Annual Analysis for JB Hi-Fi - Case Study Example

The paper 'Annual Analysis for JB Hi-Fi " is a great example of a finance and accounting case study. The different types of revenues generated by the company include revenue from the sale of goods and services which amounted to $3,483,775,000, interest received from banks amounting to $402,000 and other income which amounted to $118,000.

• Total value of for the 2014 annual report:
• Cash and cash equivalents =$43,445,000
• Inventories= $458,625,000
• Sales revenue = $3,483,775,000
• Other income = $520,000
• Plant and equipment= $181,564,000
• Interest expense (Finance costs)= $8,845,000
• Sales and marketing expense= $355,694
• Occupancy expenses =$148,968
• Trade and other payables=$302,979,000
• Borrowings (non-current) =$179,653,000

2.

Account type

Normal balance

Side of account affected in order to decrease

Cash and cash equivalents

Debit

Credit

Inventories

Debit

Credit

Sales revenue

Credit

Debit

Other income

Credit

Debit

Plant and equipment

Debit

Credit

Interest expense (finance costs)

Debit

Credit

Sales and marketing expenses

Debit

Credit

Occupancy expense

Debit

Credit

Trade and other payables

Credit

Debit

Borrowings (non-current)

Credit

Debit

Part B:

• The group’s assets are classified into two major groups including current assets and non-current assets. For the year 2014, the assets were classified as follows;

Asset classification

Amount

Current assets

Cash and cash equivalents

$43,445,000

Trade and other receivables

$70,745

Inventories

$458,625

Other current assets

$5,332,000

Non-current assets

Other financial assets

$3,000

Plant and equipment

$181,564,000

Deferred tax assets

$14,909,000

Intangible assets

$85,218,000

• The major categories listed among the group’s equity include contributed equity, reserves and retained earnings. At the end of the financial year, the group had a total of 20,105 ordinary shareholders.
• The group’s current liability for the dividend to ordinary shareholders

Dividend per share = 0.29

Total number of shares =$98,947,309

Current liability for dividend = $28,694,720

If you owned only 100 ordinary shares in JB Hi-Fi Limited, you would receive $0.29*100 = $29 in dividends (Hermanson, 2008). If added the interim dividend, the current year’s total amount of dividend per share would be;

Final dividend per share for current year = 29 cents

Interim dividend per share for current year=55 cents

Total dividend per share for current year=84 cents

• The group’s dividend per share for the current financial year (2014) was 84 cents per share while the group’s earnings per share were 128.39 cents per share.

Dividend payout ratio for 2014 was = DPS/EPS = 84/128.39 = 65.43%. This means that the company is paying more than half of its earnings as dividends and saving the rest.

PART C

• The company’s subsidiaries include JB Hi-Fi, JB Hi-Fi Home, JB HI-FI Now, and JB Hi-Fi Commercial & Education.
• The value of the group’s sales revenue for the current and previous year was $3,483,775,000 in 2014 and $3,308,396,000 in 2013. The percentage change in sales revenue for the current year has been 5.30% calculated as shown below;

% change in sales = (Sales change/Sales amount for 2013)*100% = ($3,483,775,000 -$3,308,396,000)/$3,308,396,000))*100% = 5.30%

• The group’s final profit after income tax for the current and previous year has been $128,447,000 for 2014 and $116,632,000 for 2013. The percentage change in profit (after income tax) for the current year has been 10.13% calculated as shown below;

% change in final profit = (change in final profit/final profit for 2013)*100% = ($128,447,000-$116,632,000)/ $116,632,000 = (11,815,000/$116,632,000)*100% = 10.13%

• The percentage change in sales was 5.3% compared to 10.13% change in final profit. This comparison provides information on the company’s expenses. The comparison reveals that the company has become more efficient or has implemented strategies for cost minimization which has resulted in the company’s profitability increasing at double the rate of increase in its revenues between the years 2013 and 2014.
• The total value of inventories on hand for both current and previous years is $458,625,000 in 2014 and $426,000,000 in 2013. The percentage change in inventory levels is 7.66% as calculated below;

% change in inventory =(change in inventory/inventory in 2013)* 100% = ($458,625,000- $426,000,000)/$426,000,000)100% = ($32,625,000/ $426,000,000) 100% = 7.66%.

The change in inventory levels is more than the change in revenue over the two years by 2.36%. In other words, it is almost one and a half times the change in the company’s revenue. The differences could have been caused by the company has acquired more inventories but with its sales efforts not having increased at the same rate (Skousen, 2015). This caused the company’s inventory to increase at a greater rate than the revenue increase.