MBA403 - Financial Analysis of JB HI FI for Investment Decisions

This report provides a financial analysis of JB HI FI, an Australian retailing company, from the perspective of a potential shareholder. It examines the company's annual report and other financial data to assess its investment suitability. The analysis covers aspects such as net profit margin, liquidity, cash position, and earnings per share (EPS). While the net profit margin has decreased slightly, the company has improved its cash position and maintained a competitive liquidity state. The report also highlights the company's dividend policy and market position. The overall financial performance of JB HI FI is deemed strong, with improvements in diversification and global presence. The report concludes with a recommendation for investors to consider long-term investment in the company to enhance returns and reduce risk.

Running Head: Financial and economical interception and communication
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Financial and economical interception and communication

Financial and economical interception and communication
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Executive summary:
The report emphasizes upon an Australian company. It focuses on the stakeholders’
position and the investment level of the company on the basis of the annual report, financial
statements and the various articles about the company. The study has been conducted on JB
HI FI. It is a retailing company which offers the various home consumer products to its
customers. The main products of the company include TV, electronic products, games, audio
equipment, telecommunication product and services, DVD, CD, cooking material, small
appliances etc. JB HI FI offers the products through its 40 retail stores as well as through
online portal (Reuters, 2018).
Analysis:
The annual report (2017) of the company briefs that the financial performance of the
company has been improved from last year as well as few changes has been done by the
management of the company to enhance the future growth of the company. On the basis of
the annual report, it has been found that the net profit margin of the company has been
lowered from 3.84% to 3.06% due to less increment in the total revenue in context with the
total sales of the company.
In addition, the liquidity state of the company is explaining about decrement in the
liquid position. However, it explains that in current state company could easily pay all the
short term debt and thus still, the position of the company is competitive.
The annual report (2017) of JB HI FI further explains that the total cash position of the
company has been improved due to various changes in the overall activities and the
operations of the company. The report further explains that the financial strategy and
performance of the company is enough strong to manage short term and long term debt of the
company.
Further, it also explains that the market position of the company has been improved
from last year to 172.1. The total growth in last 5 years is 10% which briefs that the company
has managed a good market position as well as total dividend of the company is 118 cents
which also explains about the relevant dividend policy of the company and better investment
position of the company (Yahoo Finance, 2018).
Current Financial information of JB HI FI
Net profit
Current liquidity
ratio Cash position EPS
Dividend per
cent
2017 2016 2017 2016 2017 2016 2017 2016 2017 2016
$
million
$
million
3.06% 3.84% 1.32167 1.57271 72.8 57.9 153.8 172.1 118 110

Financial and economical interception and communication
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(Morningstar, 2018)
Interpretation:
The changes into the financial performance have been taken due to lower increment in
the profit in relation with the sales. The changes into the liquidity state have been done by the
management of the company to reduce the need of working capital management. Further, it
has been noticed that the company has improved the turnover and issued more debts into the
market which has helped the company to enhance the level of total cash position. Further, it
has been measured that the EPS of the company has been improved and due to it, company
has decided to give higher amount s dividend to the shareholders of the company (Yahoo
Finance, 2018).
The company is mainly operating its business in Australia and New Zealand. The
overall financial performance of the company has been improved. The current diversification
strategy of the company is among the best strategies of the company to manage the
operations. The competitive level, remuneration, global presence of the company has been
improved due to strategy and better profits (Morningstar, 2018). The company is following
the formal organizational structure in which all the subordinates are supposed to report their
reporting manager about their work, responsibilities and the assigned task.
The main strength of the business is its different products and the services which are
offered to the customers. The financial strategies of the company are also enough string to
manage the performance of the company. The company has offered higher remuneration in
2017 from 2016. The highest remuneration has been given to the chairman of the company
which is $ 2,78,000. Annual report (2017) explains that no additional wages are given to the
employees of the company. The economical position of Australian market has also been
improved and the company has not affected with any economical and government rules.
Recommendation and Conclusion:
To conclude, the financial and non financial performance of the company is great and
thus, the investors are suggested to invest into the company for a long period to enhance the
total returns and to reduce the risk level.
References:
Reuters. 2018. JB HI FI. [online]. Available at:
https://www.reuters.com/finance/stocks/companyProfile/JBH.AX (accessed 5/6/18).
Annual report. 2017. JB HI FI. [online]. Available at:
https://www.jbhifi.com.au/Documents/2017%20Annual%20Report.pdf (accessed 5/6/18).
Morningstar. 2018. JB HI FI. [online]. Available at:
http://www.morningstar.com/stocks/XASX/JBH/quote.html (accessed 5/6/18).

Financial and economical interception and communication
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Yahoo finance. 2018. JB HI FI. [online]. Available at:
https://au.finance.yahoo.com/quote/JBH.AX/ (accessed 5/6/18).