• Internal Code :
  • Subject Code : MBA 403
  • University : Kaplan University
  • Subject Name : Finance

FINANCIAL ANALYSIS REPORT

Table of Contents

Executive summary 3

Analysis 3

Interpretation 3

Conclusion 4

References 5

Executive summary

JB HI-FI came into existence in the year 1974. Mr John Barbuto is the owner of this company. He started trading from only one store, which was in East Keilor, Victoria (Glass et al,. 2018) .He just had one belief, that ne needs to provide a professional variety of HI-FI , which will promote the recording of different kind of music at very cheap rates in all over Australia .In the year 1983 , the business was completely sold and after that in 1999 , it developed more and further total number of nine stores were started . The main purpose of analysing its financial report is to see the growth of this company over the years.

Analysis

The annual report for 2019 straight  away indicate that the sales has shown a growth by 4.7 percent which amounts approximately  2.59 billion dollars , in comparison  sales of approx. 3.0 percent .This was a big achievement for the company as has shown a continuous growth of sales in second quarter and also achieved a very strong product season .

In the year 2019, the growth in hardware and even services reached to 6.0 percent and in comparison to sales which was 4.4 percent through communications, the games hardware, connected technology and in comparison to hardware, the sales of software came down at 5.6 percent (CHEN, 2017). The decrease in the demand of movies and music leads to further going down of sales to 7.2 percent.

Interpretation

The company will have same remuneration plan for the year2020. For the fixed employees, there will be no increment .Only the incentive package of Tim Carter will increase for the coming year. In the year 2015, the total remuneration was approx. seventy eight lacks and in 2016 it went to eighty two lacks, in 2017 it was approx. ninety lacks , in 2018 one crore ten lacks and in 2019 it went up to one crore eighteen lacks . This clearly shows that the company’s expense on remuneration is increasing year by year. 

Sales at online sector has shown a growth of 21 percent to 144 million dollars or 5.6 percent of the total sales .The results of the organisation has witnessed a double growth and always stayed constant to achieve the long term goals for sales of approx. 500 million dollars per year  by both ways , through making strategies and organisational growth .

The company had a good growth in the gross profit as it increased around 5.2 percent to 573 million dollars (CHEN, .2017) which also resulted in the increase of gross margin , which was 22.1 percent .They continued in the same way by accelerating the scale , and through managing in an efficient and effective manner by changing their sales and balancing between the various brands and with the different variety of margins .

The company managed to achieve a low CODB, which is their biggest advantage and is maintained at constant numbers mainly through focusing more on the productivity of the company and reducing the expense and increasing the scale at 14 percent. Whereas the total operating cost was also under control because of the efforts put on the customer satisfaction services, through making various strategies, and taking measures that increased the overall volume.

The EBIT growth of the company also increased due to the growth in sales and decrease in depreciation .It was mainly managed through the investment in the network of stores, and that made a solid growth in the EBIT. The rate was 4.5 per cent to 191 million dollars, while the margin of EBIT was on a flat rate of 7.4 per cent.

The company able to open new stores in Queensland , Western Australia , New South Wales and at Sydney .The statements of accounts of this company is made in accordance with the accounting standards of Australia and the explanation is been done by the accounting standard board of Australia (Birt et al,. 2012).The historic cost methods were used to interpret the statements of accounts .The estimate and various studies have been used in the making of these  financial statements and which were valued on a regular basis and are mainly based on historic and other factors. The group has created a remuneration scheme on a basis of share ownership for its executive employees and even for the non-executive employees and it does not include any of the non-executive directors. There is a grant of options from the company to its employees for purchasing shares at different rates or to execute the same at zero price.

Conclusion

The company is a profitable venture for any investor. It has shown a great growth in last few years, from 2015 onwards it has increased year by year and shown a growth of almost 30 per cent in last five years. The company has managed to increase its sales in comparison to previous years. It has achieved the success in its every product, and even opened many stores to promote and accelerate the sales across Australia. It has increased the employment level and the remuneration has been increasing year by year (Birt et al,.2012).The management system is so efficient and effective that it reduces the unnecessary expenses and further boosted the profitability of the company. It has shown great results in terms of EBIT, which had increased the sales rapidly and thus increasing the profit as well. 

On the basis of the above report, this can be advised to the internal manager of the organisation that the remuneration expenses should not increase more than a certain level as it was seen that the expense is increasing year by year. The unnecessary expenses should be minimised more to reduce the overall expense and this will reduce cost and hence increase productivity and the profitability of the company.

References

Birt, J., Chalmers, K., Byrne, S., Brooks, A., & Oliver, J. (2012). Performance measurement.

Chen, Y. (2017). Estimation of Stock Price: A Case Study of JB Hi-Fi Limited. DEStech Transactions on Social Science, Education and Human Science, (msie).

Glass, M., & Gliozzo, A. (2018, July). Discovering implicit knowledge with unary relations. In Proceedings of the 56th Annual Meeting of the Association for Computational Linguistics (Volume 1: Long Papers) (pp.

Glass, M., Gliozzo, A., Hassanzadeh, O., Mihindukulasooriya, N., & Rossiello, G. (2018, October). Inducing implicit relations from text using distantly supervised deep nets. In International Semantic Web Conference (pp. 38-55). Springer, Cham.

Roy, L., Phillips, L., Graham, L., Tallentire, P., & Weston, S. (2013). JB HI fI LIMITED.

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