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Trend Analysis: Myer Holdings and Davy Jones

Introduction

Trend analysis (also known as time-series analysis) refers to the practice of collecting information and analyzing the pattern in the same metric historically using tables or charts. It is based on historical data from a company’s financial statements. To gain a greater insight into Myer Holdings and Davy Jones’ performances over time, a trend analysis is performed. This will determine which of the two organizations has better performances over time.

Myer Holdings Trend Analysis

In the financial year 2011/2012, the sales revenue for Myer Holdings decreased by $40,000. This showed a fall in net sales by 1.3 percent compared to the previous financial year. This shows a decline in performance. The fall in net sales and the increase in operating profit in 2010/2011 had a relative fall in operating profit by $100,000, or 3.7 percent. However, the increase in operating income between the fiscal year 2011 to 2012 witnessed a fall in operating profit by $300,000, or 11.5 percent. The one-time gain in net income, showing unusual increase for 2011 of 928,000, or 138 percent however failed to cause much of the increase, as 2011/2012 experienced a decline in net income by $210,000, or 13 percent (4-traders 2013).

Table 1: Converting Sales Revenue, EBIT, Pre-tax profit and Net income for a trend analysis

Absolute Figures ($m)

Sales revenue

Operating Profit (EBIT)

Pre-tax profit

Net Income

The base year is set as 2010. It is assigned index value of 100.

Table 2: Trend analysis

Trend analysis

Sales revenue

Operating Profit (EBIT)

Pre-tax profit

Net Income

From analysis of the trend figures, it can be noticed that sales revenues decreased each subsequent year during the 2010-2012 period. There is also a decline in operating profit (EBIT), pretax profit and the net income throughout the same period.

Figure 1: Myer Holdings graph of trend

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The trend analysis compares Myer Holdings’ base year performance to the preceding years’ performance. From the above analysis, it is evident that the company’s performance is deteriorating. Myer Holdings overall performance has declined and is becoming dramatically weaker throughout the three years 2010, 2011 and 2013.

Davy Jones Trend Analysis

In the fiscal year 2010 to 2011, the company witnessed a small decline in operating profit by $200,000, representing a 0.8 percent fall. In the financial year 2011 to 2012, the company however experienced a sharper fall in operating profit by 930,000, or 37 percent. This shows a decline in performance compared to the previous financial year. Similar declines were noted in the company’s net income, in the three successive fiscal years. In 2010/2011, a small decline of net income by 300,000, or 1.75 was noted. In 2011/2012, the net income decline was by 670,000 or 40 percent was noted (see Appending B).

From analysis of the trend figures, it can be noticed that sales revenues decreased each subsequent year during the 2010-2012 period. There is also a decline in operating profit (EBIT), pretax profit and the net income throughout the same period.

Table 3: Converting Sales Revenue, EBIT, Pre-tax profit and Net income for a trend analysis

Absolute Figures ($m)

Sales revenue

Operating Profit (EBIT)

Pre-tax profit

Net Income

Table 4: Trend analysis

Trend analysis

Sales revenue

Operating Profit (EBIT)

Pre-tax profit

Net Income

The trend analysis compares Davy Jones’ base year performance to the preceding years’ performance. From the above analysis, it is evident that the company is deteriorating. Myer Holdings overall performance has declines and is becoming dramatically weaker throughout the three years 2010, 2011 and 2013.

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Comparison of Myer Holdings and Davy Jones Performance

Comparison of Myer Holding’s and David Jones’ profitability from 2010 to 2012 indicates that the two companies performed poorly in the three succeeding years. Myer Holdings reported a slight rise in the operating profit of 600,000 in the financial year 2010/2011 and a relative fall in operating profit by $1,000,000, or 3.7 percent. Davy Jones reported a decline of operating profit by $200,000, representing a 0.8 percent fall in the year 2010 to 2011 and 9,300,000, or 37 percent, in the financial year 2011 to 2012.Based on the above illustration, it is conceivable that despite the two companies failing to indicate desirable financial performance in the year 2010, 2011 and 2012, Myer Holdings shows better profitability compared to Davy Jones. Trend analysis has therefore declared Myer Holdings as a better company. As a result, the investors should consider investing on Myer Holdings instead of Davy Jones as the former has a better performance.

References

. (Online) Retrieved from: <http://www.4-traders.com/MYER-HOLDINGS-LTD-6500903/financials/> Accessed 29 July 2013Myer Holdings Ltd4-traders. 2013.

Davy Jones. 2012. Annual Report 2012. (Online) Retrieved from: <http://www.davidjones.com.au/-/media/Files/Corporate/Presentations/2012/David%20Jones%202012%20Annual%20Report.ashx> Accessed 19 July 2013

Myer Holdings. 2011. Interim financial report half year ended 29 January 2011. (Online) Retrieved from: <http://media.corporate-ir.net/media_files/irol/23/231681/4d_16.pdf> Accessed 19 july 2013

Myer Holdings. 2012. Interim financial report half year ended 28 January 2012. (Online) Retrieved from: <http://www.afr.com/rw/2009-2014/AFR/2012/03/14/Photos/b29c49c2-6e30-11e1-9a0f-fc6d4e3f9f56_myer%20int%20fin%20report.pdf> Accessed 19 July 2013

Appendix A: Myer Holdings

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Appendix B: Davy Jones Financial Information

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