Research Report on Financial Analysis of JB Hi Fi Ltd
Added on 2019-12-28
21 Pages4839 Words427 Views
FINANCIAL ANALYSIS
Table of Contents1. INTRODUCTION...................................................................................................................................................................................51.1 Purpose...............................................................................................................................................................................................51.2 Scope..................................................................................................................................................................................................51.3 Methodology......................................................................................................................................................................................51.4 Assumptions.......................................................................................................................................................................................51.5 Limitations.........................................................................................................................................................................................62. COMPANY OVERVIEW.......................................................................................................................................................................63. ECONOMIC FRAMEWORK.................................................................................................................................................................64. FINANCIAL ANALYSIS.......................................................................................................................................................................74.1 Ratio analysis.....................................................................................................................................................................................74.1.1 Activity analysis..............................................................................................................................................................................74.1.1.1 Short-term activity ratios.............................................................................................................................................................74.1.1.2 Long-term activity ratios..............................................................................................................................................................84.1.2 Profitability analysis.......................................................................................................................................................................84.1.3 Liquidity analysis............................................................................................................................................................................94.1.4 Long-term debt and solvency........................................................................................................................................................10
4.1.5 Du Pont analysis............................................................................................................................................................................105. CASH FLOW ANALYSIS....................................................................................................................................................................116. PROSPECTIVE ANALYSIS................................................................................................................................................................116.1 Sales and EBIT forecasts.................................................................................................................................................................117. CONCLUSION AND RECOMMENDATIONS..................................................................................................................................12REFERENCES..........................................................................................................................................................................................14APPENDIX................................................................................................................................................................................................16
List of tablesTable 1 Common Size profit and loss account of JBH..............................................................................................................................16Table 2 Common size balance sheet of JB HI Fi Ltd................................................................................................................................16Table 3 Ratio analysis of JBH from 2012 to 2016....................................................................................................................................18Table 4 Ratio analysis of HVN for 2015 and 2016...................................................................................................................................20
1. INTRODUCTION 1.1 Purpose The main target or thrust of the research is to examine and compare the performance of the JB Hi Fi Ltd over the fiveconsequetive years from 2012 to 2016. Moreover, comparative analysis also will be made with its close rivalry firm, Harvey NormanHoldings. With the help of evaluation of financial performance, invest ability of the company will be assessed. 1.2 ScopeThe research report covers an in-depth and thorough analysis of the activity ratio, liquidity ratio, solvency ratios, profitabilityratios along with DuPont analysis. Moreover, prospective analysis will be made for the projection of business performance for thefuture period. At the same time, ratio analysis of JB HI Fi (JBH) Company will be done in comparison to the main competitor, HarveyNorman Holdings (HVN). 1.3 MethodologyThe report will apply financial tool, ratio analysis for the purpose of Strategic Financial Analysis (SFA) of JBH with the closecompetitor HVN. It will presents both the internal as well as external analysis by performing ratio analysis and Du-Pont analysis overthe years and with the rival firm using annual reports, statement of comprehensive income, statement of financial position andstatement of cash flow as well (Beatty and Liao, 2014). Furthermore, the ratios will be used to examine trend over the years so thatprospective analysis can be made for the future period to form convincing opinion on its investment ability. Apart from this, commonsize statement will be prepared for the purpose of detailed analysis of the business performance.
1.4 Assumptions It is assumed that the data which is acquired from the annual reports are true and valid henceforth, ratio computation providedauthentic results for examination of the business performance and its financial position by creditworthiness and solvency evaluation. 1.5 LimitationsInaccuracy of the information may leads to provided misleading results and tends to take incorrect and enviable decisions.Besides this, differences in the accounting policies and rules adopted by the JBH and its competitor HVN may also leads to takeinefficient decisions. In-depth evaluation and examination consumes more time and required large resources which is also a drawbackof the study. 2. COMPANY OVERVIEWJB Hi Fi Ltd is New Zeland and Australian retail who is engaged in the distribution of home consumer goods from its centrelocations and online stores. It has a large goods portfolio comprising CDs, DVDs, Video games, Blu-ray disc, electronic goods &home appliances and hardware and headquarter is located in Melbourne, Australia. Harvey Norman is the strongest competitor of JBHI Fi Ltd which is a multinational retailing firm of computers, bedding, communication, furniture and other consumer electronicsgoods headquartered in Homebush West, Australia. 3. ECONOMIC FRAMEWORKDiscovering the current economic conditions of Australian retail industry, it is growing at a faster pace. The sector shows agrowth of 3% in the year 2016 although the results shows progressive growth still in comparison to 2015, it is still slower. The reasonbehind this is Australians citizens prefer cautious discretionary spending because of less income growth. Online retail shows growth atsteady rate across multiple channels. Digital presence has brought significant change in people preference as now they prefer
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