|
Executive Summary执行摘要
征文的目的是相对于两个电气和计算机专营权的公司，它代表哈维诺曼有限公司（ASX代码：HVN）和JB高保真有限公司（ASX代码：JBH）作为调查对象。而这种分析是简单地比较和对比与比财务业绩为2010-2011年，为了帮助长期主要零售商选择签署有利10年的合同，同时最大限度地降低投资风险。
The aim of the essay is relative to two electrical and computer franchises companies, which represents Harvey Norman Limited (ASX code: HVN) and JB Hi-Fi Limited (ASX code: JBH) as objects investigated. And this analysis is to simply compare and contrast the financial performance with ratios for the year of 2010-2011, in order to help the long-term major retailer choose to sign a favorable 10-year contract, whilst minimizing the investing risks.
And the essay will indicate the broad background which involves the performance of the two companies, the first part will demonstrate about horizontal and vertical analysis of Harvey Norman and JB Hi-Fi, and the second part will emphasize on the ratios of profitability, solvency and financial leverage in 2010 to 2011.
1. Background of Harvey Norman and JB Hi-Fi哈维·诺曼和JB高保真的背景
1.1 Harvey Norman1.1哈维诺曼
于1961年发现，Harvey Norman的控股有限公司是一家公众公司而从事特许经营，综合性零售业务和房地产开发。它是计算机，家具，床上用品商品和电器的澳大利亚的零售商。此外，总部设在澳大利亚，其显性经营超过230专卖店遍布世界各地，包括新西兰，爱尔兰，斯洛文尼亚等。和Harvey Norman的也是其他零售连锁店，即乔伊斯梅恩和Domayne的特许经营商。
Found in 1961, Harvey Norman Holdings Limited is a public corporation which engages in franchising operation, integrated retail business and property development. It is an Australian-based retailer of computer, furniture, bedding goods and electrical appliances. In addition, headquartered in Australia, it dominantly operates exceed 230 stores throughout the world including New Zealand, Ireland, Slovenia and so on. And Harvey Norman is also a franchisor of other retail chains, namely Joyce Mayne and Domayne.
1.2 JB Hi-Fi
In 1974, JB Hi-Fi Limited Company was established in Melbourne, which is a specialty discount retailer primarily engaged in selling a widespread brands of consumer electronics, electrical goods and software comprising movies, music and games. For instance, Apple, HP, Palsonic, LG, Samsung, Sony, Asus, Sharp and other related brands. The firm aggregately operates 157 shopping center locations; it respectively distributes 144 stores in Australia and 13 stores in New Zealand. And it also provides an online site for sale prominent products. According to Annual Report of the year 2011, cash flow operations were $ 109.9 million that embodies the corporation has strong cash generation from existed stores.
2. Financial statement analysis财务报表分析
2.1 Trend analysis
As is indicated in balance sheet in the year between 2010 and 2011, it apparently demonstrated that Harvey Norman and JB Hi-Fi moderately grew in total assets, in the year of 2011 respectively 108.1% and 107.39%. In addition, Harvey Norman steadily increased to 103.3% in total equity from 2010 to 2011; in contrast, statistics of JB Hi-Fi fell extremely to 51.93% which is $152,313,000 in 2011.
As can be seen from income statement that retrieved from both Harvey Norman and JB Hi-Fi, it can be clearly shown that Harvey Norman moderately increased in their annual sales avenue, which increased 15.8% in 2011 from 2010, compared with JB Hi-Fi as it almost remains stable in $2,845,286,000 per year. Nevertheless, Harvey Norman had a growth as its statutory profit after tax to $259,620,000 that stand for 109.1% increased from 2010 while JB Hi-Fi dropped its profit after tax $8,957,000 in the year of 2011 from $118,652,000 in 2010. This table also displayed earnings per share between the two companies; data of Harvey Norman indicated an upward trend between the 2 years, which enhanced 9.1% from 2010 to 2011. However, JB Hi-Fi declined through the period of years, especially in 2011 it already decreased by 7.27%.
2.2 Vertical analysis
According to the income statement of JB Hi-Fi, cost of sales declined to 78.0% in 2011 of sales revenue from 78.2% in 2010. At the same time, the gross profit proportion had a growth from 21.8% in 2010 to 22.0% in 2011. Nevertheless, the profit for the year shows a steady fall, 4.3% in 2010 and 3.7% in 2011, respectively. This means mostly due to the large amount raise in expenses.
On the contrary, the cost of sales of Harvey Norman Company existed a slightly fluctuation, there had a increasing between 2010 (72.0%) and 2011 (72.6%). There is no doubt that the gross profit had a higher percentage of sales which were 28.0% to 27.4%. The consequence is that in 2011 company did not get a growth in profit after tax than preceding year’s statistic, which resulted from revenues and other income percentages.
From the vertical analysis of JB Hi-Fi’s balance sheet, it shows the company’s total current assets had a little increase in virtue of gross inventories. The reason why resulted in a decline in total non-current assets is that a fall in proportion of plant and equipment. The current liabilities of JB Hi-Fi Company decreased in 2011, whereas it had a strong rise to 35.1% from 8.1% in non-current liabilities. This seriously affected the proportion of total assets.
Moreover, as can be seen from the Harvey Norman balance sheet that total current assets had a slightly declining at 40.6% in 2011 comparing with 42.0% in 2010. However, another change had been a significant raise for its non-current assets (59.4% in 2011) from 4.2% in 2010. In addition, its total current liabilities were steady decrease from 26.0% (2010) to 24.8% (2011). Furthermore, the change of total liabilities was an increase between 2010 (41.8%) and 2011 (44.3%), which influences the net assets’ proportion of total assets. And this is attributed to the rise of long-term loans $195,223,000 of a large number.
2.3 Ratio analysis
2.3.1 Profitability ratio analysis
2.3.1.1 Return on net sales (profit margin)
Return on net sales demonstrates the proportion of sales revenue engendered by the firm that is translated into net profits. Harvey Norman had return on net sales of about 0.167 in 2011 while back to 0.177 in 2010. Likewise, JB Hi-Fi had profit margin of 0.037 in 2011 relative to the preceding year’s 0.043. One reason of decrease ratio was that JB Hi-Fi enhanced non-operating expenditure. For instance, JB Hi-Fi operated helping hands program that the firm donated $169,000 in the event of Queensland floods. Another decline reason is because price deflation, intense competition and franchising operations segment of Harvey Norman has depleted large amounts which results in fluctuation of sales price and a decline in franchise fees. From the foregoing statements, compared to JB Hi-Fi, it obviously states that Harvey Norman operates better in this ratio.
2.3.1.2 Return on total assets (ROA)
The ratio shows how well company manages the assets by measuring return on total assets. JB Hi-Fi Copmany decreased from 0.256 in 2010 to 0.223 in 2011, while Harvey Norman declined to 0.108 in 2011 from 0.114 in 2010. Both Harvey Norman and JB Hi-Fi gave a lower ROA from 2010 to 2011 but the significant decrease of JB Hi-Fi’s ROA was owing to a significant increase in its total assets which was not followed by notable rise in operating income. This indicated that management of the companies was not well enough to generate desirable profits with their assets.
2.3.1.3 Return on ordinary shareholders’ equity (ROE)
The ratio expresses that a company’s relationship between profit and ordinary shareholders’ investments. Between 2010 and 2011, ROE of JB Hi-Fi had increased by 0.038 in 2011 compared to 2010 performance, whereas Harvey Norman’s ROE just raised by 0.005 from 0.454 in the year of 2011. On the average of ROE, JB Hi-Fi (0.473) was much higher than Harvey Norman’s, which indicates JB Hi-Fi had been giving a much more return than Harvey Norman for the investing money from the shareholders. The increase of ROE results from raising return on net sales, that is, Harvey Norman improved the profit after tax and it enhanced the sales revenue of the firms both Harvey Norman and JB Hi-Fi. Probably, it was on account that decreased efficiency of Harvey Norman in managing their assets to engender profit.
2.3.2 Liquidity ratio analysis
2.3.2.1 Current ratio & Acid-test ratio:
Current ratio measures that the ability of company to pay its short-term obligations and liquidity. Harvey Norman had current ratio of 1.619 in 2010 while mildly increased to 1.637 in 2011, while as the current ratio of JB Hi-Fi between the year of 2010 and 2011 showed a growth which respectively were 1.252 and 1.448. Moreover, acid-test or quick ratio measures whether the corporation can immediately pay its short-term obligations but covert firm’s most liquid assets to cash. Quick ratio of Harvey Norman and JB Hi-Fi both demonstrated a decline tendency over the period of 2010 and 2011. Harvey Norman’s quick ratio dropped from 1.289 to 1.235, and JB Hi-Fi declined by 0.07 in 2011(0.247). It means company is not capable to pay back in short-term debts with current assets when the quick ratio is under 1. Compared the two companies, Harvey Norman performed better than JB Hi-Fi from 2010 to 2011. That means JB Hi-Fi’s inventory grew considerably and occupied a high proportion. However, Harvey Norman has small share of stock that does not meet the amount of current liabilities. And it shows strong liquidated assets to repay short-term debt in Harvey Norman.#p#分页标题#e#
2.3.2.2 Inventory Turnover
This ratio of inventory turnover displays to measure the number of times which both Harvey Norman and JB Hi-Fi take to sell and replace its inventory within 2 years (2010-2011). Although Harvey Norman’s inventory turnover since 2010 has been steadily increasing, and the value in 2011 increased by 0.062(3.775), the inventory turnover of JB Hi-Fi has been decreasing slightly from 6.483 in 2010 to 6.222 in 2011. The inventory turnover’s ratio of JB Hi-Fi decreased because the corporation opened 18 new stores in 2011 and cost of doing business was flat in 2011. Another reason is that finished goods of inventories in 2011 is increased much higher which valued at $406,939,000. As is seen from number of day’s inventory held, it showed that JB Hi-Fi had a growth in 2011 relative to the previous year’s performance, whereas it existed less 2 days in Harvey Norman in the year of 2011. In addition, since 2010 till 2011 the average inventory turnover ratio for Harvey Norman and JB Hi-Fi respectively is 3.744 and 6.352. Comparing the average inventory turnover of both two corporations, it apparently indicated that JB Hi-Fi Company was better in managing their inventories and it had a stronger ability to pay a debt than Harvey Norman. These two companies all through the periods retail electronic items, it is better if it has a higher inventory turnover ratio than competitors’ because it is one significant indicators how well the company operates against other rivals.
2.3.2.3 Account receivable turnover
As demonstrated in accounts receivable turnover ratio, it exhibited 0.204 increased for the period of 2010 till 2011, which pulled Harvey Norman value up to 1.450. And the 0.204 rise reveals that Harvey Norman operated successfully in advancing the effectiveness in enlarging credit and collecting debts in comparison with 2010. Likewise, JB Hi-Fi had been increased steadily in its receivable turnover from the year of 2010 to 2011, which were respectively 44.14 times and 48.61 times. The change of JB Hi-Fi’s account receivable turnover ratio was considered to be very high which expressed a better level of liquidity management and product sales. As stated in JB Hi-Fi’s annual report in 2011, creditor days were in accordance with market expectations which waere down 1.3 days to 46.8 days. In addition, it also indicated that JB Hi-Fi was better in short-term solvency and liquidation, but its shortage pointed out that JB Hi-Fi would be short on cash and its credit was tighter than competitors’ resulting in running in the risk of losing of sales when faced with an emergency.
2.3.3 Solvency ratio analysis
2.3.3.1 Debt ratio
Harvey Norman and JB Hi-Fi both are financed by a certain combination of debt and assets, and it all indicates a rise in 2011 relative to the previous year’s performance. Financing through debt was involved with risks, whereas it can rise up in return of equity (ROE). Consequently, it is necessary that companies can obtain favorable financial leverage with a right capital structure. In the period of 2010-2011, it is apparently illustrated that the debt ratio of JB Hi-Fi (0.589 to 0.802) was much higher than Harvey Norman’s (0.418 to 0.443) which suggests most assets of the companies are financed through equity and Harvey Norman has more financial leverage than JB Hi-Fi. In comparison with Harvey Norman, which has a good percentage of debt, but JB Hi-Fi has not enough leverage to improve the return to the owners. Furthermore, the higher change of debt ratio of Harvey Norman indicates that it will limit financial flexibility of the company due to a greater risk. On the other hand, the change of JB Hi-Fi’s debt ratio states that it will limit borrowing capacity of the company in respect that financing through debt will be potentially dangerous on condition that creditors begin to demand repayment of debt.
2.3.3.2 Times-interest-earned
The ratio of times-interest-earned measures how many times profit can cover interest expense in companies. Since the ratio of Harvey Norman between 2010 and 2011 sharply decreased from 12.49 to 9.70, which means the company faces more difficulties in paying interest expense of their debt during the periods. By contrast, JB Hi-Fi’s times-interest-earned ratio slightly increased by 0.92 in 2011(26.3). The increase represents JB Hi-Fi has greater ability to meet its interest obligations with room to spare, that is, the firm has more operating income to cover the debt’s interest expense. Apparently illustrated, finance cost from JB Hi-Fi’s income statement from 2010 to 2011 had already reduced $671,000 while the gross profit increased $57,855,000. On the other hand, the interest expense of Harvey Norman got a increasing in 2011, which expressed from $33,638,000 to $42,984,000. From the period from 2010 to 2011, the decrease ratio of Harvey Norman indicated the company is weaker in capacity to pay the debt, and it might generate problems in long-term solvency with rising total liabilities.
3. Recommendation建议
From the analysis of two companies’ financial ratios, on the basis of profitability, solvency and efficiency it implies better returns to maximum utilization and invested funds with an effective manner. It seems that Harvey Norman is the suitable investment opportunity, however, concerning the ratios which indicate liquidity and stability of the firm in both sides of the short-term and long-term; JB Hi-Fi appears to be the better election inasmuch it faced less liquidity risks.
Although in this case Harvey Norman seems to be a choice in better investment, a wise judgment would done for familiarizing them with the firm’s dressing. Without market knowledge and the first-hand exposure to the operations of department, simply investing on the basis of the understanding all ratios is not sufficient. The ratios and graphs of further analysis for Harvey Norman are supplied in the appendixes to assist to support the investment decision making.
4. Conclusion总结
In conclusion, the whole analysis demonstrates that Harvey Norman is the better choice for short-term investment as they got better and stable performance for the two years between 2010 and 2011. Moreover, JB Hi-Fi is chosen for the 10 year supply contract since this way can assist retailer to achieve more profit from the business.
Reference list文献
Harvey Norman Annual Report (2011), Harvey Norman Limited. Retrieved 8th Oct 2012.
Harvey Norman Annual Report (2010), Harvey Norman Limited. Retrieved 8th Oct 2012.
JB Hi-Fi Annual Report (2011), JB Hi-Fi Limited. Retrieved 1st Oct.
JB Hi-Fi Annual Report (2010), JB Hi-Fi Limited. Retrieved 1st Oct.
|
 |
|||
| 网站地图 |
