Financial Analysis of Harvey Norman Company

Running head: FINANCE AND ACCOUNTING
Finance and Accounting
Name of the Student:
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Author’s Note:

1FINANCE AND ACCOUNTING
Executive Summary
The aim for the project is to conduct a financial analysis of the Harvey Norman Company.
The financial report for the year 2017-18 was considered for the evaluation of the financial
statement of the data. The key accounting policies of the companies were recognised and the
justification for the use of the same was discussed. The valuation of the company was
evaluated in order to get the overall performance of the company. There were key valuation
measures and the sensitivity analysis of the same was done in order to get the overall impact
of the business conditions under different scenarios.

2FINANCE AND ACCOUNTING
Table of Contents
Accounting Policies...................................................................................................................3
Key Accounting Policies........................................................................................................3
Assessing Accounting Flexibility..........................................................................................3
Valuation....................................................................................................................................4
Model- Main Model and Scenario Analysis..........................................................................6
Diagnostics.............................................................................................................................7
Model Interpretation...............................................................................................................7
Reference....................................................................................................................................9
Appendix..................................................................................................................................10

3FINANCE AND ACCOUNTING
Accounting Policies
Key Accounting Policies
The key accounting policy identified, in relation to the Harvey Norman Company
were evaluated to evaluate the changes in the accounting policy. The accounting judgements
and forecasts for the company should be used carefully as the estimates and the assumptions
made by the company in terms of revenue recognition, impairment, depreciation of assets and
other key accounting policies should be identified from the financial statement of the
company (Correia, Jorge and Antunes, 2014).
The choice of the key policies of the management of the company should be such so
that the stakeholders of the company are presented with the true and fair view and should
match with the accounting and industry perspective accounting (McInnis, Yu & Yust, 2018).
Assessing Accounting Flexibility
The accounting flexibility analysis related to the key accounting policies of the
company may affect the valuation of the company. The management of the company should
not use too much of accounting flexibility so that the earnings of the company are misstated
in addition, the true financial position of the company cannot be assessed (Chen C et al.
2018).
The relevant key accounting standards used by the Harvey Norman Holdings Limited
and the key estimated used were related to revaluation of investment properties where the
investment properties are valued at the fair value on the balance sheet of the company. The
revaluation of property, plant and equipment was also done at the fair value to determine key
economic reality. The investment property depending upon the characteristics and type of the
asset class is revalued at the fair value or historical as the assessment of market may depend
on (Imoniana, Soares, & Domingos, 2018).