financial analysis of JB Hi-Fi Ltd

“You are an assistant analyst for an investment bank. Prepare a report which sets out a complete financial analysis to an adjusted set of accounts of JB Hi-Fi Ltd. It is not sufficient to simply present typed or spreadsheet solutions. You are required to demonstrate and explain your assumptions and the workings to obtain your solutions.”

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Materials:

JB Hi-Fi annual reports (i.e. minimum of 2011 – 2015) and other relevant data.

Assessment will be assessed using Turnitin. So, make sure there is no plagiarism.

Use the Harvard method for referencing.

JB Hi Fi Annual Reports

https://www.jbhifi.com.au/General/Corporate/Shareholder-Matters/Financial-Annual-Reports/

Source data. Five (5) years of JB Hi-Fi’s annual reports. Two (2) years of a close competitor’s annual reports. Other: ASX announcements; broker analyst reports; industry information; economic data. (attach a copy)

1. Make adjustments (for nonrecurring and nonoperating items) to JB Hi-Fi’s balance sheet, income statement and cash flow statement. Include a list of adjustments for the five years for JB Hi-Fi. Include pre- and post-adjusted statements for JB Hi-Fi and for the competitor. (show me adjustments on separated excel sheet)

2. Calculate as many ratios as possible for each group of ratios – activity, profitability, liquidity, and solvency. This requires calculating four years of ratios for JB Hi-Fi and one year of ratios for a close competitor.

3. Include a section analysing the economic status of JB Hi-Fi in the context of its industry and the economy. Analyse its strengths and weaknesses by assessing how JB Hi-Fi has performed against its competitors in terms of its strategy and plans to capture market share, compete on the basis of price, product or distribution, as well as compete on the basis of geographic extension into new areas or products through organic growth or by acquisition of companies.

4. Analyse JB Hi-Fi’s segment performance. This type of assessment should highlight the company’s revenue, cash flow and profit strengths and weaknesses in terms of product or geographic segment.

5. The main part of your analysis is to assess the underlying causes of the changes in the activity, profitability, liquidity, and solvency sections. You must make a judgement and explain the reasons for the changing ratios or the underlying causes for the changing ratios. Compare the most recent year’s ratios for JB Hi-Fi with that of its main competitor. Some students like to do a competitor analysis as a separate task; others like to analyse each ratio of the competitor and compare it to JB Hi-Fi when undertaking the ratio analysis in this ratio section.

6. Calculate horizontal and vertical common-sized statements for JB Hi-Fi.

7. Include a five-stage Dupont analysis of JB Hi-Fi. This can be included in the ratio analysis section.

8. Include a high-level sales and profit prospective analysis for JB Hi-Fi. Assess the trend and expectation for JB Hi-Fi’s near-term future.

References

Appendix1       List of Adjustments

Appendix2       Adjusted Accounts

Appendix3       Common Size Statements

Appendix4       Ratio Calculations

Appendix5       Peer Company Data

Appendix

Common size analysis? Along the way or separately?

Format :

• Financial Analysis
  • Ratio Analysis
    • Activity Analysis
      • Short term Activity Ratios
      • Long term Activity Ratios
    • Profitability Analysis
    • Liquidity Analysis
    • Long Term Debt and Solvency
    • Du Pont Analysis
  • Cash Flow Analysis
  • Prospective Analysis
    • Sales and EBIT Forecast