Harvey Norman Holdings Ltd: Detailed Financial Analysis Report

This report presents a financial analysis of Harvey Norman Holdings Ltd, covering the period from 2017 to 2021. It examines the company's historical financial performance, focusing on key metrics such as revenue growth, operating and net profit margins, and capital expenditure. The analysis reveals consistent revenue growth, efficient resource utilization reflected in increasing operating profits, and a conservative approach to capital investment, primarily funded by owner's equity rather than debt. Forecasted figures, based on historical trends, suggest continued growth, although potentially at a slightly reduced rate as the business matures. The report highlights Harvey Norman's strong market position and effective resource management, particularly evident in its recovery from the 2020 global pandemic.

FINANCIAL
ANALYSIS

Contents
INTRODUCTION...........................................................................................................................3
FINANCIAL ANALYSIS:..............................................................................................................3
REVENUES:..........................................................................................................................3
MARGINS:.............................................................................................................................4
CAPITAL EXPENDITURE:..................................................................................................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Financial analysis refers to analysing the financial information of the organisation in terms
of their performance over the period of time in terms of revenues, expenditure, assets they hold
and so on. In the below report the financial analysis of the Harvey Norman Holdings Ltd is being
carried out on the basis of their financial figures for the period between 2017 to 2021. The below
report the entity performance three different parameters which are being evaluated for 5 years
basis and on basis forecasted data will be fragmented of their performance (Eren, Taspinar, and
Gokmenoglu, 2019).
FINANCIAL ANALYSIS:
REVENUES:
The revenues of Harvey Normal has the constant growth from the period ranges from June
2017 to June 2021 which is around 10 % approx. which shows their consistency and stability in
the market as the performer. However, there is a slight downfall in 2018 compare to 2017 for
around 4 %. Since they are performing at the constant rate, their forecasted figures are to be
assumed to increase at the same rate also in future. Their performance is reduced in 2020 due to
global pandemic but they recovered with an immense rate of sales by 23 % hike in 2021. That
shows their capability as the market leader and also utilised their resources well when needed.
Their revenues will slowly decrease in the future as and when the business gets matures but it
expected from the past performance that they will achieve 15 % growth rate in future years.
Their major part of the revenue includes franchise operations as they well established their
business model in New Zealand, Singapore. Slovenia. etc. They are dealing in Multiline Retail
segment therefore their revenues are well diversified from various sectors such as computer and
electrical products, furniture, computerized communications, kitchen appliances etc as the
company brands sell their products in all the above categories (Martínez-Climent, Zorio-Grima,
and Ribeiro-Soriano, 2018).

MARGINS:
There is the consistent increase in the operating profits of Harvey Norman Holdings Ltd
which shows that they effectively and efficiently utilising their resources and assets in the
business. Their margins are 50 % more in 2021 as compare to 2020 which shows their capability
to utilise their resources. Their gross margins are being 55.64 % and operating margins are being
27.66 % over the period of five years show that they are stable enough to grow in the future
years. The investments made by the investment in the company will get around 14.90 % returns
on an average which is considered to be the profitable venture in terms of long-term investment.
The net profit margins of the company is 15.67 % ,14.18 %, 12.85 %, 14.26 5 and 20.29 %
respectively which shows that they are earning on an average of 14 % from the market.
Similarly, their EBIT margins are being more then 20 % on an average which reflects their
competence to perform as compare to their competitors (Nadkarni and Neves, 2018).

CAPITAL EXPENDITURE:
Without any doubt the company financial position is sound enough as they diversify into
various sectors. While looking into their balance sheet it has been concluded that the
organisation does not make much capital expenditure as their Debt-to-Equity ratio has been
maintaining around 39.85 % which shows that their business is more funded by way of owner’s
funds instead of loan from the financial institutions. Their long-term debts are being 30.15 % on
an average indicates that they are not gearing must risk in their business in terms of capital
investment. However, investment in the capital assets is the best thing for an organisation to
deploy their investment for further growth of the business. The below graph shows that they have
timely invested their funds in capital assets for the expansion of the business (Potrich, Vieira,
and Kirch, 2018).

CONCLUSION
The above report shall showcase the financial analysis of Harvey Norman Holdings Ltd for
the period ranges from 2017 to 2021. Financial analysis has been carried out to check the
historical financial performance of the company so that the forecast has been made to the future
outcomes thereof. This report also highlights the assumption that has been made in deriving the
forecasted figures of the organisation. This report shows the performance analysis of Norman in
terms their revenues, capital expenditure they have made and their margins they have earned
over their period.

REFERENCES
Books and Journals
Eren, B.M., Taspinar, N. and Gokmenoglu, K.K., 2019. The impact of financial development
and economic growth on renewable energy consumption: Empirical analysis of
India. Science of the Total Environment, 663, pp.189-197.
Martínez-Climent, C., Zorio-Grima, A. and Ribeiro-Soriano, D., 2018. Financial return
crowdfunding: literature review and bibliometric analysis. International
Entrepreneurship and Management Journal, 14(3), pp.527-553.
Nadkarni, J. and Neves, R.F., 2018. Combining NeuroEvolution and Principal Component
Analysis to trade in the financial markets. Expert Systems with Applications, 103,
pp.184-195.
Potrich, A.C.G., Vieira, K.M. and Kirch, G., 2018. How well do women do when it comes to
financial literacy? Proposition of an indicator and analysis of gender
differences. Journal of Behavioral and Experimental Finance, 17, pp.28-41.
Rodrigues, L. and Rodrigues, L., 2018. Economic-financial performance of the Brazilian
sugarcane energy industry: An empirical evaluation using financial ratio, cluster and
discriminant analysis. Biomass and bioenergy, 108, pp.289-296.