this is my assignment detail

Ratio Analysis
JB HI-FI Limited (JBH.AX)


Name | Business Finance | 5 December 2018
Introduction
The purpose of this project is to conduct a thorough comprehensive Ratio analysis of a company that is listed on ASX. The primary goal of this project is to identify the strengths and weaknesses of any company by analysing various ratios. Ratio are calculated by taking numbers from balance sheet, cash flow and profit and loss statement in different combinations to get some meaningful insights about the company.
For the purpose of this study, JB Hi-Fi Limited is chosen and its script code is JBH. JB Hi-Fi is an Australian company. JB Hi-Fi is a retailer who specializes in video games, consumer goods, CDs, mobile phones and may other services.
Calculation and analysis of performance ratios
Ratio are calculated by taking numbers from balance sheet, cash flow and profit and loss statement in different combinations to get some meaningful insights about the company. It helps us to know the financial performance of the company
Ratio analysis can be summarized into six main categories i.e. 1. Solvency/Liquidity Ratios,2. Solvency/Leverage Ratios,3. Profitability Ratios,4. Efficiency/Turnover Ratios,5. Return Ratios,6. Market Value Ratios
In this project, we have calculated various ratios falling under the six categories as discussed above which is shown below. Detailed working with the formula & calculation is shown in the excel sheet for two years.
Liquidity Ratios: JB. Hi-Fi limited had a cu
ent ratio of 1.64 in 2014, 1.62 in 2015, 1.57 in 2016, 1.32 in 2017 & 1.32 in 2018. We can see that the company’s cu
ent ratio has significantly reduced. Ideal Cu
ent Ratio is 1, but it is better, if this ratio is 2. Looking at the above calculations, we can conclude that company’s capability to pay its cu
ent liabilities from its cu
ent assets has deteriorated. It can be concluded that it is not remarkable, but it is just meeting the satisfactory levels.
However, to further get a better picture regarding, quick ratio has been calculated. JB Hi-fi quick ratio has been reduced from 0.32 in 2014 to 0.30 in 2018. Ideally, this ratio is should be 1. Even the quick ratio has gone down and also it is less than 1

Financial Leverage Ratios: - Solvency ratios display the strength of the balance sheet, its ability to pay long-term debt. A higher ratio suggests that company has more of owed funds as compared to owned funds, which is not a good sign. Such firms face bankruptcy risk. But J.B. Hi-Fi limited Financial Leverage Ratios which around 0.50 in 2018 and 0.61 in 2014, reveals that it has debt under control. Ideal debt/Equity ratio 0.5. Moreover, J.B. Hi-Fi limited has been reducing its debt since 2014. J.B. Hi-Fi’s D/E ratio is on borderline, but it is still under control. Company has an interest coverage of 21.08 in...