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.

2. Contents of report

Your report may include the following contents together with the advice on number of pages:

Items Expected no. of pages: Max. No. of pages:

Introduction and conclusion 0.5 1

Financial ratios analysed (see advice per Note 1 above) 2 3

Discussion on financial health (i.e. interpretation of financial ratios computed above) 2 3

Limitation of ratio analysis 0.5 1

Any other information (e.g. non-financial information, industry averages or other analysis that may assist in reaching conclusion) 0.5 2
Cover page, contents page, executive summary, references, acknowledgements and appendix (if any, for all these items) 3 5

Notes:

(a) The expected number of pages above is just a recommendation and not a minimum requirement;

(b) All in all, you report should not be more than 15 pages. There is no minimum number of pages required although it is expected that your report should be between 8-12 pages long (everything in);

(c) You should not attach the annual reports as part of your reports;

(d) The content items listed above is merely a recommendation and not minimum items required;

(e) While your work submitted should follow a format belongs to that of a report, what is to be included as part of your report is entirely your decision. In preparing your report, you should bear in mind the purpose of your report and exercise reasonable judgement in relation to the structure and contents of the report. You should not be deterred from any creative ideas in designing your report.

3. Format and presentation

The following points should be observed in drafting your report:

Use a font size of at least 11, with single or 1.5 line-spacing;

Each page should be numbered in one continuous sequence;

Your last name and student ID should be included at the top of each page.

If you need some guidance in how to prepare a report, you may consult Charles Sturt University's ALLaN Adviser Support.

Rationale

This assessment task covers topic 1. It has been designed to ensure that you are engaging with the subject content on a regular basis. More specifically it seeks to assess your ability to:

be able to critically assess and report upon the information contained within published financial statements.