and now it is JB Hi-Fi HOME stores. The renowned brands of computers,
Televisions, Hi-Fi, Car sound, Tablets, Portable Audio etc. are provided by the JB
stores. In all these stores, the consumers can find a vast range of recorded music,
DVD movies, games, Television shows etc. and all at a very low price. The company
is also known for its high quality personal service from their experts (JB HI-FI, N.D.).
If we talk about its operational history, then in the year 2018 it reported a rise of
12.3% in Net Profit after Tax (NPAT) and as per 2019 results the NPAT had again
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Business Finance
experienced a rise of 5.5% (Morningstar, 2019). So the company is operating from
1974- present that is JB Hi-Fi is approximately forty-five years old company.
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