Financial Analysis: Accounting Report for JB Hi-Fi and Country Road

This accounting report provides a detailed analysis of the financial statements of JB Hi-Fi and Country Road Limited. The report examines the companies' current and non-current liabilities, including trade payables, deferred revenue, provisions, and borrowings. It analyzes the changes in these liabilities from 2018 to 2019, highlighting trends and key financial figures. The report also delves into the major liabilities, such as trade payables and non-current borrowings, and assesses the management of these liabilities. Furthermore, the report discusses provisions, including employee benefits and lease provisions, and the implications of interest-bearing loans. Part B of the report explores income tax expenses, appropriation of changes in equity, and the differences between company and partnership financial statements. It also addresses the requirement of a cash flow statement for a typical partnership. The report concludes by summarizing the financial positions of both companies, emphasizing their ability to generate profits and distribute dividends, and highlighting the importance of accounting concepts such as liabilities, provisions, and retained earnings.

ACCOUNTING

Table of Contents
INTRODUCTION...........................................................................................................................3
PART A...........................................................................................................................................3
1. Current Liabilities....................................................................................................................3
2. Major Liabilities.......................................................................................................................3
3. Provisions.................................................................................................................................4
4. Interest bearing loan.................................................................................................................4
5. Non-current liabilities as secured.............................................................................................4
6. Non current borrowings...........................................................................................................4
7. Detail of Non current provisions..............................................................................................5
PART B............................................................................................................................................5
1. Detail of income tax expenses of Country Road Limited company........................................5
2. Appropriation of change in equity...........................................................................................5
3. Difference in financial statement items of company and partnership......................................6
4. The requirement of cash flow statement for typical partnership.............................................6
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Accounting refers to the process of recording, analysing, measuring and interpreting the
financial information in pre defined format. It helps the internal and external stakeholders to
interpret the annual position of company and take effective decision regarding the investment in
company's capital. The report highlight the various components of JB Hi-Fi limited company
such as current liability, provision, cash transaction etc. It explains the trend of growth from one
financial year to another financial year. It also highlights the financial position of Country Road
limited company. It presents the different financial information such as change in equity, current
liability, assets, provisions, income statement item etc. to take the effective and efficient decision
for the growth of the company.
PART A
1. Current Liabilities.
The Current Liabilities of JB Hi-Fi have increased as compare to last year which was
917.2 million dollars in 2018 and increased to 927.1 million dollars. The current liabilities have
increased by 1.08% in the year 2019. In the company the current liabilities which are classified
under the head Current Liabilities are:
Trade and other payables which have been decreased as compare to 2018 by around 1.2%.
Deferred revenue which have increased in 2019 by 8.4%. rovisions which also have increased in
2019 by 12.4%. Other current liabilities which have fallen in the year 2019 by 3.6%. Current tax
liabilities which have fallen in the year 2019 by 46.8%.
It is clealy seen the company is good at paying taxes and also provisions have increased
which is also a good sign that the JB Hi-Fi is aware of its future but the deferred revenue have
increased which is a good because the amount can be invested and bad as well because if
company fails to meet the commitment to its creditors then it will spoil the reputation of the
company.
2. Major Liabilities.
The major liabilities of JB HI-Fi as per the financial year 2019 are the Trade and other
payables which is 656.9 million USD, non current Borrowings under the head Non-current
liabilities which are 439.1 million US dollars (Birt. and et.al., 2019). Deferred Revenue under the
head Current Liabilities which is around 163.2 million USD and the Provisions which is around
93.9 million USD. All these are the major Liabilities of JB Hi-Fi and must be managed properly

by the company by investing the borrowings in two parts one is secured part also known as
hybrid which cover the Equity and Debt and the other part is Equity which is risky. The
investment must be done in order to get higher return than the amount borrowed.
3. Provisions.
The items included in the Provisions in Current Liabilities are Employee benefits and
Lease provisions under the head Current provisions and the same items under the head Non-
current provisions. The nature of the items are the perks, and they fall under the category current
liabilities. As per the IAS 37 and AASB137 the contingent liabilities which are having may
occur and may not occur must be shown under the notes to accounts and if there are higher
chances that the liability will arise in the future that it must be reflected under the Balance Sheet,
the same is followed by JB Hi-Fi. It seems that there are higher chances that the liability will
occur in the future. So the provisions are satisfied by the company. As compare to 2018 the
current provisions have increased by 12.45% in 2019 whereas the non-current provisions have
increased by 21.6%.
4. Interest bearing loan.
Interest bearing loan is a loan on which the amount of interest is to be paid by JB HI-Fi
and after analysing the balance sheet it is falling under the category Borrowings under the head
Non-current liabilities. The company has not raised any loan in the form of cash instead the
company has repaid the loan amount which is 30.5 million USD to the bank. If the amounts are
compared with 2018 then the company have paid the loan amount as in 2018 the loan amount
was 469.4 million USD but in 2019 it is around 439.1 million USD.
5. Non-current liabilities as secured.
Secured liabilities are the liabilities which are secured by any asset or lien. There are
higher chances that the liabilities will be recovered. The only secured liability of JB Hi-Wi is the
Lease under the sub-head other non-current liabilities and under the head Non-current liabilities,
under which the asset is backed by secured lease.
6. Non current borrowings.
If the non current borrowings are seen in the balance sheet it is amounting to 577.6
million USD. The whole amount is to be paid within 10 years or more as they are the non-current
liabilities but if it is taken for 2 years then the company is obliged to pay the principal for two
years which is 115.2 million USD along with the interest which is 11.552 million USD and if it

is taken for the five years then it will be 278.8 million USD and the interest in the same will be
27.88 million USD (Nambukara-Gamage. and Peries, 2020). The total amount for the 2 years will
be 126.752 million USD and for the 5 years it will be 306.68 million USD. It must be noted that
the calculation is done assuming that the company will repay the loan amount within 10 years
and with rate of interest 10%.
7. Detail of Non current provisions
Non current provision are shown under the head of current liability. The employee
benefits and lease provision are non current provision of JB Hi-Fi limited company. In 2018
employee benefit are $7.3 million which increase to $7.5 million and the lease provisions are
$5.2 million in 2018 which increase to $7.7 million in 2019. In general term non current liability
presents the liability for salary and wages, non monetary benefits, annual leave, unpaid bonus,
long service leave etc. They are recorded in balance sheet to paid the amount to the employees at
the time of settlement of liability or end of the year (Noncurrent Liabilities, 2019). Lease
provision are made to estimate the amount of lease premises on the basis of historical data and
current position of company.
PART B
1. Detail of income tax expenses of Country Road Limited company
As per the 2013 annual report of Country Road Limited company it has been identified
that in 2012 the income tax expenses are $4392000 which increase to $14715000 in 2013. The
income tax expenses of company are not shown in the income statement of partnership because
company follow the accounting concept of separate legal entity concept. This concept state that
the liability and asset of company is separate from the partners liability and assets. So the income
tax expenses of company are not present in the income statement of partners. In partnership the
income tax expenses are also present in income statement.
2. Appropriation of change in equity
The change in equity statement are prepare to ascertain the total income of the company
at the end of the year after adjusting all the expenses, tax, dividend etc. the final retained earning
of the year are prepare by subtracting the annual dividend from the initial retained earning and
add back the profit of the company (Sidman-Taveau. and Hoffman, 2019). The retained earning
of company at the end of 2013 is $65812000. It is appropriate for company because it helps

organization to use the amount for the further growth. The allocation of total profit in partnership
is differ from the Country Road Limited company because in partnership the profit is distributed
among the shareholders as per the agreed ratio while in Country road company the portion of
profit is distributed to the shareholders as dividend and rest of the amount is retain in company as
retained earning.
3. Difference in financial statement items of company and partnership
The issued capital refers to the share issued to the shareholders by the company to
ascertain their share in company. The Country Road Limited Company present issued capital in
change equity statement to highlight their shareholders shares in company. It differ from the
Typical partnership account because in partnership the share is does not issued to the partners.
Because they share the profit and loss of their business and interest is issued to them rather than
the shares.
4. The requirement of cash flow statement for typical partnership
The typical partnership also require to prepare the cash flow statement for their
partnership. The cash flow statement helps them to ascertain the total cash inflow and outflow in
particular accounting period (Xu, Arling. and Wang, 2019). They require to prepare cash flow to
identify the position of their business and measure that whether they are able to pay the current
debt or day to day expense of their business or not. It also helps the partners to ascertain the
liquidity of their business.
CONCLUSION
It can be summarized from the above report that the status of current liability is changed
from the financial year 2018 to 2019. It can be concluded that both the company JB Hi-Fi limited
company and Country Road limited company are able to earn profit and pay sufficient dividend
to their shareholders in different financial year. The report also helps to understand the various
terms of accounting such as the provisions, liability, retained earning, income tax expenses etc.
and their impact on both company and on its shareholders.

REFERENCES
Books and journals
Birt, J. and et.al., 2019. Accounting: Business reporting for decision making. John Wiley & Sons.
Nambukara-Gamage, B. and Peries, S.T., 2020. The Impact of Dividend Policy on Shareholder
Wealth: A Study on the Retailing Industry of Australia. Review of Integrative Business and
Economics Research. 9(1). pp.38-50.
Sidman-Taveau, R. and Hoffman, M., 2019. Making change for equity: An inquiry-based
professional learning initiative. Community College Journal of Research and
Practice. 43(2). pp.122-145.
Xu, D., Arling, G. and Wang, K., 2019. A cross-sectional study of self-rated health among older
adults: a comparison of China and the United States. BMJ open. 9(7). p.e027895.
Online
Noncurrent Liabilities. 2019. [Online]. Available through:
<https://www.investopedia.com/terms/n/noncurrent-liabilities.asp>