JB Hi-Fi Company Analysis

The provided assignment is an in-depth analysis of JB Hi-Fi, a retail electronics company. It covers the company's strategy, which includes innovation and diversification, as well as its hedging transactions. The assignment also discusses potential downside risks, including economic, environmental, and social sustainability risks. Furthermore, it examines the company's dividend policy, including statutory dividends, underlying dividend growth, earnings per share, and price earnings ratio.

Financial Analysis and Valuation
(FIN103)
Assignment 3: Company valuation and
investment recommendations
Total marks: 50
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Instructions to students
• This assignment covers Topics 5, 7, 8 and 9 and accounts for 50% of your final grade.
• There are five (5) areas you need to focus on in this assignment. You should answer all areas.
• You are required to conduct research beyond the FIN103 subject materials when answering some of the
assignment areas.
• The overall word limit for the assignment is 2,000 words. Marks will only be awarded for answers up
to the word limit (plus 10%) for each question. Any material written after this will not be counted
towards your mark for that question. Headings, quotes and references within the body of the answer
are included in the word count. Numerical tables, calculations, and reference lists are not included.
For more information on word counts and their rationale, go to Assessment  Assignment 
General assessment information.
• Refer to the Criteria-based Marking Guide for guidelines on what is expected for each question.
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presentation, word limits, citations and referencing, collusion, plagiarism and other policies,
useful resources, submitting your assignment and accessing your results.
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not attached as an appendix. Appendices to assignments will not be read.
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answer) when quoting or using material from external sources. Include a reference list at the end of
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Hub’ in KapLearn for further information on referencing.
• State all assumptions used in providing your answer.
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of the assignment will not be considered by the marker. Refer to the ‘Refer to the ‘Extensions and
special consideration’ section of the Assessment Policy on Kaplan’s website for more information.
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Learning outcomes (LO) mapping Marks
2. Explain how corporations are financed, the needs of their stakeholders and the calculation
of dividend returns to various types of shareholders. 3
3. Calculate a company’s working capital, profitability and market performance ratios using its
annual report. 20
4. Assess the company’s performance using the results of the financial ratios calculated to
make an investment recommendation. 22
5. Explain key valuation concepts and the valuation process. 5
Total marks 50
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Assignment presentation and referencing
Reference and cite all your sources when quoting or using material from external sources.
You are required to:
• use an appropriate presentation and format for your assignment
• demonstrate independent research and analysis
• demonstrate appropriate use of relevant references
• follow the Harvard referencing style as recommended in the ‘Referencing and Citations Guide’
available from the ‘Library Learning Hub’ in KapLearn
• include a reference list at the end of your assignment following the recommended referencing style
• adhere to the assignment word limit.
Background information
• For this assignment you are required to evaluate the quality of JB HiFi’s (JBH’s) earnings, calculate and
analyse market performance ratios related to JBH, and prepare a report in which you are required to
provide an investment recommendation for JBH.
• For the purposes of your analysis and discussion for questions 1, 2 and 4, ignore post balance date events
at JBH (i.e. post 30 June 2017 events). In other words, your responses to questions 1, 2 and 4 should be
based on JBH’s performance up to 30 June 2017. However, for Question 3, do not ignore any dividends
that were declared post 30 June 2017 that relate to JBH’s financial year ended 30 June 2017.
• Show all workings for any ratio calculations in your answers. Your workings and answers should be
rounded (unless otherwise stated in a question) to the same extent that JBH has rounded amounts in its
2017 Financial Statements. For example, JBH’s total assets of $2,452.3 million as at 30 June 2017 would
be shown in the assignment as $2,452.3 million.
• Consistent with Assignment 2, assume that the only significant items in FY2017 were as follows:
– transaction fees and implementation costs of $22.4 million pre-tax ($15.7 million post tax) associated
with the acquisition of The Good Guys
– goodwill and fixed asset impairment charges relating to JBH New Zealand of $15.8 million pre-tax
($11.1 million post-tax).
• Assume that the current market price (CMP) for JBH at 30 June 2017 is $23.37.
• Assume that the FY 2017 price/earnings ratio for the ASX Consumer Discretionary sector is 12.8 times
(x), while the FY2017 dividend yield for this sector is 4.1%.
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• When calculating earnings per share (EPS), cash flow per share and net tangible assets (NTA) per share,
assume the following in relation to JBH share capital movements during the financial year:
Date Details
Number of
shares issued/
(bought back)
Application price
$
Last market price
cum issue
$
1 July 2016 Starting number of shares 98,947,309
1 31 August 2016 Employee option exercise 277,863 26.05 30.07
2 26 September 2016 Institutional entitlement offer 9,891,258 26.20 30.81
3 11 October 2016 Retail entitlement offer 5,246,066 25.20 29.55
4 28 February 2016 Employee option exercise 58,907 24.99 26.82
30 June 2017 Ending number of shares 114,421,403
– Assume that all share issues occur at the end of the dates of issue (i.e. at 5.30 pm or close of
business).
– When time weighting the number of shares, work in days (not months) and use the exact number of
shares (not the number of shares rounded to the nearest 1,000). Note that while partial shares can
be carried forward in calculations, only whole shares should be shown in tables (shares are not
divisible).
– Any calculations of market price ex-issue must be to four (4) decimal places.
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Question 1 Quality of earnings (12 marks | Word limit: 500 words)
LO3: Calculate a company’s working capital, profitability and market performance ratios using its
annual report.
LO4: Assess the company’s performance using the results of the financial ratios calculated to make an
investment recommendation.
(a) Evaluate JBH’s quality of earnings with reference to the trend in earnings results (at the earnings
before interest and taxes (EBIT) level as disclosed in JBH’s 2017 Annual Report) over the past five
years; the occurrence of significant items in FY17; and the nature of its earnings base. Then provide
an overall conclusion about JBH’s earnings quality. (7 marks)
(b) Calculate JBH’s 2017 effective tax rate to the nearest whole percentage and provide a brief
assessment of JBH’s effective tax rate. (3 marks)
(c) Calculate JBH’s 2017 financial gearing profitability ratio ($m) to one (1) decimal place and provide an
evaluation of this ratio. (2 marks)
Criteria-based marking guide for Question 1
Excellent (Mark range: 10–12 marks) Satisfactory (Mark range: 6–9 marks) Unsatisfactory (Mark range: 0–5 marks)
• provides an evaluation of JBH’s EBIT
trend over the last five years;
the incidence of significant items in
FY17; the quality of JBH’s earnings,
covering all (or nearly all) key points.
Provides an overall conclusion
• provides an evaluation of some of the
following: JBH’s EBIT trend over the last
five years; the incidence of significant
items in FY17; the quality of JBH’s
earnings and an overall conclusion.
However, the answer does not mention
all key points
• makes little or no attempt to the
consider the following: JBH’s EBIT trend
over the last five years; the incidence of
significant items in FY17; the quality of
JBH’s earnings and an overall conclusion
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Insert your answers to Question 1(a)–(c) below this line
(a) Evaluate JBH’s quality of earnings with reference to the trend in earnings results (at the earnings
before interest and taxes (EBIT) level as disclosed in JBH’s 2017 Annual Report) over the past five
years; the occurrence of significant items in FY17; and the nature of its earnings base. Then provide
an overall conclusion about JBH’s earnings quality. (7 marks)
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Page 27
 Over the past five years, JBH’s EBIT and Revenue has increased by $129.7m and $2,319.6m
respectively. Both EBIT and Revenue have increased about 70-72% over the period. EBIT margin
have remained the same and stable regardless of the increase in revenue and EBIT due to the
acquisition of The Good Guys. This indicates that JBG’s earning have increased where its operating
performance have remained stable in the last five years. As discussed in the financial report, The
Good Guys business does not, itself, perform as expected or the acquisition has an adverse effect
on the performance of JB Hi-Fi business due to, for example, management being preoccupied with
The Good Guys business. The Group has developed a detailed integration plan for the businesses
where appropriate. (page 28) Hence, there isn’t expected impact to the group.
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The cost of sales have been maintained at the same level as the growth in revenue as the increasing scale
of the Group’s operations was able to deliver cost reductions which offset the increase in unexpected cost.
(page 28)
2017 2016 2015 2014 2013
Profits before tax from continuing operations 259.2 217.8 195.5 182.7 168.2
Add back: interest expense 10.7 3.9 5.9 8.8 10.2
Add back: significant expenses - acquisition of The Good Guys 22.4 - - - -
Add back: significant expenses - JBH New Zealand impairment 15.8
EBIT 308.1 221.7 201.4 191.5 178.4
Revenue 5,628.0 3,954.5 3,652.1 3,483.8 3,308.4
EBIT margin 5.5% 5.6% 5.5% 5.5% 5.4%
2017 2016 2015 2014
Change in EBIT (%) 39% 10% 5% 7%
Change in Revenue (%) 42% 8% 5% 5%
Both EBIT and Revenue had increased significantly in 2017 due to the acquisition of The Good Guys.
 Overall, the company’s earnings have been stable over the years until 2017. There was a 42%
increase in revenue in 2017 due to the acquisition of The Good Guys. The earning quality of the
company is good as the gross profit margin of the company has remained stable over the last five
years.
 It should be noted that all JBH’s performance indicators have been influenced by the timing of the
acquisition of The Good Guys, with all ratios including earnings from The Good Guys from 28
November 2016 to 30 June 2017.
Quality of earnings
 JBH’s EBIT was growing consistently between 2013 to 2016, the rate of growth in EBIT was between
5% - 10%. In 2017, EBIT had an increase of 39% in 2017 due to the acquisition / any external
factors ? . The growth in 2017 is unlikely to sustain at a high growth, however, it is likely to remain
positive as …. Refer financials…page 27 ?
 NPAT of the group has been increasing steadily in the past 5 years.
Effective tax rate ???
Profit for the year 172.4 152.2 136.5 128.5
Change in Revenue (%) 13% 12% 6% 10%
 – transaction fees and implementation costs of $22.4 million pre-tax ($15.7 million post tax)
associated with the acquisition of The Good Guys
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 – goodwill and fixed asset impairment charges relating to JBH New Zealand of $15.8 million pre-
tax ($11.1 million post-tax).
Both significant expenses have affected the profits from continuing operations, however it has
been offset by the increase of revenue from The Good Guys earnings – to be confirmed ?
It is expected that the increase of revenue from The Good Guys should be reflected in profit in the
next financial year without the one-off cost.
 Nature of earnings base:
It has been noted that company’s profits were derived from different sector and geographical
region.
other income – consulting ?
the good guys ?
new Zealand, online
 Products offered by the group

(b) (b) Calculate JBH’s 2017 effective tax rate to the nearest whole percentage and provide a brief
assessment of JBH’s effective tax rate. (3 marks)
(c) (c) Calculate JBH’s 2017 financial gearing profitability ratio ($m) to one (1) decimal place
and provide an evaluation of this ratio. (2 marks)
ROA= EBIT
Total assets−cash∧cash equivalent assets−interest bearing investments ×100 %
ROA= 308.1
2452.3−72.8 ×100 %=12.95 %
Financial gearing profitability ratio= ( Financial Debt × ROA ) −Borrowing expenses
Financial gearing profitability ratio= ( 558.8 ×12.95 % )−10.7=61.7
End of answers to Question 1(a)–(c)
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Question 2 Earnings per share and price/earnings ratio (12 marks | Word limit: 300 words)
LO3: Calculate a company’s working capital, profitability and market performance ratios using its
annual report.
LO4: Assess the company’s performance using the results of the financial ratios calculated to make an
investment recommendation.
(a) Calculate JBH’s 2017 earnings per share (cents) to one (1) decimal place. Ex-issue prices must be
calculated to two (2) decimal places and dilution factors must be calculated to four (4) decimal
places. Show all your workings for the calculation of ex-issue prices and dilution factors.
Note: Refer to the ‘Background information’ for additional information. (8 marks)
(b) Calculate JBH’s 2017 price/earnings ratio (PER) at the current market price (provided in the
‘Background information’) to one (1) decimal place. (1 mark)
(c) Explain how PER can be used to value JBH. (3 marks)
Criteria-based marking guide for Question 2(a)–(c)
Excellent (Mark range: 10–12 marks) Satisfactory (Mark range: 6–9 marks) Unsatisfactory (Mark range: 0–5 marks)
• accurately calculates all aspects of
earnings per share and PER (with
minor errors)
• provides a clear explanation of how
the PER can be used to value JBH
• accurately calculates most aspects of
the earnings per share and PER (with
several key errors)
• provides an explanation of how the PER
can be used to value JBH, covering some
(but not all) key aspects
• makes little or no attempt to calculate
JBH’s earnings per share and PER
• makes little or no attempt to explain how
the PER can be used to value JBH, or the
explanation provided is inaccurate
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Insert your answers to Question 2(a)–(c) below this line
End of answers to Question 2(a)–(c)
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Question 3 Dividends (7 marks | Word limit: 300 words)
LO2: Explain how corporations are financed, the needs of their stakeholders and the calculation of
dividend returns to various types of shareholders.
LO3: Calculate a company’s working capital, profitability and market performance ratios using its
annual report.
LO4: Assess the company’s performance using the results of the financial ratios calculated to make an
investment recommendation.
(a) Calculate JBH’s 2017 dividend per share (cents) to one (1) decimal place and its pre-tax dividend yield
at the current market price (provided in the ‘Background information’) to one (1) decimal place.
(2 marks)
(b) Calculate JBH’s 2017 after-tax dividend yield for a superannuation fund (paying tax at 15%) at the
current market price (provided in the ‘Background information’) to one (1) decimal place.
Note: All steps in after-tax dividend per share calculations (before calculating after-tax dividend yield)
must be in cents to one (1) decimal place. (3 marks)
(c) Calculate JBH’s 2017 dividend cover (times) to one (1) decimal place and assess the adequacy of this
dividend cover. (2 marks)
Criteria-based marking guide for Question 3
Excellent (Mark range: 6–7 marks) Satisfactory (Mark range: 4–5 marks) Unsatisfactory (Mark range: 0–3 marks)
• correctly calculates dividend ratios, or
with only minor errors
• assesses the adequacy of JBH’s
dividend cover with supporting
rationale
• most aspects of dividend ratios correct,
although there are a few key errors
• assesses the adequacy of JBH’s dividend
cover but lacks valid supporting
rationale
• makes no attempt to calculate dividend
ratios or ratio calculations are mostly
incorrect
• makes little or no attempt to evaluate
JBH’s dividend cover
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Insert your answers to Question 3(a)–(c) below this line
Answer to Question 3.a:
Particulars Amount
Interim Dividend Paid (in million) A $82.40
Final Dividend (in million) B $52.60
Total Dividend (in million) C=A+B $135.00
Nos. of Ordinary Shares (in million) D 112.70
Dividend per shares (in $) E=C/D $1.20
Current Market Price per Share (in $) F $23.37
Pre-Tax Dividend Yield G=E/F 5.13%
Answer to Question 3.b:
Particulars Amount
Interim Dividend Paid (in million) A $82.40
Final Dividend (in million) B $52.60
Total Dividend (in million) C=A+B $135.00
Nos. of Ordinary Shares (in million) D 112.70
Dividend per shares (in $) E=C/D $1.20
Tax Rate F 15%
After Tax Dividend per shares G=Ex(1-F) $1.0
Current Market Price per Share (in $) H $23.37
After-Tax Dividend Yield I=G/H 4.36%
Answer to Question 3.c:
Particulars Amount
Interim Dividend Paid (in million) A $82.40
Final Dividend (in million) B $52.60
Total Dividend (in million) C=A+B $135.00
Net Profit after Tax (in million) D $172.40
Dividend Cover Ratio (in times) E=D/C 1.3
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As evident from the above stated computations, the dividend cover ratio for the Jb-Hi-Fi stood 1.3.
Evidences from the annual report suggest that the board has declared the final dividend consisting of 46
cents per share of fully franked. During the financial year of 2017, JB-HI-FI ltd has reported a strong year of
growth with sales revenue, profits and dividend of the company increasing significantly prior to the figures
reported in the previous year. The board asserts that the dividend has increased by 18 cents per share
prior to the dividends declared in 2016. It can be stated that the dividend payout ratio of the company
stands 65%, which appropriately balances the distribution of the profit that is attributable to the
shareholders with the reinvestment of the earnings for future growth.
The total amount of dividend paid by the company for the financial year of 2017 stood 118 cents each
share, which ultimately represented that the payout ratio of the company has significantly increased to
65% of the full underlying earnings. In order to maintain or adjust the capital structure so that the company
adjust the level of dividends paid to the shareholders along with the return to the shareholders. In the
addition to this, the company has significantly placed the dividend policy as the tool for monitoring the
dividend payout ratio by targeting the payout ratio to approximately cover the dividend ratio of 65% of the
net after tax profit.
The dividend cover of the Jb-Hi-Fi can be considered as the adequate coverage since it aims to strike the
balance among the shareholders return and making sure that the capital adequacy by the company is
retained. The dividend coverage represents the growth of the business in order to increase the long-term
shareholders returns.
End of answers to Question 3(a)–(c)
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Question 4 Net tangible assets and cash flow (9 marks | Word limit: 200 words)
LO3: Calculate a company’s working capital, profitability and market performance ratios using its
annual report.
LO4: Assess the company’s performance using the results of the financial ratios calculated to make an
investment recommendation.
(a) Calculate JBH’s net tangible assets (NTA) per share at 30 June 2017 in dollars and cents, rounded to
the nearest cent. (2 marks)
(b) Evaluate JBH’s NTA per share compared to its current share price. (2 marks)
(c) Calculate JBH’s 2017 cash flow per share (cents) to one (1) decimal place. (2 marks)
(d) Identify and briefly discuss three (3) key items that caused JBH’s 2017 cash flow per share to differ
(either positively or negatively) from its 2017 earnings per share. (3 marks)
Criteria-based marking guide for Question 4
Excellent (Mark range: 7–9 marks) Satisfactory (Mark range: 4–6 marks) Unsatisfactory (Mark range: 0–3 marks)
• accurately calculates all aspects of
NTA per share
• accurately evaluates all (or nearly all)
aspects of the NTA per share
compared to its current share price
• accurately calculates all aspects of cash
flow per share and provides an
accurate evaluation of it in relation to
JBH’s operating activities
• provides all (or nearly all) required
reasons as to why cash flow per share
differs from earnings per share.
Answer does not contain inaccurate
and/or irrelevant reasons
• accurately calculates most aspects of
NTA per share
• accurately evaluates some aspects of
the NTA per share compared to its
current share price
• accurately calculates most aspects of
cash flow per share, provides some
evaluation of it in relation to JBH’s
operating activities
• provides some reasons as to why cash
flow per share differs from earnings
per share. However, the answer does
not mention all key points or contains
some inaccurate and/or irrelevant
reasons
• makes little or no attempt to calculate
NTA per share or incorrectly calculates
most aspects of NTA per share
• makes no attempt or makes an incorrect
evaluation of the NTA per share
compared to its current share price
• makes little or no attempt to calculate
cash flow per share or incorrectly
calculates most aspects of cash flow per
share, provides no evaluation of it in
relation to JBH’s operating activities
• makes no attempt or provides incorrect
reasons as to why cash flow per share
differs from earnings per share
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Insert your answers to Question 4(a)–(d) below this line
Answer to Question 4.a:
Particulars Amount
Total Assets (in million) A
$2,452.3
0
Less: Intangible Assets (in million) B
$1,026.6
0
Total Tangible Assets (in million) C=A-B
$1,425.7
0
Less: Total Liabilities (in million) D
$1,598.8
0
Net Tangible Assets (in million) E=C-D -$173.10
Nos. of Ordinary Shares (in million) F 112.7
Net Tangible Assets per Share G=E/F -$1.54
Answer to question 4.b:
The net tangible assets of the company has grown significantly to $5,628 million resulting in underlying
earnings before tax increase by 38.5% to $306.3 million. It can be stated that the underlying earnings per
share of the company has increased by 22.4% to 186.0 cents from the figures reported in previous year.
The earnings per share have earned growth from the financial year of 2016 by 4% to stand at 8% with
compound earnings per share growth rate of 4%.
Answer to Question 4.c:
Particulars Amount
Cash Flows from Operating
Activities (in million) A $190.60
Nos. of Ordinary Shares (in million) B 112.7
Cash Flow per shares C=A/B $1.69
Answer to question 4 D:
The three key items that have resulted the cash flow differ significantly from the earnings per share for the
financial year of 2017 is stated below;
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a. Prepaid and accrued expenditure or revenues,
b. Non-cash operating expenditure such as depreciation, and
c. Non-operating income or expenditure
The above stated factors have resulted the cash flow to differ negatively. The effective changes that arises
results the fair value of the derivatives to be recognized in the comprehensive income statement.
End of answers to Question 4(a)–(d)
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Question 5 Conclusions and recommendation (10 marks | Word limit: 700 words)
LO4: Assess the company’s performance using the results of the financial ratios calculated to make an
investment recommendation.
LO5: Explain key valuation concepts and the valuation process
Using your discussion above to support your view, determine whether you would place a buy, hold or sell
recommendation on JBH (assume current market price is the 30 June 2017 closing price).
In your response, and justifying your investment recommendation, you should:
• include your evaluation of the ratios calculated in both assignments
• discuss key qualitative factors (such as strategy and management) supporting your view
• discuss the key areas of potential downside (or risk factors)
• considers JBH’s dividend yield and PER.
Criteria-based marking guide for Question 5
Excellent (Mark range: 9–10 marks) Satisfactory (Mark range: 5–8 marks) Unsatisfactory (Mark range: 0–4 marks)
• provides sound analysis and
conclusions drawn from:
– quantitative analysis
(ratios calculated throughout
the assignment)
– valuation metrics
– qualitative factors
– downside risks
• analysis and conclusions do not
contain inaccuracies and/or irrelevant
points
• includes the evaluation of the ratios
covering all (or nearly all) key points
• correctly considers dividend yield and
PER
• recommendation is provided and is
clearly supported and consistent with
the analysis and conclusions
• provides some analysis and conclusions
drawn from:
– quantitative analysis
(ratios calculated throughout
the assignment)
– valuation metrics
– qualitative factors
– downside risks
• analysis/conclusions contain some
inaccuracies and/or irrelevant points
• includes the evaluation of the ratios.
However, the answer does not mention
all key points or the evaluation contains
some inaccurate and/or irrelevant
analysis
• considers dividend yield and PER with
some errors or omissions
• recommendation is provided and is
largely supported and/or consistent
with the analysis and conclusions
• makes little or no attempt to provide
analysis and conclusions drawn from:
– quantitative analysis (ratios
calculated throughout the assignment)
– valuation metrics
– qualitative factors
– downside risks
• analysis/conclusion contains some
incorrect points or is incomplete
• makes no attempt to include the
evaluation the ratios or provides
inaccurate and/or irrelevant evaluation
of the trends in the ratios
• does not consider dividend yield and PER
• recommendation is unclear or
not provided
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Insert your answers to Question 5 below this line
Answer to question A:
The dividend coverage ratio can be defined as the ratio that is used to determine the earnings of the
company over the amount of the dividends that is paid to the shareholders from the profit or loss that is
attributed to the shareholders in the form of ordinary dividend. The dividend coverage ratio for the
company stands 1.3%. Evidences obtained suggest that the company has reported a strong year of growth
with the dividend payout ratio standing 65%.
Net tangible assets on the other hand refers to the proportion of total assets reported by the company
subtracted by the intangible portion of assets namely the goodwill, patents and trademarks. Taking into the
considerations the net tangible assets for the organization it can be stated that the company has reported
negative net tangible assets per share of -$1.54. The primary reason for the negative net tangible assets for
the company is that there is a high amount of total liabilities that has been reported by the company with
$1,598 leading to negative net tangible assets of -$173.
Answer to question B:
Taking into the considerations the strategy of the organization evidences obtained from the financial
report suggest that board and the management have implemented and constructive business policy. The
company has implemented the strategy of innovation and diversification in the new products, technology,
and merchandising and property locations as the constructive business policy. With the help of this the
company increases the revenue, margin and productivity. Another business strategy of Jb-Hi-Fi is the
documentation of the hedging transaction as the relationship among the hedge instruments and hedge
items as the strategy for undertaking numerous hedge transactions.
Jb-Hi-Fi has assigned the business strategy with the management as it believes that the skill and
experience enables the company to govern the business, operate effectively and add value to the firm in
context of the organization strategy. The company has placed several managerial position such as retail
expertise and experience, operational management expertise and experience, governance management
and risk management expertise as the qualitative factors of the organization strategy and management.
Answer to question C:
The key areas of potential downside for the company includes economic sustainability risks,
environmental sustainability risks and social sustainability risks.
Economic sustainability Risks: Jb-Hi-Fi faces the risks of economic sustainability that is associated to the
company’s capability of continuing its operations at the present level of economic production over the
period of long term. The company is exposed to numerous economic risk that may create an impact on the
preserved value of the shareholders over the short, mid and long term.
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Environmental sustainability risks: The company is exposed to the environmental suitability risk relating to
the capability of the firm in continuing its operations in a way that it does not jeopardizes the health of the
environment over the long term period.
Social sustainability risks: The social sustainability risk are related to the organizations ability in meeting
the accepted social norms and necessities over the period of long term. However, the company does not
believe that the social sustainability risk have any potential sustainability impact over the business long
term growth or the preserved value of the shareholders.
Answer to question D:
As evident from the calculation, it is noticed that the company has declared the interim dividend of
82.40 million with final dividend standing 52.60 million. The dividend per share of the company stood
$1.20 with after tax dividend yield standing 4.36% for the financial year of 2017. The statutory dividend for
the company over the period of five years have reported a rising trend with the company is underlying
dividend growth stood 18.0%. The earnings per share for the company stood 186.0 cents representing a
rise of 22.4 per cent each share and the total dividends for the financial year stood 118 cents with a rise of
18% from the figures reported over the previous year. The price earnings ratio too reflected a strong trend
with 27% growth in the financial year of 2017.
Therefore, by considering the growth rates, it can be stated that JB Hi-Fi is a profitable investment
option and investors can invest in this company for longer period.
End of answers to Question 5
Bibliography:
Jbhifi.com.au. (2018). [online] Available at: https://www.jbhifi.com.au/Documents/2017%20Annual
%20Report.pdf [Accessed 25 Mar. 2018].
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