Jb Hi-Fi Financial Analysis
The question asks us to compare and evaluate JB Hi-Fi’s calculated ratio report, with that of the retail industry ratio report (Potter, Libby, Libby, Short p. 1133). The retail ratio report is comprised of a basket of listed companies which operate under the retail banner, which makes it relevant to use as a comparison to JB Hi-Fi.
1. Liquidity ratios are a class of financial metrics that is used to determine a company's ability to pay off its short-terms debts obligations. Generally, the higher the value of the ratio, the larger the margin of safety that the company possesses to cover short-term debts.
Table 1: Current Ratio Current ratio: This ratio measures whether or not a firm has enough resources to …show more content…
3. Profitability ratios are important when assessing the profitability of a business. They give management useful insight into where and how they can improve the operations of a business.
Table 8: Net Profit Margin Ratio The net profit margin: This ratio show the proportion of every dollar of sales that is left after all expenses has been paid, and remains as net profit. | 2010: 4.34 | 2011: 3.71 | Industry: 2.45 |