These analysis form an integral part of the financial statement analysis, especially from the investors point of view, who always strive to invest in countries having strengthen and stabilizing financial ratios and representing an upward trend. It is of great significance that the ratios must be benchmarked against a standard in order for them to possess a meaning. Keeping that into account, the comparison is usually conducted between companies portraying same business and financial risks, between industries and between different time periods of the same company. The company under consideration is JB Hi Fi Limited and in this report analysis of the financial performance of the company for the financial year 2009 with the financial year 2010 has been conducted in order to draw attention to various financial trends and significant changes over the period. The analysis is divided into three main categorize namely Profitability, Liquidity and Gearing. Profitability ratios identify how efficiently and effectively a company is utilizing its resources and how successful it has been in generating a desired rate of return for its shareholders and investors. Liquidity ratios measure the ability of the company to quickly convert its asset into liquid cash to settle its short term liabilities. Whereas, the Gearing ratios identifies the extent to which the company is financed through debt and to what degree the operations are being conducted from the finance raised through raising equity capital or otherwise. Financial Analysis JB Hi Fi Limited is regarded as one of the prominent when it comes to selling home appliances. The company is involved in selling plazmas, computer and tablets and several other digital home entertainment appliances. It holds a considerable market share and manages its operations through a well established supply chain. The company represents sound financial outcome as its turnover has increased by 27% during the financial year 2009 as compared to the prior financial year, boosting the net profit by a massive 39%. The company’s reserves have also increased during the current financial year which shows that its investors are considering the company lucrative and are planning to have a long term association with it. Profitability Ratios 2009 2008 Profitability Ratios Gross profit margin 21.51% 21.86% Net profit margin 6.17% 5.65% ROCE 41.19% 39.71% Gross profit margin is an analyzing tool which assists in identifying how effectively and efficiently the company is utilizing its raw materials, variable cost related to labor and fixed costs such as rent and depreciation of property plant and equipment. The ratio is calculated by dividing the sales revenue by the gross profit. Analyzing the trend of gross profit margin, in the financial year 2009 the gross profit margin has marginally decreased as compared to the financial year 2008. Although the sales in the year 2009 increased by $498.702 million, but this was offset by an increase of $ 397.802 million in the cost of sales. Net profit margin, on the other hand analyzes the profitability of the company before deducting the taxation and finance charges from the earnings. The ratio is calculated by dividing the profit before interest and tax with the sales revenue of the current finan
Contents Abstract 2 Financial Analysis 3 Profitability Ratios 3 Liquidity and efficiency Ratios 4 Gearing Ratios 6 Conclusion 7 References 8 Abstract Ratio analysis is a very accurate and reliable tool when it comes to analyzing the financial outlook of an entity…
Introduction This study entails about the balance sheet and its components. Balance sheet is a type of financial statement prepared by all the business organisations to represent its financial position at a particular point of time when the balance sheet is prepared by them.
This is attributed to heavy growth in Accounts Payable as a result on greater purchases on credit. Nevertheless, the credit sales of company increased by just under 14%. Cash and cash equivalents also recorded a reasonable increment of 13% approximately from 2001 to 2003.
Due to the importance of these capital markets there is a need for professionals dedicated to financial reporting. Publicly traded companies have to prepare financial statements every accounting period.
Balance sheet indicators point at increased asset levels and growing equity against a fairly stabilized liability trajectory to ensure sustainability of its operations. Considering the difficulties witnessed in the financial crisis witnessed during the specified operating period, Apple’s performance leading to growth illustrates the exponential investment opportunity that investors stand to gain when the markets stabilize in the near future.
Ways of controlling Off-Balance Sheet Banking by Financial Regulators
This situation fell out of proportion which ultimately led to huge loss in financial market and industry. The years 2007 – 2009 were affected by the subprime market loss as well as losses in mortgage market.
A strong balance sheet strengthens the investor's confidence in the company and motivates to invest more because investors can see huge returns for future in the form of dividends and bonus. The balance sheet further makes it easier for the financial manager to take wise decisions and know the reasons behind non-accomplishment of company's goal.
The Enron failure has given rise to several questions concerning the preparation and presentation of financial statements of accounts including off balance sheet financing resorted to by several corporate entities. All these questions have been cropped up due to the single factor of 'off balance sheet financing' (OBSF) techniques adopted by Enron and the consequent impact it created on the whole economy because of its failure.
Working capital is the difference between the current assets and the current liabilities of any firm. This could also be explained as the assets that are set aside for the day – to –day operations of the business (Samuels et al,