Financial Reporting: Liquidity, Insolvency and Altman’s Z-score Analysis of JB HI FI Limited

Running head: FINANCIAL REPORTING
Financial reporting
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1FINANCIAL REPORTING
Table of Contents
1. Introduction:...........................................................................................................................2
2. Context of the situation..........................................................................................................2
3. Enumerate options:.................................................................................................................3
4. Strength and weaknesses of issues:........................................................................................5
5. Conclusion:............................................................................................................................7
6. Reflection：...........................................................................................................................7
Reference....................................................................................................................................8

2FINANCIAL REPORTING
1. Introduction:
In this report the discussion will be made on the liquidity factor of the JB HI FI
limited which is one of the leading IT and electronics manufacturer register in the Australian
stock exchange. In addition to that, the potential use of the funds, profit-earning capacity of
the considering company will be evaluated. In addition to that, a resent downfall in the share
prices is being observed therefore it will be beneficial for the company to make an
exponential analysis of their key strength and weaknesses (Hoyle et al., 2015). Further, the
company’s current performance will be evaluated by comparing with its rival or competing
company Hervey Norman Holdings. Currently the company is engaged in the manufacturing
and development of the CD, DVDs Software and larger electronic appliances. In addition to
that, the company’s performance of the retail market is quite impulsive and stealthy.
In this context, three major terms regarding the financial activity of JB HI FI will be
discussed. These are liquidity, insolvency and Altman’s Z-score. The liquidity of a company
signifies the ability of the company to pay its obligation in terms of the liquid assets of the
company. The insolvency is considered when the company is failed to repay its obligations.
The Altman’s Z score is the term when it is required to figure out the financial distress of the
company by measuring the risks inclined in the financial difficulty of the company.
2. Context of the situation
In the next segment of the report, the liquidity ratio and the Altman’s Z-score of the
company will be discussed for the last three years in order to evaluate the key issues in
comparison with the financial performance of the company.
JB Hi-Fi Harvey Norman
2018 2017 2016 2018 2017 2016
Current Ratio 1.32 1.32 1.57 1.59 1.5 1.26
Quick Ratio 0.3 0.3 0.34 1.08 0.97 0.97