JB Hi-Fi cash flow analysis Essay Example

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Introduction

JB Hi-Fi Company is an Australian merchant of customer electronics, video games and DVDs supplier, Compact disks and Blue-rays (Roy, et al., 2013). JB Hi-Fi Company is considered to be a chain store operation that is headquartered in Melbourne. The company has also expanded its trade from primarily selling music compact disks and currently the company form one of the main retailer from several consumer electronics that includes LCD and Plasma TVs, digital cameras and portable audios among other diverse electronic products (JB Hi-Fi Annual Report, 2015).

The examination of the impacts of the economic environment on the company, the focus must be equally distributed between the macro condition and the micro conditions. Macroeconomic conditions usually include extensive economic factors that affect the whole economy like currency exchange rate and interest rate (JB Hi-Fi Annual Report, 2015). In terms of currency rate, Australia dollar has maintained a stable rate of exchange comparing with other global currencies in the recent years. This aspect plays a vital responsibility in the overall JB Hi-Fi Company performance since the majority of its video products are usually imported from diverse states and the aspect of the high rate of exchange that can decrease the cost it passes to consumers thus marinating a high profit.

The business cash flow statements reveals the business adjusted income in statement of income to attain the cash from operating activities which is subsequently adjusted in contradiction of cash inflow or outflow from investing and financing activities. The transaction charges against income in the income statement are the adjustments of non-cash items which included the depreciations, amortizations as well as the changes in inventory which are adjusted against the income reported in income statement to arrive the cash items flow’s cash from operating activities. As such, the company enjoys a good cash flow as the analysis of the five years depicts a sequential increase. For instance, in 2011 the company had a free cash flow of 64.88 million and as at 2015 the company’s free cash flow it had accumulated to amount of 137.43 million. This can be attributed to sound management, adherence of good financial policies and standards. The driving force in an organization is the amount of cash flowing thus meaning that the company has enough money to finance its operations. The cash flow trend secures a good future as it shows that the trend will be improved in coming years. Injected cash is well managed thus leading to increase cash flow and high investing activities that generate income.

A critical overview reveals that, JB Hi-Fi Company has the best human resources which is shown by the high number of revenues earned. A good company performance can be charged by how the employee related with the company executives thus translating to the income earned. Job evaluation shows that JB Hi-Fi Company has come up with good plans that care for employees[ CITATION Alt08 l 1033 ]. Good remuneration and good working conditions determines the success of any organization. As such, JB Hi-Fi Company has proof to be a top-notch company as it has well-structured plans targeting the human resources. Comparison of the five years shows a positive trend that has enable success in every fiscal year[ CITATION Cha10 l 1033 ]. The increase in revenue can be attached to mean good employee policies incorporated by JB Hi-Fi Company.

References

Altman, E. I. (2008). Financial ratios, discriminant analysis and the prediction of corporate bankruptcy. The journal of finance, 589-609.

Gibson, C. (2010 ). Financial Reporting and Analysis: Using Financial Accounting Information. Cengage Learning.

JB Hi-Fi. (2016, April 14). JB Hi-Fi Annual Report. Retrieved from https://www.intelligentinvestor.com.au/company/JB-Hi-Fi-JBH-250229/cashflow-statement

FINANCIAL STATEMENT ANALYSIS

FINANCIAL STATEMENT ANALYSIS 1