22748 Financial Reporting and Analysis Group Case-Study, Autumn 2021 Assignment Sample 2024
5. Questionable numbers and undo distortions
Business report of 2020 has provided data that JB HIFI has achieved annual revenue growth of near about 17%, NPAT growth of more than 28%, EBIT growth of approximately 22%. The operation of group is largely impacted due to the sudden breakdown of the Covid-19 pandemic era.
The result in take few government actions during the end of 2020, 31st December (Investors.jbhifi.com.au 2020, p. 17). the entire business operation is negatively affected (Jbhifi.com.au. 2021). Therefore, to overcome this disruptive situation, JB HIFI is remarkably committed to taking support of the Australian government and the social community efforts.
PPE analysis
Useful life of PPE around 1.5 to 15 years which is quite less than its other top competitors, is obviously a questionable thing to be analysed. There are other things the company is going through like different governmental policies that have put an impact on the organization’s internal end. As per the policy AAS108, JB Hi Fi was able to obtain a certain representation of their financial statements (Investors.jbhifi.com.au 2020).
A lower PPE value also worked on favour of the organization costing less on any accumulated depreciation and loss of impairment. AASB116 policy made it possible for JB Hi Fi. Moreover, through other sub-policies of AASB116 as well as AASB108, the company could analyse and measure its useful lives, residual values and also the method of depreciation.
Thus internal modification is possible in order to expand the business. IRS 35 also recommends having 2 to 10 years for equipment that not only results in lowering depreciation (Investors.jbhifi.com.au 2020). Besides that, it adds value to the assets temporarily and a more appealing image becomes possible to be presented to the investors.
Intangible asset analysis
As per claims of JB Hi Fi, it has developed its brand image up to that level from where it can easily calculate it as an intangible asset. Moreover, in 2013 the total accumulated amount was $93096000 as depreciation and amortization. In the next year it became $113223000 and in 2015 it was calculated as $126000000. Here a gradually increased asset can be observed as there was no impairment done in 2014, as per evidence.
No other revaluation charge has been updated by the company and thus it can be concluded that several governmental policies made changes in the organization internally that might affect in company’s financial status in various ways (Investors.jbhifi.com.au 2020).
Inventory analysis
FIFO method: FIFO also known as First in and First out method allows an organization to acquire the latest equipment at the very first stage of release. Thus, a company can make available the latest components in their inventory right after its release. Due to utilize the advanced kind of FIFO method, it can be helps for determining the ultimate price of the latest gadgets.
Besides that, the price is initially associate with the process of cash flow assumption as it delivered through FIFO method. In order to be the first in purchasing the latest stock, the company needs to sell it with a profitable price during the first period or else it may face a rapid decline in price than for what actually it was bought. A potential value of software sales is effectively representing more than 7% of entire sales (Investors.jbhifi.com.au, 2020).
The organization has to be ready for the challenge to buy and sell the latest gadgets maintaining reasonable profits.
The accounting policies of JB HIFI are developed through smart accounting numbers for each employee. Financial assets including bonds and stocks are moderately convenience as it can be interpreted as the earnings, interest paid or dividend to the owners (Detzel et al. 2021). It is highly interlinked with the financial report based on the 2019 half-year ended accounting chart. Besides that, it is remarkably in accordance with the accounting standard AASB 134 “Interim Financial reporting” as well as the “Corporation Act 2001”.
As cited by Zummo (2017), Australia is continuously moving forward with the measurement to increase and reform the transparency regarding the corporate system. Using the ultimate range of good and reliable accounting policies can help to adjust through taking a strong place in the core Australian relation market.
Based on the data from the context of annual report of this company, it can be idealised that near about 23% of the consumer and employee are highly attracted within the business context. The prolonged deterioration in the context of stable economic condition, containing slow down the business and consumer demand create a major impact on recent financial condition (Investors.jbhifi.com.au 2020).
The operational process of JB HIFI is moderate through introducing modified and advanced accounting policies. The core policies that are highly associated with leading business operations are PP&E (property, plant, and equipment), Inventory as well as intangible assets. Such policies help in developing operation management of business as well as integrating functions of valuable assets in it.
Reference list
Birt, J., Chalmers, K., Maloney, S., Brooks, A., Oliver, J. and Bond, D., 2020. Accounting: Business reporting for decision making. John Wiley & Sons. Available at: https://eprints.usq.edu.au/4866/1/Birt_Chalmers_Beal_Brooks_Byrne_Oliver_2008_PV.pdf
CHEN, Y., 2017. Estimation of Stock Price: A Case Study of JB Hi-Fi Limited. DEStech Transactions on Social Science, Education and Human Science, (msie). Available at:
https://www.dpi-proceedings.com/index.php/dtssehs/article/viewFile/15424/14936
Detzel, A., Liu, H., Strauss, J., Zhou, G. and Zhu, Y., 2021. Learning and predictability via technical analysis: Evidence from bitcoin and stocks with hard‐to‐value fundamentals. Financial Management, 50(1), pp.107-137. Available at: https://onlinelibrary.wiley.com/doi/pdf/10.1111/fima.12310
Investors.jbhifi.com.au 2020. About. Available at: https://investors.jbhifi.com.au/annual-reports/,[Available at: 02.05.2021]
Jbhifi.com.au. 2021. About. Available at: https://www.jbhifi.com.au/, [Accessed on: 25th April, 2021]
Myassignmenthelp.com. 2020. About. Available at: https://myassignmenthelp.com/free-samples/advanced-accounting-annual-reports-of-jb-hi-fi-limited
Nambukara-Gamage, B. and Peries, S.T., 2020. The Impact of Dividend Policy on Shareholder Wealth: A Study on the Retailing Industry of Australia. Review of Integrative Business and Economics Research, 9(1), pp.38-50. Available at: http://sibresearch.org/uploads/3/4/0/9/34097180/riber_9-1_02b_t19-021_38-50.pdf
Zaw, P., 2019. Planned manufactured capital investment disclosures in annual and integrated reports: Evidence from New Zealand and Australian organisations. Available at: https://openrepository.aut.ac.nz/bitstream/handle/10292/13020/Planned%20manufactured%20capital%20investment%20disclosures%20in%20annual%20and%20integrated%20reports%20Evidence%20from%20New%20Zealand%20and%20Australian%20organisations.pdf?sequence=1
Zummo, H., McCredie, B. and Sadiq, K., 2017. Addressing aggressive tax planning through mandatory corporate tax disclosures: An exploratory case study. eJTR, 15, p.359. Available at: https://eprints.qut.edu.au/115124/1/10_Zummo_eJTR_15%282%29.pdf
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