JB Hi-Fi Financial Analysis: Strategic Business Plan & Alternatives

This report provides a comprehensive financial analysis of JB Hi-Fi, an international electronics retailer, evaluating its strategic management, financial performance, and investment potential. It examines the company's strategic initiatives, including cost leadership and product differentiation, and analyzes its financial statements, liquidity risk, and growth strategies. The report also assesses the company's compliance with IFRS and GAAP accounting standards, auditor details, and key managerial compensation. Furthermore, it suggests potential alternatives for JB Hi-Fi to improve its business operations, such as inventory management and tax planning. The analysis includes ratio analysis to determine the company's profitability and financial stability, offering insights for investors and stakeholders. Desklib provides access to this and other solved assignments for students.

RUNNING HEAD: Financial analysis of JB Hi-Fi Company
1
Name of the student-
Topic- : Strategic business plan of Company
University name

Strategic business planning of company
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Table of Contents
Introduction...........................................................................................................................................3
Present description of JB HI-FI Company.........................................................................................3
Director’s details of company................................................................................................................4
Strategic management of JB Hi-Fi Company..........................................................................................4
Financial summary of JB Hi FI Company................................................................................................5
Chief executive Report of company.......................................................................................................6
Liquidity risk of company.......................................................................................................................6
Strategies to drive growth.....................................................................................................................7
Financial reporting frameworks.............................................................................................................7
Auditors detail of JB Hi-Fi Company......................................................................................................7
Key managerial compensation report...................................................................................................7
Consolidated income of company.........................................................................................................8
Possible alternative to be followed by JB Hi-Fi Company......................................................................9
Comprehensive analysis s of JB Hi-Fi Company...................................................................................10
Cash flow statement analysis of company...........................................................................................16
Business risk of company.....................................................................................................................17
Investment advice to investors for their investment...........................................................................17
Conclusion...........................................................................................................................................19
References...........................................................................................................................................20
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Introduction
Organization is accompanied with the complex set of activities in which various
functions are performed to accomplish set objectives and goals. In this report, investment
analysis and associated business factors of organizations are analysed. This report reflects the
true understanding on the financial and non-financial information of company. This report
has shown how investors could evaluate the financial performance of public limited
company. In this report, Australian company named JB HI-FI Company has analysed to
identify the trend of its financial performance. This JB HI-FI company has been using
strategic management in its business to increase the overall outcome of the business.
Nonetheless, this strategic management of JB HI-FI Company is accompanied by planning,
control and observation of all the internal and external factors of the business. This company
has increased its overall revenue by 22% since last five years. The increment in share price
and overall revenue reflects that company is booming in international market and increased
the overall business. It is considered that if investors want to invest their money for creating
value on their investment then they should invest their money in organization which has high
amount of profit and offering high return on capital employed to their shareholders.
Nonetheless, after evaluating the five years annual report of JB Hi-Fi Company, it is
considered that investors should invest their funds in the business functioning of JB Hi-Fi
Company in long run. However, investing money in small period of time of JB Hi-Fi
Company will destruct the value of the capital of the investors (JB HI-FI, 2017).
Present description of JB HI-FI Company
JB HI-FI Company is an international company which is engaged in performing an
effective business to sell the entire electronic home appliance around the globe. The present

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stock price of the JB HI-FI Company is JBH (ASX) A$ 25.73 +1.63 (+6.76%). The main
headquarter of company is in Melbourne, Australia. All the employees of the company are
accustomed to act as per the directions and instructions of Richard Murray. In this report
analysis has been made by evaluating the annual report of JB HI-FI Company and its other
financial details in determined approach. All the directors and promoters of company are
more inclined towards investing money in the business functioning of JB Hi-Fi Company and
expanding the business.
Director’s details of company
Strategic management of JB Hi-Fi Company
It is evaluated that Strategic management of JB Hi-Fi Company is accompanied with
analysing, considering and assessment of all the internal and external factors of business.
This Strategic management is used by management department to analyse all the available
resources of business to increase the overall outcome of organization. This Strategic

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management help company to increase the synergy of company and increase the overall
profit in determined approach. It is considered that Strategic management of JB Hi-Fi
Company has increased the main focus of company towards developing core competency in
two specific filed such as cost leadership and product differentiation strategy. This
management of JB Hi-Fi Company is accompanied with three principles such as unique
business strategy, market trade off and implementing corporate strategic alliance. JB Hi-Fi
Company has entered into various strategic alliances with other organizations to increase its
overall outcomes. For instance, increasing the overall marketing advertisement strategy,
company has used computing systems and social media such as Facebook and Twitter. In
addition to this, company has also arranged various training and development program for its
employees to increase their employability. This type of training program under strategic
management process makes them more employable towards the sophisticated business
process system of organization. Nonetheless, in management theory and practice, operational
and strategic management is most valuable part of the business success. It is considered that
operational strategic program helps company to manage its value chain activities and increase
the overall productivity. On the other hand, strategic management implemented by JB Hi-Fi
Company increases the efficiency of the business and helps in creating the core competency
of business (JB HI-FI, 2017).
Financial summary of JB Hi FI Company
This summary has shown that company has total turnover of $ 5.6 billion and 40% of
its sales account to its net profit after tax amount. This has shown that company has high
business sustainability throughout the time.

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Chief executive Report of company
This company has high profit potential growth and opening several stores around the globe.
The investment in New Zealand channel has increased is overall profit and return of its
capital employed (Laudon and Traver, 2013).
Liquidity risk of company
It is evaluated that JB Hi-Fi Company has low level of liquidity risk which has shown
that company could reduce the investment in its working capital. In addition to this, as per the
economic factors of company, there could be so many changes in the business (Warren,
2016).

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Strategies to drive growth
This JB Hi-Fi company has been continue to expand its business on international level
and expanded its business in New Zealand as well. In addition to this, there is significant
opportunity of investing in diversifying market which management department of JB Hi-Fi
Company has been considering.
Financial reporting frameworks
JB Hi-Fi Company has established harmonization in complying with the IFRS rules
and standards and GAAAP accounting standards to prepare and file its accounting and
financial statement. This helps company to mitigating its domestic and international reporting
issues (Chand, Patel, and White, 2015)
Auditors detail of JB Hi-Fi Company
The main auditor of company is Deloitte who have given unqualified audit report.
This firm has also given the report that company has completed with all the rule sand
regulation of government (Dinnie, 2015).
Key managerial compensation report
These key managerial persons are the persons who control and run the business of
organization. It is evaluated that if company could follow effective business functioning then
it will have to reduce the compensation amount to its key managerial persons.

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Company has increased overall payment to its key managerial persons by 29% which
shows that company had to increase the cost of the production by 29% at the same time. This
type of strategic program will not only destruct the business policies to develop core
competency in cost leadership strategy but also destruct the business structure of organization
(Draft, 2015).
Consolidated income of company
The consolidated income of company has increased in one year and return offered by
company to its shareholders has also increased throughout the time. It is evaluated that profit
of company is completely based on the overall turnover which shows that company has
increased its overall output throughout the time. The average growth of company since last

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two years is average 20% which is very good indicator for the sustainability of the
organization (Elad, 2016).
Possible alternative to be followed by JB Hi-Fi Company
After considering the annual report of company and financial analysis of company, it
is considered that company should increase its overall outcomes and should focus on
investing more money in its other sub units. It is evaluated that JB Hi-Fi Company has
followed double entry system while preparing its financial accounts. Nonetheless, all the
accounts and reporting framework of company is based on the accounting standards of IFRS
rules and regulations. It is suggested that company needs to make changes in its inventory
management system to reduce the blockage of funds. Company should focus on following
LIFO methods to manage its inventory. Furthermore, company has also failed to disclose the
true and fair value of its assets. As per the IAS-136 rules and regulations, company should
implement impairment test on each and every reporting period to showcase the true and fair
view of its assets. It is observed that all the impairment loss of company should be deducted
from the available cash generating units of organization. In addition to this, company should
follow conservative investment policies as it should be more inclined towards plugging back
all of its money in its business. Apart from that, company should also establish proper level
of harmonization in its domestic and international accounting frameworks to have standards
reporting frameworks around the globe. Company has high payment of tax due to its
international business transactions. Therefore, JB Hi-Fi Company should enter into double
taxation avoidance agreement to reduce its overall payment. This level of changes in its
business functioning will increase the overall outcome and efficiency of organization.
Furthermore, strategic management of JB Hi-Fi Company has focused on developing core
competency in cost leadership as well. This level of strategic planning and effective business

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performance will help company to grow effectively. In addition this, JB Hi-Fi Company has
to reduce the remuneration payment of its key managerial persons to reduce the overall cost
of the production (Garrett, Hoitash and Prawitt, 2014).
Comprehensive analysis s of JB Hi-Fi Company
This report has reflected the key understanding on the annual report and financial
analysis of JB Hi-Fi Company. The annual report and other financial details of the particular
company has been analysed to evaluate trend and business growth of company. It has been
using its strategic and financial management. In this report, some of the questions related to
financial details of JB Hi-Fi Company have been taken into consideration. JB Hi-Fi Company
has used strategic management functioning to increase its overall output to make effective
output of the business (Kundakchyan and Zulfakarova, 2014). Strategic management is
considered as formulation and implementation of the major objectives and initiative takes by
company’s top management on the behalf of owners for management of the scarcity of the
resource to make more profitable outcome in organization. In JB Hi-Fi Company, this
strategic management is used by top management to run the effective business functioning of
company on domestic and international level. This appraisal of the project using ratio
analysis project technique has been used to analyse whether the JB Hi-Fi Company is running
the profitable business throughout the time. This ratio analysis will help clients to understand
the business trend growth of business throughout the time. It is evaluated that since last five
years, JB Hi-Fi Company has increased its overall output and increased the brand image of
company in determined approach. This analysis will in evaluating the financial performance
of company and how company could make proper changes by injecting more money in its
business. JB HI FI company has implemented growing business.
Liquidity ratio of JB Hi-Fi Company

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This ratio reflects how company could pay off its short term and long term debt thorough its
current assets (Shouman, El Shenawy and Khattab, 2016)
It is considered that JB Hi-Fi Company has decreased its current ratio by .70 points since last
five years. Quick ratio has increased to .35 in 2017 which is .4 points higher since last three
years. This liquidity ratio has shown that company has blocked more funds in its working
Description
JB Hi-Fi
Limited
Liquidity
( Formula) 2017 2016 2015 2014 2013
Cash ratio
cash equivalents
+ cash / current
liabilities
0.082392
8 0.1163311
0.128947
4 0.1221591 0.15158
Current
ratio
Current
assets/current
liabilities
1.3
2
1.5
7
1.6
2
1.6
4 1.28
Quick
Ratio
Current assets-
Inventory/current
liabilities
0.3
5
0.3
5
0.3
6
0.3
4 0.31

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capital and preparing itself from the sluggish market condition. In addition to this, I will keep
the company safe from all the internal and external business factors. For instance, in case of
high demand of the products and services, company could easily increase the overall
production (Cucchiella, D’Adamo and Gastaldi, 2015).
Profitability
It is reflected that JB Hi-Fi Company has reduced its overall profit throughout the
time. Company has maintained effective operating profit of 35% to 30% since last four years.
It is considered that if company could increase 20% in 2017 from 30% in 2013. It is
evaluated that return on capital employed has also went down due to the business factors. In
addition to this, the main impact of business is seen on the change of net profit (Cucchiella
and D’Adamo, 2015).
Description Formula JB Hi-Fi Limited
Profitability
2017 2016 2015 2014 2013
Return on
equity
Net
profit/revenues 0.0305615 0.0384421 0.0375137 0.0367394 0.03507
Return on
assets
Net
profit/Equity 0.2014052 0.3753086 0.3994169 0.4338983 0.47737
Financial EBIT / EBIT - 1.0428016 1.0184332 1.0307692 1.0494505 1.05952