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ACC101 Accounting for Decision Making

   

Added on  2020-04-29

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Running head: FINANCIAL PERFORMANCE ANALYSIS OF JB HI-FIFinancial Position and Performance Analysis of JB Hi-FiName of the University:Name of the Student:Authors Note:
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1FINANCIAL PERFORMANCE ANALYSIS OF JB HI-FITable of Contents1. Purpose of Financial Accounting Statements..................................................................22. Accounting Practices of JB Hi-Fi to Produce Annual Report.........................................23. Financial Ratio Analysis of JB Hi-Fi...............................................................................33.1. Profitability Ratios....................................................................................................33.2. Solvency Ratios............................................................................................................63.3. Liquidity Ratios........................................................................................................83.4. Market Based Ratios...............................................................................................114. Opinion on Future of JB Hi-Fi.......................................................................................12Reference List....................................................................................................................14
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2FINANCIAL PERFORMANCE ANALYSIS OF JB HI-FI1. Purpose of Financial Accounting StatementsThe purpose of financial accounting statements is to offer relevant information regardingthe financial position, performance as well as variations in financial position of JB Hi-FiCompany. Moreover, analyzing financial statements of the selected company can be useful to allits users in order to make certain economic decisions.1 Due to such relevance, financialstatements must be relevant, understandable, comparable and reliable. Major financial statementsof the company include income statement, balance sheet and cash flow along with retainedearnings that are used by the management in decision making regarding the business. Financialstatements are used by JB Hi-Fi Company all through the year for facilitating its investors andcreditors to get involved in better decision making. These statements are used by the company’sinvestors for determining the viability of making investments in the company. 2. Accounting Practices of JB Hi-Fi to Produce Annual ReportCertain accounting policies are followed by JB Hi-Fi in preparation of its annual report.The company has prepared the annual report in accordance with the requirements ofCorporations Act 2001.2 Moreover auditing of the annual report is conducted in compliance with1Babalola, Y. A., and F. R. Abiola. "Financial ratio analysis of firms: A tool for decisionmaking."International journal of management sciences1, no. 4 (2013): 132-137.2Baños-Caballero, Sonia, Pedro J. García-Teruel, and Pedro Martínez-Solano. "Workingcapital management, corporate performance, and financial constraints."Journal ofBusiness Research67, no. 3 (2014): 332-338.
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3FINANCIAL PERFORMANCE ANALYSIS OF JB HI-FIethical needs of “Accounting Professional and Ethical Standards Board’s APES 110 Code ofEthics for Professional Accountants”. New accosting standards are also followed by thecompany such as AASB 16 leases in classifying its cash flows affected by operating leasepayments. Moreover, preparation of the financial statements is in accordance with “AustralianAccounting Standards and Corporations Regulations 2001”.3JB Hi-Fi considers employing full-disclosure principle that indicates that accountants maintain all important information within thefinancial statement. The company also considers extra information such as unusually highearnings of the company must be disclosed in the financial statements section following fulldisclosure principle. 3. Financial Ratio Analysis of JB Hi-Fi3.1. Profitability RatiosReturn of equityReturn on equity ratio of the company is observed to decrease over the years from 2012to 2017. This is because of the reason that the company is not able to measure its capability togather profits from its shareholders investment in the company. The company is not able to makeenough profits for every dollar that is generated by common stockholders’ equity.4Return on3Brigham, Eugene F., and Michael C. Ehrhardt.Financial management: Theory & practice.Cengage Learning, 2013.4Delen, Dursun, Cemil Kuzey, and Ali Uyar. "Measuring firm performance usingfinancial ratios: A decision tree approach."Expert Systems with Applications40, no. 10(2013): 3970-3983.
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