Accounting - Analysis of Two Companes (Wcm) Essay

7106 Words Oct 15th, 2013 29 Pages
Group Assignment
Khalid Mousa 43251528
Sharmila Barua 43095135
Amarise Saini 41193814
Sheree Barbat 43216609
Alex Nicholas 43359280
Jennifer Harwood 43160816

Table of Contents | Executive Summary | 3 | Background Information | 4 | Local and Global Economic Conditions | 5 | Stock Price Movements | 7 | Summary of the Financial Statements | 9 | Analysis: Profitability | 11 | Analysis: Operating Efficiency | 15 | Analysis: Liquidity and Financial Risk | 20 | Investment Decision | 25 | Appendix 1: Financial Statements Note | 28 | Appendix 2: SWOT | 29 | References | 31 | | | Total Word Count (excluding appendix/tables) | 5,404 |

Executive Summary
This report is an analysis of 2 companies:
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JB Hi-Fi’s continued its rapid store expansion, acquisitions and investment into other businesses as well as implementing a strategy to pay down debt before initiating a share buy back in 2011 increasing shareholder value.
Following this analysis it was determined that while the recent performance of JB Hi-Fi is attractive there are warning signs of a possible burn out with costly investments into rapid store openings and closures and diversification into new segments such as whitegoods and online music, hence the better long term sustainable investment is David Jones in the interest of a comparatively low-risk, long term sustainable strategy to grow shareholder value.

Background information

JB Hi-Fi established by Mr John Barbuto (JB) in 1974 but since has been purchased by private equity bankers as well as being floated on the Australian Stock Exchange, is a specialty discount retailer of branded home entertainment products. The group’s products particularly focus on consumer electronics, electrical goods and software including music, games and movies, with recent investments into diversifying operations into white goods and other investments.

The product mix is constantly revised to ensure competitiveness. JB Hi-Fi’s reluctance to take on the new devices illustrates strict product selection. Margin gains

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