David Jones
1. Introduction
The main purpose of this report is to analyse David Jones’ business performance and to determine whether it is a worthwhile investment. Two main points will be closely examined: classification of non-recurring items and recurring items, and ratio analysis. First, clarifying the generation of income made by ordinary activities and extraordinary activities will enable us to estimate the firm’s real earning power. Second, analysing historical financial data, using ratios, will enable us to understand the quality of the firm’s performance, such as profitability or efficiency. Analysis is also performed by comparison of David Jones’ ratios with others: I have compared Myer’s and industry average data with David Jones.
*Myer’s financial statement is constructed by the use of a half a year of data, from mid 2006 to early 2007. It seems reasonable to assume that the data can be used as one year data.
This report begins by the adjustment of financial statements, originally presented by David Jones. Due to the change in accounting standard in 2005, David Jones’ financial statements were adjusted to reflect that change. Ratio analysis and cash flow analysis is then presented, and then a brief summary of the analysis is given
2. Adjustment and Rearrangement of the Financial Statement
2.1 Adjustment
2.1.1 Need of adjustment
Because of the change in accounting standard used by David Jones in 2005, there are several adjustments to be made in order to find the trends of the performance during the last five years. By doing this, the quality of the adjusted financial statements will be greater when used for analysis. It would make the data more consistent across time and more comparable, so that the analysis will be more accurate.
The adjustment is made based upon the new accounting standard, AIFRS. The data under AGAAP in 2002, 2003 and 2004 are adjusted corresponding to the data under AIFRS in 2005 and 2006. Considering that AIFRS will be
The main purpose of this report is to analyse David Jones’ business performance and to determine whether it is a worthwhile investment. Two main points will be closely examined: classification of non-recurring items and recurring items, and ratio analysis. First, clarifying the generation of income made by ordinary activities and extraordinary activities will enable us to estimate the firm’s real earning power. Second, analysing historical financial data, using ratios, will enable us to understand the quality of the firm’s performance, such as profitability or efficiency. Analysis is also performed by comparison of David Jones’ ratios with others: I have compared Myer’s and industry average data with David Jones.
*Myer’s financial statement is constructed by the use of a half a year of data, from mid 2006 to early 2007. It seems reasonable to assume that the data can be used as one year data.
This report begins by the adjustment of financial statements, originally presented by David Jones. Due to the change in accounting standard in 2005, David Jones’ financial statements were adjusted to reflect that change. Ratio analysis and cash flow analysis is then presented, and then a brief summary of the analysis is given
2. Adjustment and Rearrangement of the Financial Statement
2.1 Adjustment
2.1.1 Need of adjustment
Because of the change in accounting standard used by David Jones in 2005, there are several adjustments to be made in order to find the trends of the performance during the last five years. By doing this, the quality of the adjusted financial statements will be greater when used for analysis. It would make the data more consistent across time and more comparable, so that the analysis will be more accurate.
The adjustment is made based upon the new accounting standard, AIFRS. The data under AGAAP in 2002, 2003 and 2004 are adjusted corresponding to the data under AIFRS in 2005 and 2006. Considering that AIFRS will be
References: Footnotes [1] Australian Bureau of Statistics, 8622.0 - Retail and Wholesale Industries, Australia, 2005-06, 17/08/2007, Full Text Online Available: CFA Institute. (2007). CFA Level I Candidate Readings. CFA Institute: Charlottesville White, G. Kimmel et al. (2006). Accounting building business skills (2nd edition). John Wiley & Sons Australia, Ltd.