Accounting Business Reporting for Decision Making

350 Accounting: Business Reporting for Decision Making

2015 42.79%

2014 47.71%

2015 15.56%

2014 15.08%

2015 4.16 times

2014 4.09 times

2015 61.62%

2014 65.73%

2015 34 times

2014 21.65 times

Liquidity (current ratio)

2015 1.62 times

2014 1.64 times

Liquidity (quick ratio)

2015 0.36 times

2014 0.34 times

2015 8 days

2014 7 days

2015 3.74%

2014 3.69%

2015 60 days

2014 59 days

2015 16.52%

2014 16.47%

2015 21.86%
2014 21.70%

Expense

ratios

Current asset

turnover

Current ratio

and

quick ratio

Prot margin

Return on

assets Leverage

Return on

equity

JB Hi-Fi

nancial

performance

and position

Asset turnover

Gross

prot

margin

Days

inventory

Days

debtors

Debt ratio

Interest coverage ratio

FIGU R E 8 .12 The interrelationship between ratios using JB Hi-Fi Ltd as the example

Ratio analysis, in conjunction with other considerations, is an important input to the process of val-

uing an entity or business. Analysts’ reports, prepared to inform investors’ investment decisions and

other user decisions, always refer to the financial analysis that has been conducted on the entity as well

as other factors that influence the likely success of the entity in the future. The reality check ‘JB Hi-Fi

profit falls, earnings outlook subdued’ presents a report summarising JB Hi-Fi Ltd’s financial position

and performance after the first six months of 2015.

REALITY CHECK

JB Hi-Fi profit falls, earnings outlook subdued

JB Hi-Fi has reported a small fall in first-half profit, posting $88.5 million of net earnings in the six

months to December. That was down 1.9 per cent on the same period last year, despite a 1.3 per cent

rise in total sales, an 11 basis point rise in gross margins and a 1.8 per cent increase in gross profit.

However, comparable store sales were down 0.7 per cent, showing that it was only the opening of new

stores driving the modest revenue growth.