Financial Evaluation of Jb Hifi's Performance
JB Hi Fi Limited’s (referred to as JBH or the company throughout this report) financial performance for the two years ending 30th June 2009 can be evaluated using the ratios presented in Table 1 below. Overall, considering the economic environment during this period with the Global Financial Crisis, JBH has continued to maintain exceptional profit margins and return to shareholders. The company achieved revenue growth of 27%, earnings before interest and taxes (EBIT) growth of 39% and net profit after taxes (NPAT) growth of 45% for the year ended 30 June 2009 (JBH Annual Report, 2009).
Table 1. Ratios calculated from JBH Annual Report 2009 using formulae from Evans & McDowell (2009).
| |FY08 |FY09 |
|Gross profit (GP) margin (%) |21.87 |21.64 |
|Earnings before interest and taxes (EBIT) margin (%) |5.59 |6.1 |
|Net profit after taxes (NPAT) margin (%) |3.56 |4.06 |
|Return on assets (%) |19.27 |21.69 |
|Return on equity (%) |39.7 |41.2 |
|Basic earnings per share (EPS) (cents) |61.78 |88.26 |
The gross profit (GP) margin decreased slightly in 2009 to 21.64% when compared to the previous year remaining at the reasonable trading efficiency of 20-30% as recommended by Evans and McDowell (2009). Whilst the GP margin decreased only slightly, the GP increased by 27% from $399,891 million to $503,591 million during the same time period, showing that the business managed to increase sales despite the economic downturn that occurred. This was due to a combination of the opening of 19 new stores throughout the year and achieving an 11.5% growth in sales in
Table 1. Ratios calculated from JBH Annual Report 2009 using formulae from Evans & McDowell (2009).
| |FY08 |FY09 |
|Gross profit (GP) margin (%) |21.87 |21.64 |
|Earnings before interest and taxes (EBIT) margin (%) |5.59 |6.1 |
|Net profit after taxes (NPAT) margin (%) |3.56 |4.06 |
|Return on assets (%) |19.27 |21.69 |
|Return on equity (%) |39.7 |41.2 |
|Basic earnings per share (EPS) (cents) |61.78 |88.26 |
The gross profit (GP) margin decreased slightly in 2009 to 21.64% when compared to the previous year remaining at the reasonable trading efficiency of 20-30% as recommended by Evans and McDowell (2009). Whilst the GP margin decreased only slightly, the GP increased by 27% from $399,891 million to $503,591 million during the same time period, showing that the business managed to increase sales despite the economic downturn that occurred. This was due to a combination of the opening of 19 new stores throughout the year and achieving an 11.5% growth in sales in