Task:
You are a member of a large accounting firm which provides various business consultancy services including financial statement analysis. One of your clients is considering investing in JB Hi-Fi and approached you for advice.
Required:
Prepare a report commenting on the financial health of JB Hi-Fi in the past two (2) years.
Detailed guidelines for completing this task:
1. Analysing the financial statements
The purpose of your report is to discuss and summarize your findings on the financial health of JB Hi-Fi by analyzing and interpreting the financial statements of the company. After getting the two most recent annual reports of JB Hi-Fi, calculate at least four (4) major financial ratios from each of the categories below:
(a) Profitability ratios;
(b) Liquidity ratios;
(c) Financial stability ratios; and
(d) Ratios used for analysing cash flow.
The choice of ratios chosen should be made so that you are able to arrive at a conclusion to advise your client on the financial health of JB Hi-Fi in the past two (2) years. The ratios chosen, together with their formulae and calculation, are to be included as part of your report. These can be inserted in any sections of your report, depending on your creativity.
Note that you should make any reasonable assumptions in computing your ratios. You should focus on interpreting the ratios computed, rather than the accuracy of the ratios computed.