HI5020 Corporate Accounting: Analysis of JB Hi-Fi Cash Flow Statement

This report provides a detailed analysis of JB Hi-Fi's cash flow statement, focusing on operational, investing, and financing activities. It examines key observations such as increasing operational cash flow, investment in business acquisitions, and debt management strategies. The report also del...Read More

CORPORATE
ACCOUNTING
JB Hi-Fi

 Cash flows from operational activities
◦ Receipts from Customers ( $6,205.5. million)
◦ Payment to suppliers and employee ($5,908,8
million)
◦ Income tax paid ( $ 98.5 million)
 Cash flows from investing activities
◦ Payment for business combination ($836.6.
million)
◦ Payment for plant and equipment ($49.1 million)
◦ Proceeds from plant and equipment sale ($0.2
million)
Cash Flow Statment

 Cash Flow From Financing Activities
◦ Share issue related proceeds ($395.9 million)
◦ Incremental borrowings ($ 450 million)
◦ Dividends paid ($119.1 million)
◦ Other items include costs related to issue of
equity or debt
 The total increase in cash & cash
equivalents for the year FY2017 is $
21million
Cash Flow Statement
(Contd..)

 Key Observations
◦ Operational cash flow increasingly y-o-y
◦ Cash outflow from investing limited but in FY2017, a new business acquired
◦ Emphasis of company on limiting debt in FY2015, FY2016 but incremental debt in
FY2017 due to acquisition
◦ Equity financing also prevalent for all three years
Cash Flow Trends

 Two main items
◦ Value change of cash flow hedge
◦ Translation gain/(loss) related to foreign exchange
OCI Statement

 Recorded items
◦ Cash flow hedge related gain/(loss) realised as the fair
value at the beginning and year end needs to be
stated which provides gain/(loss) which may be
notional
◦ Difference in functional currency and foreign currency
of revenue recognition leading to translation related
gain/(loss)
 Need for OCI
◦ Accounting norms and regulations
◦ Different from normal P&L items but yet relevant
OCI Statement (Continued)

 Interest expense FY2017 = $86.8 million
 The above is not same as the corporate tax
rate multiplied by the accounting income
◦ Reason: Adjustments on account of reconciliation
between tax norms and accounting principles
◦ Also arise on account of creation of deferred tax
assets and liabilities
Corporate Income Tax

 Deferred Tax Assets
◦ Definition: Lead to tax savings in future on account of
present transactions
◦ Creation: Arise primarily on account of temporary
differences created due to different tax & accounting
norms
Deferred Tax Asset

 Deferred Tax Liabilities
◦ Definition: Lead to tax outflow in future on
account of present transactions
◦ Creation: Arise primarily on account of temporary
differences created due to different tax &
accounting norms
Deferred Tax Liabilities

 No current tax assets as on June 30, 2017.
 Current tax liabilities to the extent of $11.8
million
◦ Liabilities to be paid within 12 months
 Since some tax is paid on an ongoing basis,
hence tax payable does not equal tax
expense but typically less than that
Current Tax
Assets/Liabilities

 Income tax expense
◦ Source: Income Statement
◦ Highlighted on accrual basis
◦ Refers to the tax expenses that the company
would bear for the year
 Income tax paid
◦ Source: Cash Flow Statement
◦ Highlighted on cash basis
◦ Refers to the tax actually paid which would refer
to both the current year and previous year
Income Tax Expense/Paid