Inancial Nalysis OF Avid Ones Imited: Financial Analysis of David Jones

Financial Analysis of David Jones
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FINANCIAL ANALYSIS
OF
DAVID JONES LIMITED

(30/05/2011)
Tutor: Libby Zhang | 1
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EXECUTIVE SUMMARY
The purpose of this Report, Financial Analysis of David Jones Limited, was to assess the financial strengths and weaknesses of the company and guide potential investors to make an informed decision on whether or not to invest in the company. This Report interprets and analyses the financial reports of David Jones and two of its competitors, MYER and Harvey Norman, over the period of three years (from 2008 to 2011) using different methods such as trend analysis, common-size statements and ratio analysis. The report also examines relevant government and industry statistics, stock exchange and other market information, and relevant media comments to provide potential investors with a recommendation whether or not David Jones is a worthy investment at present.
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Table of Contents
EXECUTIVE SUMMARY ................................................................................................................................ 2 1. Company Description ................................................................................................................... 4
2. Introduction ...................................................................................................................................... 6 3. Conclusion & Recommendation...................................................................................................... 7 4. Discussion.......................................................................................................................................... 8 4.1 Trend Analysis ............................................................................................................................. 8 4.2 Common Size Statements .......................................................................................................... 9 4.3 Ratio Analysis ............................................................................................................................ 10 4.3.1 Profitability Ratios .............................................................................................................. 10 4.3.2 Efficiency Ratios ................................................................................................................. 15 4.3.3 Liquidity Ratios .................................................................................................................. 18 4.3.4 Market Based Ratios .......................................................................................................... 23 4.4 Market Information and Industry Statistics .......................................................................... 24 4.4.1 Stock Exchange Performance ............................................................................................ 24 4.4.2 Industry Statistics .............................................................................................................. 25 4.4.3 Inflation & Consumer Confidence ................................................................................... 25 4.4.4 Interest Rates ..................................................................................................................... 26 4.4.5 Exchange Rates .................................................................................................................. 26 4.5 Media Comments and Public Opinions ................................................................................. 27 5. References ........................................................................................................................................ 28 6. Appendices ...................................................................................................................................... 30 6.1 Appendix A: David Jones .......................................................................................................... 30 6.1.1 Trend Analysis ..................................................................................................................... 30 6.1.2 Common-size Statements.................................................................................................. 36 6.1.3 Ratio Analysis ...................................................................................................................... 42 6.2 Appendix B: Financial reports of Myer ................................................................................... 46 6.2.1 Trend Analysis .................................................................................................................... 46 6.2.2 Common-size Statements ................................................................................................. 52 6.2.3 Ratio Analysis ..................................................................................................................... 60 6.3 Appendix C: Harvey Norman .................................................................................................. 63 6.3.1 Trend Analysis .................................................................................................................... 63 6.3.2 Common-size Statements ................................................................................................. 65 Tutor: Libby Zhang | 3
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6.3.3 Ratio Analysis ..................................................................................................................... 67
1. Company Description
David Jones Limited
David Jones Limited is a leading retailer, positioned as Australia's only true upmarket department store chain selling high quality merchandise at a reasonable price. A focus on building the fashion franchise, particularly for women, has generated significantly higher trading volumes, and attracted an increasing number of suppliers. Its growing importance to suppliers has delivered improved contract terms, increasing profitability and reduced risk. David Jones Limited operates 35 department stores and 2 warehouse outlets throughout Australia. American Express joined David Jones to generate a David Jones branded credit card. In 1995, David Jones became a listed company in the Australian Stock Exchange under 'DJS' and has remained a strong company since, attracting many investors to further fuel its growth and solidifying its presence in the market. Some of the main competitor of David Jones is Coles Myer Ltd, Howard Smith Pty Ltd, Warehouse Group, Nuance Global Traders, Harvey Norman Holdings Ltd and Harris Scarfe Holdings

Competitors evaluated in this report: Myer Holding Limited
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Myer Holding Limited (MYR) is the most significant competitor of David Jones. Myer is one of Australia's largest department store groups targeting a wide spectrum of consumers. The company has a national network of 65 stores in Australia. Myer retails designer, national, and international fashion and apparel for men, women, and children, and operates a consumer loyalty program.
Harvey Norman Holdings Limited
Harvey Norman Holdings Limited (HVN) is an Australian leading electrical franchisor. Harvey Norman's principal activities consist of an integrated retail, franchise and property enterprise including sale of furniture, bedding, computers, communications and consumer electrical products in New Zealand, Slovenia and Ireland.
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2. Introduction
This report aims to find out the stability and performance of David Jones by analysing its financial strengths and weaknesses over a period of three years (2008 to 2010). The main objective of this report is to advise potential investors whether or not David Jones Limited is a worthy investment and the future profitability of the company. This report evaluates the financial information of David Jones using Trend Analysis, Commonsize statements and investigates two competitors alongside David Jones, namely Myer and Harvey Norman, to present a balanced overview. Also the report contains industry and market information as well as stock market information, interest and exchange rate effects in order to provide a better understanding of the companys overall performance and stand in the consumer retail goods sector, all factors which help predict future profitability and indirectly affect the investment decision of a potential investor. However, there are several limitations to this report, as outlined below. The information used in this report as provided in the annual reports, is outdated. More recent and detailed information will be needed to predict the future performance. However, only a limited amount of information is available to external users. Usually for large firms as explored in this report, the business and especially financial risks can differ according to their financing structures. The same ratios can be calculated using different formulas and this could lead to different results. Inflation, business and consumer confidence, impact of interest rates and exchange rates will have different effects on different companies and will make comparisons difficult. Changes in technology, innovation in the industry, the extent to which Research and Development takes place in the industry is a significant factor especially in the electronics and technology market that these firms operate in and their effects could vary by each product group for each company. The changing economical and commercial environments, different government laws and legislations and tax policies affect the performance of the companies operating in the international markets. The use of different accounting policies and adoption of new accounting standards will affect the overall results of the company.
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Although the companies discussed in this report belong to the same industry their diversity of products as well as differences in management policies, stock control, credit control etc. could make the companies seem very dissimilar. Analysis of accounting information only identifies the symptoms, not causes, and thus is of limited use.
3. Conclusion & Recommendation Conclusion:

3.1 Using trend analysis and common-size methods in evaluation, it was found that David Jones is performing very well in the retailing industry. Ratio Analysis show that overall, David Jones is a very profitable company, uses its resources efficiently compared to its competitors, and performs well in the market, especially in terms of Earnings per share which shows how confident investors are in its share performance in the future. The liquid position of the company is not that strong as the company is highly geared although compared to others in the market, and a total decrease in the net debt in 2009 indicates that the effects of this can be tolerated. 3.3 The Stock Exchange performance against the consumer discretionary sector which David Jones Limited operates in as a retailer shows that the company is performing well compared to industry performance. 3.4 Industry statistics in which total turnover for household retail goods are compared against David Jones shows that the company sales is steadily increasing and will continue to do so. 3.5 Overall analysis of inflation, consumer confidence, interest and exchange rate trends show that David Jones is performing well, and that there is potential for future growth. Media discussions reinforces this notion indicating that David Jones will remain if not increase its current profitability status.
3.2
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Recommendation:
Careful evaluation and analysis of the information included in this report and other research shows that David Jones is performing extremely well at present. Especially with expectations for the further growth and share prices to increase, it is highly recommended that potential investors should buy David Jones shares now.
4. Discussion
4.1 Trend Analysis
Trend Analysis is a method used to interpret data easily by analysing financial information against a base year (2008) and over a period of time. In such a statement, analysing involves comparing the same item. The trend analysis for David Joness Financial Statements allows easy comparison against the base year figures (2008) to identify the movements of each item in 2009 and 2010. Appendix A lists the trend analysis for David Jones under 6.1.1, Appendix B lists the trend analysis for Myer under 6.2.1 and Appendix C lists the trend analysis for Harvey Norman under 6.3.1. Sales have decreased by 2.1% compared to 2008 which is a slight decline, however the Cost of Sales (Cost of Goods Sold) has also decreased, by 2.4%. Gross Profit has steadily increased from 94.7% to 98.3% from 2009 to 2010 based on 2008 figures. Earnings Before Tax and Interest (EBIT) has increased by 17.1% in 2009 and has stayed constant through to the next year. Net Profit for 2009 has increased by 6.3% and 15.6% in 2010 compared to the Net Profit earned in 2008. All these trends show that the company is growing at a healthy pace. David Jones seems to remain profitable in the future as well, as this trend analysis based on 2008 figures show that even with the global recession in 2008 which affected most companies around the world, had not effected the performance of David Jones. This is a strong indication that David Jones will continue to perform well and that investors will be rewarded greatly.
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4.2 Common Size Statements

Common size statements express each financial item as a percentage of one significant item This enables easy comparison and to identify significant changes. Table 7 and Table 9 in Appendix 6.1.2, indicates the common size Statement of Comprehensive Income and Balance Sheet for David Jones, for three years from 2008 to 2009. These figures are expressed in percentages, in relative terms, against Sales and Total Assets (Income Statement and Balance Sheet respectively). Table 7 shows that COGS has remained consistent with the sales, which indicates that David Jones is maintaining its gross profit margin at a consistent level. All expenses have remained stable over the period of three years in consideration, with a slight decrease in Sales and Marketing Costs and Finance Costs. An increase in EBIT and an overall increase in Net profit for the year show that David Jones is performing extremely well, and is a strong indication of its growth and future profitability. The Common Size Balance Sheet produced for David Jones (Table 9) show that current assets and current liabilities are decreasing to 27% and 26% respectively, in 2010. This shows that David Jones has stable working capital conditions as it indicates that the company can successfully finance its day-to-day operations in the short run. Another significant observation is that David Jones hardly has any short term borrowings but records a decrease in the use of long term borrowings. This reduces the financial risks associated with the company. However, this might restrict growth in the long run as David Jones is not taking advantage of its strong presence as a stable retailer in the market. But since David Jones still performs well independent of the need for such measures is an indication how confident the company is in its future performance. Net Assets of the company is steadily increasing which is also a good indication, as it shows that the company has more capacity for expansion and to continue being profitable and efficient.
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An increase in retained earnings during the period of three years has resulted in the total equity of the company to increase, which will enable David Jones to invest more in its operations and increase its profitability and overall performance.
4.3 Ratio Analysis

Note: All ratios used in tables below are calculated using the information provided in the 2010 company annual reports. A full summary of ratios for all three companies for 2008, 2009 and 2010 (including half yearly reports of 2010 & 2011) can be found in Appendix 6.1.3 (David Jones), Appendix 6.2.3 (Myer) and Appendix 6.3.3 (Harvey Norman).
4.3.1 Profitability Ratios
These ratios assess a companys ability to generate profit. If these ratios are stable or higher than the previous period, higher relative to a competitors ratio, or similar to industry ratios, it indicates that the company is performing well.
1. Rate of return on Assets (ROA)

This ratio measures the operating profitability or the firms ability to generate earnings without being dependent on external financing options of the company. 2010 Annual Report David Jones Myer Harvey Norman 21.46%
13.72% 11.41%
David Jones seems to be performing quite adequately compared to its competitors, earning $21.46 of earnings for every $100 worth of average total assets utilized. Further investigation shows that figures for David Jones is steadily increasing from 13.46% (2008) to 18.76% (2009). This is an indication that David Jones is growing steadily and will continue to do so in the coming years.
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Myer and Harvey Norman both record drastic drops in ROA further emphasizing David Jones's strong performance and consistent growth indicating higher profitability in the future.
2. Net Profit Margin Ratio

Net profit ratio shows how well a company controls its overheads and expenses in terms of how much net profit is made for a sale worth $100. 2010 Annual Report David Jones Myer Harvey Norman 8.32% 2.02% 17.70%
Analysing the trend for the full years David Jones seems to be experiencing an increase in net profit margin (up from 7.88% in 2009), which is repeated in the (first) half yearly trends with net profit margin increasing from 9.25% to 9.76% in 2011 and 2010 respectively, which is a positive sign. But by observing the above results, it can be seen that Harvey Norman has a much higher value compared to both David Jones and Myer. This could be due the fact that Harvey Norman specialises in Manchester and other goods that does not relate to the business David Jones does. David Jones however does have a greater Net profit margin ratio compared to Myer.
3. Gross Profit Margin Ratio (GP Ratio)

Gross profit ratio is a measure of how well a firm is utilizing its capital, capacity and other resources in its production process. As a percentage it shows how much of gross profit is earned for every $100 worth of sales. 2010 Annual Report David Jones Myer Harvey Norman 39.73% 39.64% 27.98%
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David Jones has maintained a stable GP Ratio at 39% over the 3 years examined in this report. Its GP ratio is greater compared to Myer and Harvey Norman. Furthermore, from the examination of the half yearly report from 2011 for David Jones, the GP ratio has slightly declined to 39.68%. This indicates that David Jones is performing well compared to its competitors. However, it should be taken in to account that David Jones only operates in a limited market compared to Harvey Norman.
Expenses as a percentage of sales
4. Sales and Marketing Expenses as a percentage of Sales

This ratio measures the sales and marketing expenses against sales. 2010 Annual Report David Jones Myer Harvey Norman 1.97% 21.96% 26.41%
David Jones spends only 1.97% in sales and marketing (out of 100% sales) which has decreased from 2.29% in 2009. This reduces the overall costs to the company thus improving profitability; however, a fall in expense such as marketing might result in lower sales in the years to come. It could reduce the competitiveness too, as trends show that Myer and Harvey Norman increasing its marketing expenses to promote more products, awareness and ultimately, more sales.
5. Administrative expenses as a percentage of Sales

2010 Annual Report David Jones Myer Harvey Norman 0.99% 9.55% 27.81%
This ratio shows the expenses a company incurs in controlling and directing the company and usually includes salaries and costs of day-to-day office operations that cannot be directly identified with the companys main operations. David Jones only spends $0.99 per $100 worth of
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sales on administrative expenses (which has been decreasing from 2008) whereas its competitors spend comparatively greater amounts.
6. Net finance costs as a percentage of Sales

Finance costs includes the total cost of borrowing, may it be interest charges for loans, bank overdrafts, other forms of borrowing which require charges to be paid to the lender. David Joness interest cost has decreased from 1.96% in 2008 to 0.34% in 2010. However this does not mean that the finance costs or the level of borrowing has reduced, but indicates that although finance costs have increased, sales have increased by a much larger proportion, reducing the overall percentage of finance costs to sales.
7. Income tax expenses as a percentage of Sales

Income tax is an annual charge imposed on both earned and unearned income of a company. David Jones spends 3.74% of its sales income on income tax charges whereas Harvey Norman spends 11.04%. The income tax as a percentage of sales is steadily increasing for David Jones indicating strong growth in sales and income.
8. Total Assets Turnover Ratio

This ratio is a measure to identify a firms efficiency to utilize its assets to generate sales. The Higher the ratio, the more productive the assets are in generating sales revenue and thus resulting in higher profitability of the firm.

2010 Annual Report David Jones Myer Harvey Norman 1.77 1.69 0.37
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This shows that David Jones earns $1.77 for $1 of average assets used in the company, which is higher than the competitors. Also, the ratio has steadily increased from 1.33 (2008) to 1.49 (2009) till 1.77 which is an indication that David Jones is efficiently using its assets to generate profit and this could continue well into the future, ensuring profitability of the company. 9. Rate of return on shareholders Equity (ROE) This ratio measures the shareholders profitability against the net profit of the firm. It indicates how well utilized the shareholders equity is to generate profit for the firm. 2010 Annual Report David Jones Myer Harvey Norman 23.86% 10.86% 11.29%
David Jones is not performing well as its ROE has decreased from 26% to 23.95% from 2008 to 2009 and finally to 23.86% in 2010.
10. Cost of interest & finance charges

Cost of interest & finance charges gives an indication of how much interest the company is paying compared with its liabilities. David Jones had a very large Cost of interest & finance charge of 4.05% in 2008, which decreased to 1.37% in 2009 and has increased slightly to 1.59% in 2010. The larger the value the more likely Banks and other entities are to lend money. However, this value is on average.
Financial Analysis of David Jones 11. Basic Earnings Per Share (EPS)
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This shows how much net profit a share is earning against the weighted average number of ordinary shares issued.
David Jones is the best performing company against the two competitors evaluated, earning 34 cents of net profit per share. David Jones also indicates an increase in EPS over the years with $0.31 in 2008 and $0.32 in 2009.
4.3.2 Efficiency Ratios
Efficiency ratios show how effectively a firms resources are being used.
12. Accounts receivable turnover

This ratio shows the relationship between total sales and the average trade accounts receivable (i.e. trade debtors). It gives an indication of the effectiveness of a firms credit policy.
2010 Annual Report David Jones Myer Harvey Norman 0 226.57 1.25
Note that David Jones sold its trade accounts receivable to American express, which resulted with zero accounts receivable in 2009 and 2010. In 2008 however, David Jones had an accounts receivable of 5.36
Financial Analysis of David Jones 13. Average days of sales uncollected
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This ratio shows how long it takes average debtors to settle their due amounts to the company. These results could be affected by different payment policies each competitor uses.
2010 Annual Report David Jones Myer Harvey Norman 0 1.61 292.95
The Accounts receivable turnover and Average Days sales uncollected ratios show that David Jones collects its debts usually within 0 days, vanished from 68.07 days in 2008. This shows that the joining of American express was a large success. Harvey Norman sells more expensive goods such as furniture, therefore their payment methods would differ which could be the reason for such a difference produced in calculations. At JB HiFi customers could pay cash up front or through credit cards which takes only a few days to realize, whereas for Harvey Norman which offer 0% interest free instalment schemes over a period of 24 months could result in the days average sales to be collected much higher.
14. Inventory turnover
This ratio shows the number of times a business sells the value of its stocks. The higher the result the more effective the company is in selling and replenishing inventories and also resulting in low risk of loss that might occur due to outdated inventories.
Financial Analysis of David Jones 15. Inventory turnover in days
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This ratio shows the number of days it takes a firm to sell its stocks.
The inventory turnover and inventory turnover in days for the three years from 2008 for David Jones maintained consistent values over the three years. Harvey Norman record lower turnover ratios and thus higher inventory turnover in days it could emphasize that David Jones is performing better as it gets to stock the latest products which would result in further increase in sales as demand increases for more recent inventions in electronics.
However, it should be taken into account that the competitors engage in a much wider market selling more expensive goods such as furniture and white goods therefore stocks cannot be expected to be replaced often.
16. Accounts payable turnover
This ratio shows how soon a company can pay its creditors. A change would indicate whether the payments to creditors have become quicker or slower depending the credit terms granted to the firms is strict or lenient.
Financial Analysis of David Jones 17. Average days of accounts payable
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Average days of accounts payable ratio measure the number of days it takes a firm to settle its debt to creditors.
The results show that David Jones has a higher Accounts payable turnover, which results in a lower number of days to pay back its creditors. Harvey Norman record a higher creditors collection days, which does not mean that David Jones is at a disadvantage as it takes less time to pay its creditors; rather, this ratio reflects the differences in the market these companies operate in. It is understandable that a longer credit period is granted for Harvey Norman which sells more expensive white goods and thus takes longer to recover its income (especially when using instalment schemes). However careful consideration must be placed on whether the average days of sales uncollected exceed the average days of accounts payable as only then will it make sense to compare and contrast different firms ability to recover and settle accounts in a realistic manner.
4.3.3 Liquidity Ratios
SHORT TERM
These ratios help assess a firms ability to settle its short term liabilities by measuring how easily and quickly it can liquidate its current assets.
Financial Analysis of David Jones 18. Current ratio
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This ratio gives an indication of a firms ability to payback its shorts term debts using its current assets. The higher the ratio, the more liquid the company is. An ideal result would be 2:1 where the current assets can settle its short term debts twice.
David Jones records a rise in current ratio from 0.97 in 2009 to 1.05 in 2010, which is a good indication of the companys illiquidity. Especially comparing to Harvey Norman, which records an increasing trend, David Jones needs to improve its current ratio.
Effective management of creditors will help David Jones to plan its debt control in a way that maximizes the benefits of a longer pay back period. Measures such as sale of redundant assets, taking long term loans, share issues will help David Jones in improving its cash flow and increasing liquidity.
19. Quick ratio
This ratio calculates the liquidity of the firm using current assets less inventory to find out the immediate ability of the firm to settle its short term debts. This ratio needs to be at least 1 in order to meet expectations of creditors and to ensure that the companys current debts can be met immediately should the need arise.
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Calculations show that David Jones and Myer cannot meet its current liabilities using its liquid assets, and David Jones records the lowest result out of the three companies. The main reason for this is that the majority of current assets of David Jones consist of inventories which is steadily increasing, and thus comparatively minimizing the liquid assets available. Measures such as a better inventory control system and less use of current liabilities and a move on to long term liabilities will help solve the cash flow issues in the long run.
20. Cash flow from operations to current liabilities ratio ($)

2010 Annual Report David Jones Myer Harvey Norman
0.65
0.43 0.40
This ratio shows the companys short term debt paying ability based on operating cash flows. Among the competitors David Jones seems to be doing the best as it generates 65c of cash to pay off $1 worth of current liabilities.
LONG TERM 21. Debt to equity ratio

This ratio assesses the relationship between debt and equity financing of a firm. The higher the result, which shows the number of times the company is funded using debt finance compared to equity finance, the more riskier investing in such a company is, especially as the company is more sensitive to interest rate changes and other external market conditions that affect such changes the rate of interest. 2010 Annual Report David Jones Myer Harvey Norman 0.61 1.28 0.72
David Jones is financed 0.61 times more through debt compared to equity finance. Although the trend is decreasing from 1.47 times in 2008, it still means that the company is still majorly financed through debt (such as borrowings, long term loans and debentures). Therefore it is more
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sensitive to interest charges and will affect the companys ability to pay dividends (through changes in profits after settling finance costs). However, if the decreasing trend continues, the situation would turn more favourable for David Jones as it becomes less dependent on debt financing.
22. Debt to total assets ratio

This ratio calculates the proportion a companys total assets are financed through liabilities. If the ratio is less than one, it means that the majority of the companys assets are financed through equity, however if it is greater than one, most of it is financed through debt.
The ratios show that David Jones and its competitors assets are mostly financed by equity, therefore is less prone to financial risks. Trends show that the ratio for David Jones is actually decreasing over the three years in consideration, which is a positive sign, as it becomes less risky ensuring stability in returns for its investors in the long run.
23. Leverage ratio

Leverage is the amount of debt used to finance a company. This ratio shows to which degree the company is using its debt. The higher the ratio, the greater the use of borrowings, and also the more risk borne by the company. 2010 Annual Report David Jones Myer Harvey Norman 1.61 2.28 1.72
David Jones records the lowest ratio compared to Myer and Harvey Norman. Since the overall trend of David Jones over the three years show that the leverage ratio is decreasing, the risk is minimal as it also is a strong performer in the industry relative to its competitors, in other aspects such as profitability and efficiency.
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24. Cash flow from operations to total liabilities ratio

Cash flow from operation to total liabilities shows the ability of a firm to settle all its debts using operating cash flows. Compared to competitors, David Jones seems to be performing well and shows an increasing trend over the years up from $0.22 in 2008, however it can only contribute 45 cents of cash to settle $1 of total liabilities.
25. Interest and finance coverage ratio

This shows the number of times a firms interest charges and other finance costs can be paid through Earnings Before Interest and Tax (EBIT). The lower the result, the greater the pressure on firms to settle its finance costs without resulting in any negative consequences from the lenders. 2010 Annual Report David Jones Myer Harvey Norman 35.28 6.10 4.90
David Jones seems to beat its competitors in this ratio, which indicates that it can easily afford to settle its finance charges (35.28 times using EBIT). The interest cover has increased from 5.17 times to 26.96 times from 2008 to 2009 till 35.28 times in 2010. However, although this is a positive result, it shows that the company can afford to borrow more to fuel growth and increase long run profitability.

4.3.4 Market Based Ratios
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1.
Price/ Earnings ratio (P/E Ratio)
This ratio shows the amount the market will pay for $1 of profit. That is, it shows how expensive r highly valued a share is. High P/E ratios indicate higher risks as it implies greater market expectations. David Jones Myer Harvey Norman 13.2 11.4 11.3
David Jones records the highest P/E ratio as it indicates that the company shares are highly valued in the stock market, that is, investors are prepared to pay $13.2 to earn $1 of profit of David Jones. This is an indication that the investors are confident and have high expectations for it to perform well and profits to increase further in the future. Competitors of David Jones are not performing as well comparatively, which is also an indication that the investors anticipate more growth in David Jones compared to its competitors in this market.
1. Earning yield
Earnings yield shows how much a share is earning based on the current market price of the company. David Jones Myer Harvey Norman 7.58% 8.77% 8.85%
JB Hi-Fi, compared to Myer and Harvey Norman earns less; however, with high expectation for the company to grow in the future as indicated by the high P/E ratio this will not be a significant factor as it already is earning 7.58% which is considered favourable.
Financial Analysis of David Jones 1. Dividend yield
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This ratio shows the yield a company pays out its shareholders in the form of dividends. The higher the dividend yield the better, however this also depends on whether a company is well established or not, or whether a company decides to pay out a dividend in the year or not.
David Jones Myer Harvey Norman
6.9% 7.0% 5.1%
David Jones seems to reward a slightly lower dividend yield to its shareholders, but this figure tend to increase or decrease over time.
4.4 Market Information and Industry Statistics

4.4.1 Stock Exchange Performance
The Australian Stock Exchange (ASX) has listed David Jones as one of the top 100 stocks ranked by market capitalisation, which indicates the companys strong presence in the retailing sector and investor confidence. The following chart compares David Joness performance against the consumer discretionary index (where companies operating in the general consumer retailing sector belongs to, along with other companies gambling). involved in media and
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David Jones seems to be doing fairly well compared to the whole sector especially since early 2009 however it has reached a peak in late 2009. The company is moving fairy constant from 2010 to present. The trend might pick up or remain stable from this point or even if it declines it will still be performing considerably well compared to the total industry.
4.4.2 Industry Statistics
The retail turnover of department store statistics (Appendix 5) provided by the Australian Bureau of Statistics (ABS) shows the total turnover in the market on a monthly basis. Figure 1 illustrates that the total turnover for the industry usually peaks in November however, sharply declines over the period of November to March and picks up again and follows a cycle. Figure 1: Total Turnover: Household goods retailing
Turnover: Total Department stores

3500.0 3000.0 2500.0 $ Milions 2000.0 1500.0 1000.0 500.0 0.0 Jan-2008 Mar-2008 Jan-2009 Mar-2009 Jan-2010
May-2009
May-2008
Mar-2010
4.4.3 Inflation & Consumer Confidence The Consumer Price Index (Reserve Bank of Australia- RBA) shows that the overall expected
price change (inflation) for goods sector has steadily inclined from 1.4% to 1.7% from March 2010 to March 2011 which means that even though the prices for goods are expected to rise, it will rise at a slightly faster pace at 1.7% than at 1.4%. This will not be favourable to David Jones as their prices will not rise as much, but because it is a very slight increase, it will ensure steady sales.
May-2010
Jul-2007
Sep-2007
Nov-2007
Jul-2008
Sep-2008
Nov-2008
Jul-2009
Sep-2009
Nov-2009
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However, a media release by the Wespac Institutional Bank on 13th April 2011 suggests that the Australian consumer confidence has declined rose by 1.2% in April 2011 compared to March 2011. This is however, a much insignificant result as the consumer sentiment index (which measures the consumer confidence in Australia) still remains near at a three-year high. Also, the release suggests that the consumer confidence to buy a major household item rose by 3.5%. These results will be advantageous to David Jones as they imply that with time there are expectations for sales, especially for household retail goods. This implies that anticipated growth in the industry in the near future is very likely.
4.4.4 Interest Rates The Reserve Bank of Australia (RBA) has been steadily increasing the interest rate since April
2009. This is significant to David Jones as it has borrowings, long term loans and other hedging agreements which depend on the interest rates. The changes in the interest rate will not affect the borrowing taken against fixed interest charges; however, for those on variable interest charges will be affected. However, David Jones's net debt remains at a conservative level at $86.4m, reduced from $88m in 2009 which was at $446m in 2008 (Annual Report 2010 and 2009) However, the company has a total interest bearing liabilities of $104m. Therefore an increase in interest rates could have a great impact on the company, especially if the majority of this debt is charged at a variable interest rate.
4.4.5 Exchange Rates
Although David Jones only operates in Australia, it is important to study exchange rates behaviour, especially as its competitor Harvey Norman operates in the New Zealand, Slovenia and Ireland. Statistics from the RBA, comparing the Australian dollar against the New Zealand dollar is summarized in the graph below (figure 6). The New Zealand dollar rate against the Australian dollar seems to be quite unpredictable over the months (Jan 2010- May-2011). This could lead to continuous changes in conversion to Australian dollars for Harvey Norman which could generate losses when the rate is high, which in turn will improve profits of David Jones. However, profits for David Jones would decline if the rate decreases.

Figure 2: The NZ $ against AUS $
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NZ $
1.4000 1.3500 AUS $ 1.3000 1.2500 1.2000 1.1500 1.1000 04-Mar-2010
04-Jun-2010
04-May-2010
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4.5 Media Comments and Public Opinions

David Jones has been short listed for the Peoples CHOICE Awards (CHOICE, March 2011) for the Best Retailer. The Award criteria are based on Customer service, Value for money, Product knowledge and After-sales service which again indicates the notable acceptance from the consumers. An article in The Australian recently reported that David Jones has decided to reopen its online sales website, after closing it in 2004 due to lost profits. David Jones believes that it will be able to make profit by this action for reasons such as increased internet security and the increased value of the Australian dollar. These factors emphasize that David Jones is an outstanding company which will continue to grow, remain profitable and promising positive returns on investment.
04-May-2011
04-Aug-2010
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04-Feb-2011
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5. References
1. Back, D. (27 April 2010). Analysis and Interpretation of Financial Statements,
Lecture Notes, Business Reporting & Analysis, Australian National University, Canberra.
2. Bazley, M. and Hancock, P (2010), Contemporary Accounting, Seventh Edition,
Cengage Learning Australia Pty Ltd, Melbourne.

3. Emerson, L. (2009), Writing guidelines for business students, Fourth Edition, Cengage
Learning Australia Pty Ltd, Melbourne.

4. David Jones Limited (2011) Annual and Half yearly reports (2008, 2009, 2010)
retrieved May 1, 2010 from http://www.davidjones.com.au/

5. Myer Holding Limited (2011) Annual and half yearly reports (2008, 2009, 100)
retrieved May 1, 2010 http://www.myer.com.au/

6. Harvey Norman Holding Limited (2004) Annual and Half yearly reports (2008, 2009,
2010) retrieved May 1, 2010 from http://www.harveynormanholdings.com.au/

7. Wikipedia (2011) David jones logo, viewed 08/05/2011
http://upload.wikimedia.org/wikipedia/en/3/3e/DavidJoneslogo.svg
8. Wikipedia (2011) Myer logo, viewed 08/05/2011
http://upload.wikimedia.org/wikipedia/en/e/e8/Myer.svg
9. Wikipedia (2011) Harvey Norman logo, viewed 08/05/2011
http://upload.wikimedia.org/wikipedia/en/8/83/Harvey-norman-brand.svg
10. Ninemsn (2011) Company description, David Jones, viewed 08/05/2011
http://finance.ninemsn.com.au/news-and-markets/company/?code=DJS
11. Ninemsn (2011) Company description, Myer, viewed 08/05/2011
http://finance.ninemsn.com.au/news-and-markets/company/?code=MYR
12. Ninemsn (2011) Company description, Harvey Norman, viewed 08/05/2011
http://finance.ninemsn.com.au/news-and-markets/company/?code=HVN
13. ASX (2011) Graph of stock exchange, viewed 08/05/2011
http://hfgapps.hubb.com/asxtools/Charts.aspx?asxCode=DJS&compare=comp_index &indicies=XJO&compareCode=MYR&chartType=3&pma1=0&pma2=0&volumeInd =2&vma=0&TimeFrame=M3

14. ASX (2011) Rank of Retailers, viewed 08/05/2011
BUSN 1001
http://www.asx.com.au/documents/research/consumer_sector_factsheet.pdf
15. Reserve Bank of Australia (2010). Inflation Rates. retrieved 08/05/2011
http://www.rba.gov.au/statistics/cash-rate.html
16. RBA (2011) consumer price index, retrieved 08/05/2011
http://www.rba.gov.au/inflation/measures-cpi.html
17. Westpac institutional Bank (2010), Media Release: Consumer Sentiment Resilient to
rate hike, Melbourne Institute, Faculty of Business and Economics, retrieved on 8 May 2010 from http://melbourneinstitute.com/downloads/media_release/2011%20Consumer%20Senti ment%20Report/PressReleaseCSI20110413.pdf
18. RBA (2011) exchange rate data, retrieved on 8 May 2010 from
http://www.rba.gov.au/statistics/hist-exchange-rates/index.html
19. Dailytelegraph (2011) choice award, retrieved on 8 May 2010 from
http://www.dailytelegraph.com.au/money/money-matters/aussies-vote-on-nationsbest-retailer/story-fn300aev-1226030039571
20. The Australian (2011) Retailers finally click to the online boom, retrieved on 8 May
2010 from http://www.theaustralian.com.au/business/retailers-finally-click-to-theonline-boom/story-e6frg8zx-1226051436382
BUSN 1001
6. Appendices
6.1 Appendix A: David Jones
6.1.1 Trend Analysis
Table 1: Trend analysis for Comprehensive Income Statements, Full year
Trend Analysis - Comprehensive Income Statements, Full year (%)

2010 Sales revenue Cost Of Sales Gross Profit Other income Employee benefits expenses Lease and occupancy expenses Depreciation and amortisation expanses Advertising, marketing and visual merchandising expenses Administration expenses Net financing expenses Other expenses Profit before income tax expense Earnings Before Interest & Tax (EBIT) Income tax expense Net profit for the period Other comprehensive income Gain/(Losses) on cash flow hedges Transfer of realised gains on hedges to profit and loss Income tax on items of other comprehensive income Total other comprehensive loss for the period, net of tax Total comprehensive income for the period Basic earnings per share (cents per share) Diluted earnings per share (cents per share) 97.9 97.6 98.3 48.0 91.1 106.4 105.5 74.3 59.9 17.2 40.3 115.5 117.1 114.3 115.9 58.0 -33.4 37.3 -26.2 113.2 111.1 110.0 2009 94.6 94.6 94.7 60.0 97.5 91.6 105.9 83.6 59.9 22.4 49.0 103.7 117.1 97.7 106.3 -23.0 -39.7 132.0 -122.4 103.1 102.9 101.0 2008 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Table 2: Trend analysis for Comprehensive Income Statements, Half year
BUSN 1001
Trend Analysis - Comprehensive Income Statements, Half year (%)

29/01/2011 Sales revenue Cost Of Sales Gross Profit Other income Employee benefits expenses Lease and occupancy expenses Depreciation and amortisation expanses Advertising, marketing and visual merchandising expenses Administration expenses Net financing expenses Other expenses Profit before income tax expense Earnigns Before Interest & Tax (EBIT) Income tax expense Net profit for the period Other comprehensive income Gain/(Losses) on cash flow hedges Transfer of realised gains on hedges to prfit and loss Income tax on items of other comprehensive income Total other comprehensive loss for the period, net of tax Total comprehensive income for the period Basic earnigns per share (cents per share) Diluted earnings per share (cents per share) 100.2 99.7 101.1 91.8 107.0 99.9 82.0 132.9 65.9 88.0 105.7 95.6 95.5 96.8 95.0 73.3 64.2 1050.0 833.3 95.1 96.2 94.6 23/01/2010 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Table 3: Trend analysis for Consolidated Balance Sheet, Full year
Trend Analysis - Consolidated Balance Sheet, Full year (%)

2010 Current assets Cash and cash equivalents Receivables Inventories 378.33 1,824.09 488.90 1,599.65 100.00 100.00 2009 2008

91.13 Financial assets Other assets Total current assets Non-current assets Financial assets Property, plant and equipment Ingangible assets Deferred tax assets Other assets Total non-current assets Total assets Current liabilities Payables Interest bearing liabilities Current tax liablities Provisions Financial liabilities Other liabilities Total current liabilities Non-current liabilities Interest bearing liabilities Provisions Financial liabilities Other liabilities Total non-current liabilities 94.64 222.97 96.45 225.90 5,028.57 144.41 227.78 105.08 90.96 88.23 254.20 100.00 100.00 100.00 100.00
BUSN 1001
6,650.00 88.07 101.46 107.92 8.82 90.25 128.01
6,650.00 92.63 96.64 106.21 2.57 93.89 135.70
100.00 100.00 100.00 100.00 100.00 100.00 100.00
112.30 8,229.54 100.17 133.23 52.47 1,433.12 192.64
112.50 12,960.43 686.68 103.23 43.70 1,590.63 198.38
100.00 100.00 100.00 100.00 100.00 100.00 100.00
267.33 111.48
270.00 115.29
100.00 100.00 100.00 100.00 100.00 Tutor: Libby Zhang | 32
BUSN 1001
Total liabilities Net assets Equity Contributed equity Reserves Retained earnings/(Accumulated losses) Total equity
201.88 83.28
206.86 90.17
100.00 100.00
90.67 53.14 73.58 83.28
95.04 63.61 84.57 90.17
100.00 100.00 100.00 100.00
Table 4: Trend analysis for Consolidated Balance Sheet, Half year
Trend Analysis - Consolidated Balance Sheet, Half year (%)

29/01/2011 Current assets Cash and cash equivalents Receivables Inventories Financial assets Other assets Total current assets Non-current assets Financial assets Property, plant and equipment Ingangible assets Deferred tax assets Other assets Total non-current assets Total assets Current liabilities 83.39 105.79 94.30 33.33 144.85 95.61 100.00 100.00 100.00 100.00 100.00 100.00 23/01/2010
100.00 94.57 106.85 101.03 261.51 95.62 95.62
100.00 100.00 100.00 100.00 100.00 100.00 100.00
BUSN 1001
Payables Interest bearing liabilities Current tax liablities Provisions Financial liabilities Other liabilities Total current liabilities Non-current liabilities Interest bearing liabilities Provisions Financial liabilities Other liabilities Total non-current liabilities Total liabilities Net assets Equity Contributed equity Reserves Retained earnings/(Accumulated losses) Total equity
106.44 987.11 77.59 115.35 76.90 117.25 106.30
100.00 100.00 100.00 100.00 100.00 100.00 100.00
82.80 122.82
100.00 100.00
98.02 88.36 100.82 92.79
100.00 100.00 100.00 100.00
95.85 85.79 87.17 92.79
100.00 100.00 100.00 100.00
Table 5: Trend analysis for Consolidated Statement of Cash flows, Full year
Trend Analysis - Consolidated Statement of Cash flows, Full year (%)

2010 CASH FLOWS FROM OPERATING ACTIVITIES Reciepts from customers (inclusive of GST) Paymentss to suppliers and employees (inclusive of GST) Commissions received 105.0 103.5 0.0 2009 107.7 107.1 0.0 2008 100.0 100.0

Interest received Borrowing costs paid Income tax paid Net cash flows from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Payments for property, plant and equipment Payments for software Proceeds from sale of property Net cash flows used in investing activities CASH FLOWS FROM FINANCINF ACTIVITIES Dividends paid on ordinary shares Proceeds from the assignment of storecard and credit reserve receivables Repayments of receivables funding Proceeds from/repayment of borrowing On-market purchase of shares for Trust Interest paid on RPS Proceeds from loan repayments under employee share purchase plan Net cash flows used in financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of the period Cash and cash equivalents at end of the period 21256.3 556.8 144.8 99.0 93.1 23.1 7526.9 39.7 72.3 -18000.0 0.0 115.5 219.6 -3309.4 1373.4 445.1 118.3 182.6 179.8 247.4 555.2 5269.8 444.1 101.3 105.4 77.6 7.3 31.9 79.5
BUSN 1001 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
0.0 0.0 105.9 0.0 -
100.0 100.0 100.0 100.0 100.0 100.0 100.0
Table 6: Trend analysis for Consolidated Statement of Cash flows, Half year
Trend Analysis - Consolidated Statement of Cash flows, Half year (%)

29/01/2011 CASH FLOWS FROM OPERATING ACTIVITIES Reciepts from customers (inclusive of GST) Paymentss to suppliers and employees (inclusive of GST) Commissions received Interest received Borrowing costs paid Income tax paid Net cash flows from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Payments for property, plant and equipment Payments for software Proceeds from sale of property Net cash flows used in investing activities CASH FLOWS FROM FINANCINF ACTIVITIES Dividends paid on ordinary shares 100.2 102.3 91.8 42.6 -91.1 54.5 93.0 79.3 735.5 80.0 89.6 23/01/2010 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Proceeds from the assignment of storecard and credit reserve receivables Repayments of receivables funding Proceeds from/repayment of borrowing On-market purchase of shares for Trust Interest paid on RPS Proceeds from loan repayments under employee share purchase plan Net cash flows used in financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of the period Cash and cash equivalents at end of the period
BUSN 1001
287.5 35.8 108.5 -257.0 80.2 39.6
100.0 100.0 100.0 100.0 100.0 100.0
6.1.2 Common-size Statements Table 7: Common-size statement for Comprehensive Income Statement, as a percentage of sales, Full year
Common-size statement - Comprehensive Income Statements as a percentage of Sales, Full year (%)
2010 Sales revenue Cost Of Sales Gross Profit Other income Employee benefits expenses Lease and occupancy expenses Depreciation and amortisation expanses Advertising, marketing and visual merchandising expenses Administration expenses Net financing expenses Other expenses Profit before income tax expense Earnigns Before Interest & Tax (EBIT) Income tax expense Net profit for the period Other comprehensive income Gain/(Losses) on cash flow hedges Transfer of realised gains on hedges to prfit and loss Income tax on items of other comprehensive income 100 60 40 3 15 9 2 2 1 0 1 12 12 3 8 0 0 0 2009 100 60 40 3 17 8 2 2 1 0 1 11 13 3 8 0 0 0 2008 100 60 40 5 17 8 2 3 2 2 2 10 10 3 7 0 0 0

Total other comprehensive loss for the period, net of tax Total comprehensive income for the period Basic earnigns per share (cents per share) Diluted earnings per share (cents per share) 0 8 0 0 0 8 0 0
BUSN 1001
0 7 0 0
Table 8: Common-size statement for Comprehensive Income Statement, as a percentage of sales, Half year
Common-size statement - Comprehensive Income Statements as a percentage of Sales, Half year (%)
29/01/2011 Sales revenue Cost Of Sales Gross Profit Other income Employee benefits expenses Lease and occupancy expenses Depreciation and amortisation expanses Advertising, marketing and visual merchandising expenses Administration expenses Net financing expenses Other expenses Profit before income tax expense Earnigns Before Interest & Tax (EBIT) Income tax expense Net profit for the period Other comprehensive income Gain/(Losses) on cash flow hedges Transfer of realised gains on hedges to prfit and loss Income tax on items of other comprehensive income Total other comprehensive loss for the period, net of tax Total comprehensive income for the period Basic earnigns per share (cents per share) Diluted earnings per share (cents per share) 100 60 40 2 14 8 2 2 1 0 1 14 14 4 10 0 0 0 0 10 0 0 23/01/2010 100 60 40 2 15 8 2 2 1 0 1 13 14 4 9 0 0 0 0 9 0 0
BUSN 1001
Table 9: Common-size statement for Consolidated Balance sheet, as a percentage of total assets, Full year
Common-size statement - Consolidated Balance sheet as a percentage of Total assets, Full year (%)
2010 Current assets Cash and cash equivalents Receivables Inventories Financial assets Other assets Total current assets Non-current assets Financial assets Property, plant and equipment Ingangible assets Deferred tax assets Other assets Total non-current assets Total assets Current liabilities Payables Interest bearing liabilities Current tax liablities Provisions Financial liabilities Other liabilities 1 2 24 0 0 27 1 2 22 0 1 26 4 27 17 0 1 49 2009 2008
0 64 3 6 0 73 100
0 64 3 6 0 74 100
0 44 2 5 0 51 100
20 0 2 3 0
22 0 0 5 0
18 16 2 4 0

0 Total current liabilities Non-current liabilities Interest bearing liabilities Provisions Financial liabilities Other liabilities Total non-current liabilities Total liabilities Net assets Equity Contributed equity Reserves Retained earnings/(Accumulated losses) Total equity 26 0 27 1 39
BUSN 1001
8 1 2 11 38 62
9 1 3 12 39 61
18 1 0 2 20 59 41
42 6 15 62
43 5 14 61
30 2 8 41
Table 10: Common-size statement for Consolidated Balance sheet, as a percentage of Total assets, Half year
Common-size statement - Consolidated Balance sheet as a percentage of Total assets, Half year (%)
29/01/2011 Current assets Cash and cash equivalents Receivables Inventories Financial assets Other assets Total current assets 1 2 22 0 0 1 3 22 0 1 23/01/2010

26 Non-current assets Financial assets Property, plant and equipment Ingangible assets Deferred tax assets Other assets Total non-current assets Total assets Current liabilities Payables Interest bearing liabilities Current tax liablities Provisions Financial liabilities Other liabilities Total current liabilities Non-current liabilities Interest bearing liabilities Provisions Financial liabilities Other liabilities Total non-current liabilities Total liabilities Net assets Equity Contributed equity 0 65 3 6 0 74 100 0 64 3 6 0 74 100 26
BUSN 1001
18 0 3 3 0 0 24
20 1 2 3 0 0 27
8 1 2 11 35 65
7 1 3 10 37 63
43
43 Tutor: Libby Zhang | 40
BUSN 1001
Reserves Retained earnings/(Accumulated losses) Total equity
6 16 65
5 14 63
Table 11: Common-size statement for Consolidated Statement of Cash flows, as a percentage of Receipts from customers, Full year
Common-size statement- Consolidated Statement of Cash flows as a percentage of receipts from customers, Full year (%)
2010 CASH FLOWS FROM OPERATING ACTIVITIES Reciepts from customers (inclusive of GST) Paymentss to suppliers and employees (inclusive of GST) Commissions received Interest received Borrowing costs paid Income tax paid Net cash flows from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Payments for property, plant and equipment Payments for software Proceeds from sale of property Net cash flows used in investing activities CASH FLOWS FROM FINANCINF ACTIVITIES Dividends paid on ordinary shares Proceeds from the assignment of storecard and credit reserve receivables Repayments of receivables funding Proceeds from/repayment of borrowing On-market purchase of shares for Trust Interest paid on RPS Proceeds from loan repayments under employee share purchase plan Net cash flows used in financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of the period Cash and cash equivalents at end of the period 100 91 2 0 0 2 9 3 0 0 4 5 0 0 0 5 0 1 1 0 7 2 3 1 2009 100 90 2 0 0 3 9 4 0 4 5 17 11 8 0 2008 100 89 2 2 3 8 3 0 2 1 4
8 0 0 11 4 7 3
Table 12: Common-size statement for Consolidated Statement of Cash flows, as a percentage of Receipts from customers, Half year Tutor: Libby Zhang | 41
BUSN 1001
29/01/2011 23/01/2010 CASH FLOWS FROM OPERATING ACTIVITIES Reciepts from customers (inclusive of GST) Paymentss to suppliers and employees (inclusive of GST) Commissions received Interest received Borrowing costs paid Income tax paid Net cash flows from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Payments for property, plant and equipment Payments for software Proceeds from sale of property Net cash flows used in investing activities CASH FLOWS FROM FINANCINF ACTIVITIES Dividends paid on ordinary shares Proceeds from the assignment of storecard and credit reserve receivables Repayments of receivables funding Proceeds from/repayment of borrowing On-market purchase of shares for Trust Interest paid on RPS Proceeds from loan repayments under employee share purchase plan Net cash flows used in financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of the period Cash and cash equivalents at end of the period 100 88 2 0 0 3 11 4 0 4 6 1 0 7 0 1 1 0 8 0 1 1 2 100 90 2 0 0 1 10 3 0 0 3 6
6.1.3 Ratio Analysis Table 13: Ratio analysis for full year
2010 PROFITABILITY RATIOS Rate of return on assets (ROA) = EBIT/ average total assets Net Profit margin = Net profit/sales Gross Profit margin = gross profit/sales 21.46% 8.32% 39.73%
2009
2008
18.76% 7.88% 39.59%
13.46% 7.02% 39.55%
BUSN 1001
Expenses as a percentage of sales = Expenses/Sales Employee benefits expenses as a percentage of sales Lease and occupancy expenses as a percentage of sales Depreciation and amortisation expenses as a percentage of sales Advertising, marketing and visual merchandising expenses as a percentage of sales Administration expenses as a percentage of sales Net financing expenses as a percentage of sales Other expenses as a percentage of sales Income tax expense as a percentage of sales Total assets turnover ratio = sales/average total assets Rate of return of shareholders' equity (ROE) = (net profit-preference dividends)/average ordinary shareholders' equity Cost of interest & finance charges = Interest and finance charge expenses/Average total liabilities Basic Earnings Per Share (EPS) in cents EFFICIENCY RATIOS Accounts recievable turnover = sales/ average trade accounts recievable Average days of sales uncollected = days in year/ accounts recievabe turnover Inventory turnover = COGS/average inventory Inventory turnover in days = days in the period/iventory turnover Accounts payable turnover= Purchases/ Average trade accounts payable Average days of accounts payable= days in the period/ accounts payable turnover 15.41% 8.85% 2.13% 17.07% 7.88% 2.22% 16.56% 8.15% 1.98%
1.97% 0.99% 0.34% 0.75% 3.47%
2.29% 1.03% 0.47% 0.94% 3.07%
2.59% 1.62% 1.96% 1.82% 2.97%
1.77
1.49
1.33
23.86%
23.95%
26.00%
1.59% 34.0
1.37% 31.5
4.05% 30.6
0 0 4.69 77.76 10.11 36.09
0 0 4.78 76.41 8.78 41.57
5.36 68.07 4.72 77.36 8.57 42.61

LIQUIDITY RATIOS Short term Current ratio= current assets/current liabilities Quick ratio= (current assetsinventories)/current liabilities cash flow from operations to current liabilities ratio = cash flow from operations/average current liabilities LONG TERM Debt to equity ratio= total libailities/total shareholders' equity Debt to total assets ratio = total liabilities/ total assets Leverage ratio = total assets/ total shareholders' equity Cash flow from operations to total liabilities ratio = cash flow from operations/average total liabilities($) Interest and finance coverage= EBIT/Interest and finance expense
BUSN 1001
1.05 0.15
0.97 0.16
1.24 0.81
0.65
0.63
0.33
60.56% 37.72% 160.56%
63.99% 39.02% 163.99%
146.80% 59.48% 246.80%
0.45 35.28
0.44 26.96
0.22 5.17
Table 14: Ratio analysis for half year 29/01/2011 PROFITABILITY RATIOS Rate of return on assets (ROA) = EBIT/ average total assets Net Profit margin = Net profit/sales Gross Profit margin = gross profit/sales Expenses as a percentage of sales = Expenses/Sales Employee benefits expenses as a percentage of sales Lease and occupancy expenses as a percentage of sales Depreciation and amortisation expenses as a percentage of sales 14.15% 8.16% 2.38% 15.10% 8.13% 1.95% 35.84% 9.76% 39.68% 38.18% 9.25% 40.00% 23/01/2010

Advertising, marketing and visual merchandising expenses as a percentage of sales Administration expenses as a percentage of sales Net financing expenses as a percentage of sales Other expenses as a percentage of sales Income tax expense as a percentage of sales Total assets turnover ratio = sales/average total assets Rate of return of shareholders' equity (ROE) = (net profit-preference dividends)/average ordinary shareholders' equity Cost of interest & finance charges = Interest and finance charge expenses/Average total liabilities Basic Earnings Per Share (EPS) in cents EFFICIENCY RATIOS Accounts recievable turnover = sales/ average trade accounts recievable Average days of sales uncollected = days in year/ accounts recievabe turnover Inventory turnover = COGS/average inventory Inventory turnover in days = days in the period/iventory turnover Accounts payable turnover= Purchases/ Average trade accounts payable Average days of accounts payable= days in the period/ accounts payable turnover LIQUIDITY RATIOS Short term Current ratio= current assets/current liabilities Quick ratio= (current assetsinventories)/current liabilities cash flow from operations to current liabilities ratio = cash flow from operations/average current liabilities
BUSN 1001
1.71%
2.27%
0.81% 0.36% 0.74% 4.10%
0.53% 0.31% 0.78% 3.96%
90.33%
95.45%
13.87%
14.26%
0.89% 20.8
0.79% 20.0
0 0 2.39 75.62 0 0
0 0 2.64 68.54 0 0
1.07 0.18 0.45
0.96 0.17 0.40
BUSN 1001
LONG TERM Debt to equity ratio= total libailities/total shareholders' equity Debt to total assets ratio = total liabilities/ total assets Leverage ratio = total assets/ total shareholders' equity Cash flow from operations to total liabilities ratio = cash flow from operations/average total liabilities($) Interest and finance coverage= EBIT/Interest and finance expense
54.31% 35.20% 154.31% 0.31 39.64
59.01% 37.11% 159.01% 0.29 43.01
6.2 Appendix B: Financial reports of Myer


2010 Sales revenue Concession Sales Sales of goods Sales revenue deffered under customer loyalty program Revenue from sale of goods Other operating revenue Cost of goods sold Profit from sale of property and associated costs Other income Operating gross profit Selling expences Administration expenses EBIT before non-recurring IPO transaction costs Finance revenue Finance costs Net finance costs Profit before income tax before non-recurring IPO transaction costs Income tax expense 92 19 102 84 104 84 105 91 97 108 103 166 608 213 188 162 49 105 104 109 103 191 304 108 95 241 71 2009 93 21 103 94 105 91 105 2008 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100

Profit for the period before non-recurring IPO transaction costs Initial Public Offering transaction costs Profit for the period
BUSN 1001
0 0 505 0 0 976 0 0 362 0 0
0 312 0 58 0 0 420 0 0 -
100
Other comprehehnsive income

Cash flow hedges non-recurring IPO related transfers to profit and loss Actualrial gains/(losses) on retirement benefit obligation Income tax relating to components of the other comprehensive income Other comprehehnsive income for the period, net of tax Total comprehensive income for the period Basic earnings per share (cents per share) Diluted earnings per share (cents per share)
100
100

29/01/2011 Sales revenue Concession Sales Sales of goods Sales revenue deffered under customer loyalty program Revenue from sale of goods Other operating revenue Cost of goods sold Profit from sale of property and associated costs Other income Operating gross profit Selling expences Administration expenses EBIT before non-recurring IPO transaction costs Finance revenue Finance costs Net finance costs Profit before income tax before non-recurring IPO transaction costs Income tax expense Profit for the period before non-recurring IPO transaction costs Initial Public Offering transaction costs 104 100 104 110 104 94 104 76 101 100 98 107 130 138 139 104 99 105 4,427 100 100 100 100 100 100 100 100 100 100 100 100 23/01/2010 100 100 100 100 100 100 100

Profit for the period 20 170 989 989 44 22 23 -
BUSN 1001 100 100 100

100 100 100 100 100
Table 3: Trend analysis for Consolidated Balance Sheet, Full year
Trend Analysis - Consolidated Balance Sheet, Full year (%)

2010 Current assets Cash and cash equivalents Trade and receivables Inventories Derivative financial instruments Non-current assets classified as held for sale Total current assets Non-current assets Other financial assets Derivative financial instruments Property, plant and equipment Ingangible assets Deferred tax assets Other assets Total non-current assets Total assets 131 127 98 113 75 93 97 100 90 100 100 100 100 100 2009 2008
154 1,680 63 97 136 131 89
121 79 99 105 112 95
100 100 100 100 100 100 100

95 Current liabilities Trade and other payables Derivative financial instruments Current tax liablities Provisions Borrowings Other liabilities Total current liabilities Non-current liabilities Borrowings Derivative financial instruments Deferred tax liabilities Provisions Deferred income Other liabilities Total non-current liabilities Total liabilities Net assets Equity Contributed equity Reserves Retained earnings/(Accumulated losses) Total equity 100 204 377 105 48 105 93 24 512 103 80 99 100 100 100 100 100 100 93 100
BUSN 1001
208 131 35 85 180 142 35
99 114 53 27 96 97 78
100 100 100 100 100 100 100
16 22 65 35
100 23 66 78
100 100 100 100
Table 4: Trend analysis for Consolidated Balance Sheet, Half year
Trend Analysis - Consolidated Balance Sheet, Half year (%)

29/01/2011 23/01/2010

Current assets Cash and cash equivalents Trade and receivables Inventories Derivative financial instruments Non-current assets classified as held for sale Total current assets Non-current assets Other financial assets Derivative financial instruments Property, plant and equipment Ingangible assets Deferred tax assets Other assets Total non-current assets Total assets Current liabilities Trade and other payables Derivative financial instruments Current tax liablities Provisions Borrowings Other liabilities Total current liabilities Non-current liabilities Borrowings Derivative financial instruments Deferred tax liabilities Provisions Deferred income Other liabilities Total non-current liabilities Total liabilities Net assets Equity Contributed equity Reserves Retained earnings/(Accumulated losses) Total equity
BUSN 1001
85 90 93 98 107 178 74 101 155 109 94 95 91 95 111 75 91 99 113 65 1,445 97 94 97 100 82 93 97 -
100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100
100 100 100 100 100 100 100 100 100 100
Table 5: Trend analysis for Consolidated Statement of Cash flows, Full year
Trend Analysis - Consolidated Statement of Cash flows, Full year (%)

2010 2009 2008

CASH FLOWS FROM OPERATING ACTIVITIES Reciepts from customers (inclusive of GST) Paymentss to suppliers and employees (inclusive of GST) Other revenue Interest paid Tax paid Net cash flows from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Payment for available for sale financial assets Payments for property, plant and equipment Proceeds from sale of land and building Capital gains tax paid on disposal of land and building Payments for intangible assets Payments for other assets Lease incentives receivable Return of capital received from investment Interest received Net cash flows used in investing activities CASH FLOWS FROM FINANCINF ACTIVITIES Proceeds from borrowings Repayment of borrowings Repayment of Myer Notes Funding received from related party Funding paid to related party Repayments of employee share loans Funding of employee share loans Payment for shares acquired by the Myer Equity Plan Trust Proceeds from the issue of shares Payment of capital return Non-recurring finance costs associated with Initial Public Offering Payment of cost of Initial Public Offering Dividend paid Net cash flows from financing activities Net increase(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of the period Cash and cash equivalents at end of the period
BUSN 1001
102 102 78 131 1,094 64 106 156 32 0 466 376 42 40 0 202 0 0 0 0 321 298 103 119 131 -
103 104 91 95 66 93
100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100
94
161 11,520 35 0 248 336
339 583 0 77
100 100 -
37,799 178 158 75
100 100 100 100 100
Table 6: Trend analysis for Consolidated Statement of Cash flows, Half year
Trend Analysis - Consolidated Statement of Cash flows, Half year (%)

29/01/2011 CASH FLOWS FROM OPERATING ACTIVITIES Tutor: Libby Zhang | 51 23/01/2010

Reciepts from customers (inclusive of GST) Paymentss to suppliers and employees (inclusive of GST) Other revenue Interest paid Tax paid Net cash flows from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Payment for available for sale financial assets Payments for property, plant and equipment Proceeds from sale of land and building Capital gains tax paid on disposal of land and building Payments for intangible assets Payments for other assets Lease incentives receivable Return of capital received from investment Interest received Net cash flows used in investing activities CASH FLOWS FROM FINANCINF ACTIVITIES Proceeds from borrowings Repayment of borrowings Repayment of Myer Notes Funding received from related party Funding paid to related party Repayments of employee share loans Funding of employee share loans Payment for shares acquired by the Myer Equity Plan Trust Proceeds from the issue of shares Payment of capital return Non-recurring finance costs associated with Initial Public Offering Payment of cost of Initial Public Offering Dividend paid Net cash flows from financing activities Net increase(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of the period Cash and cash equivalents at end of the period 104 105 79 244 139 79 70 173 261 301 202 70 654 14,906 1,966 0 220 64 175 85 -
BUSN 1001 100 100 100 100 100 100
100
100 100 100 100 100 100 100 100 100
100
100 100 100 100 100 100

2010 Sales revenue Concession Sales Sales of goods Sales revenue deffered under customer loyalty program Revenue from sale of goods Other operating revenue Cost of goods sold Profit from sale of property and associated costs Other income Operating gross profit Selling expences Administration expenses EBIT before non-recurring IPO transaction costs Finance revenue Finance costs Net finance costs Profit before income tax before non-recurring IPO transaction costs Income tax expense Profit for the period before non-recurring IPO transaction costs Initial Public Offering transaction costs Profit for the period 100 14 86 1 85 3 50 2 40 22 10 8 0 1 1 7 2 5 3 2 0 0 1 0 0 1 3 0 0 2009 100 13 87 1 86 3 51 2 38 22 10 7 0 3 3 5 1 3 3 0 1 0 0 1 2 0 0
BUSN 1001
2008 100 3 97 1 97 3 57 8 2 42 26 11 15 1 3 3 12 1 11 0 0 11 -

29/01/2011 23/01/2010

Sales revenue Concession Sales Sales of goods Sales revenue deffered under customer loyalty program Revenue from sale of goods Other operating revenue Cost of goods sold Profit from sale of property and associated costs Other income Operating gross profit Selling expences Administration expenses EBIT before non-recurring IPO transaction costs Finance revenue Finance costs Net finance costs Profit before income tax before non-recurring IPO transaction costs Income tax expense Profit for the period before non-recurring IPO transaction costs Initial Public Offering transaction costs Profit for the period 100 13 87 1 85 3 50 2 41 21 9 10 0 1 1 9 2 6 0 6 0 0 0 0 6 0 0
BUSN 1001 100 13 87 2 85 3 50 2 40 21 9 10 0 1 1 9 2 6 5 1 0 0 2 1 1 3 0 0

Table 9: Common-size statement for Consolidated Balance sheet, as a percentage of total assets, Full year
Common-size statement - Consolidated Balance sheet as a percentage of Total assets, Full year (%)
2010 Current assets Tutor: Libby Zhang | 54 2009 2008
BUSN 1001
Cash and cash equivalents Trade and receivables Inventories Derivative financial instruments Non-current assets classified as held for sale Total current assets Non-current assets Other financial assets Derivative financial instruments Property, plant and equipment Ingangible assets Deferred tax assets Other assets Total non-current assets Total assets Current liabilities Trade and other payables Derivative financial instruments Current tax liablities Provisions Borrowings Other liabilities Total current liabilities Non-current liabilities Borrowings Derivative financial instruments
5 1 18 25
9 2 18 1 30
7 2 19 2 29
0 0 24 47 4 0 75 100
0 19 46 5 0 70 100
0 0 16 48 5 0 71 100
22 0 0 5 0 29
24 1 0 5 0 30
24 0 2 6 0 32
21 -
44 1
47 Tutor: Libby Zhang | 55

Deferred tax liabilities Provisions Deferred income Other liabilities Total non-current liabilities Total liabilities Net assets Equity Contributed equity Reserves Retained earnings/(Accumulated losses) Total equity 3 3 0 28 56 44 3 2 0 51 81 19 4 1 0 52 84 16
BUSN 1001
26 1 16 44
4 1 16 19
5 0 11 16
Table 10: Common-size statement for Consolidated Balance sheet, as a percentage of Total assets, Half year
Common-size statement - Consolidated Balance sheet as a percentage of Total assets, Half year (%)
29/01/2011 Current assets Cash and cash equivalents Trade and receivables Inventories Derivative financial instruments Non-current assets classified as held for sale Total current assets Non-current assets Other financial assets Derivative financial instruments 8 2 18 28 7 2 18 1 29 23/01/2010
0 0
0 0 Tutor: Libby Zhang | 56
BUSN 1001
Property, plant and equipment Ingangible assets Deferred tax assets Other assets Total non-current assets Total assets Current liabilities Trade and other payables Derivative financial instruments Current tax liablities Provisions Borrowings Other liabilities Total current liabilities Non-current liabilities Borrowings Derivative financial instruments Deferred tax liabilities Provisions Deferred income Other liabilities Total non-current liabilities Total liabilities Net assets Equity Contributed equity Reserves
26 43 2 0 72 100
20 46 4 0 71 100
25 0 1 4 0 31
24 0 5 0 29
20 3 3 0 26 57 43
21 3 2 0 27 56 44
25 1
26 1 Tutor: Libby Zhang | 57
BUSN 1001
Retained earnings/(Accumulated losses) Total equity
17 43
17 44
Table 11: Common-size statement for Consolidated Statement of Cash flows, as a percentage of Receipts from customers, Full year
2010 CASH FLOWS FROM OPERATING ACTIVITIES Reciepts from customers (inclusive of GST) Paymentss to suppliers and employees (inclusive of GST) Other revenue Interest paid Tax paid Net cash flows from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Payment for available for sale financial assets Payments for property, plant and equipment Proceeds from sale of land and building Capital gains tax paid on disposal of land and building Payments for intangible assets Payments for other assets Lease incentives receivable Return of capital received from investment Interest received Net cash flows used in investing activities CASH FLOWS FROM FINANCINF ACTIVITIES Proceeds from borrowings Repayment of borrowings Repayment of Myer Notes Funding received from related party Funding paid to related party Repayments of employee share loans Funding of employee share loans Payment for shares acquired by the Myer Equity Plan Trust Proceeds from the issue of shares Payment of capital return Non-recurring finance costs associated with Initial Public Offering Payment of cost of Initial Public Offering Dividend paid 100 93 2 2 0 7 0 3 1 1 0 0 3 13 20 4 0 0 10 1 2 2 1 0 1 0 0 4 4 2009 100 92 2 3 2 5 2008 100 94 2 2 1 5 0 3 18 2 1 0 0 0 12 5 8 0 0 0
0 0 0 0
0 11

Net cash flows from financing activities Net increase(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of the period Cash and cash equivalents at end of the period 7 2 6 3
BUSN 1001 0 1 4 6 19 2 7 4
Table 12: Common-size statement for Consolidated Statement of Cash flows, as a percentage of Receipts from customers, Half year
29/01/2011 23/01/2010 CASH FLOWS FROM OPERATING ACTIVITIES Reciepts from customers (inclusive of GST) Paymentss to suppliers and employees (inclusive of GST) Other revenue Interest paid Tax paid Net cash flows from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Payment for available for sale financial assets Payments for property, plant and equipment Proceeds from sale of land and building Capital gains tax paid on disposal of land and building Payments for intangible assets Payments for other assets Lease incentives receivable Return of capital received from investment Interest received Net cash flows used in investing activities CASH FLOWS FROM FINANCINF ACTIVITIES Proceeds from borrowings Repayment of borrowings Repayment of Myer Notes Funding received from related party Funding paid to related party Repayments of employee share loans Funding of employee share loans Payment for shares acquired by the Myer Equity Plan Trust Proceeds from the issue of shares Payment of capital return Non-recurring finance costs associated with Initial Public Offering Payment of cost of Initial Public Offering 191 177 4 3 0 14 6 2 1 0 0 6 0 18 5 0 0 1 0 0 7 2 7 182 169 3 5 3 9

Dividend paid Net cash flows from financing activities Net increase(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of the period Cash and cash equivalents at end of the period 4 13 5 11 6
BUSN 1001
0 3 8 10
2010 PROFITABILITY RATIOS Rate of return on assets (ROA) = EBIT/ average total assets Net Profit margin = Net profit/sales Gross Profit margin = gross profit/sales Expenses as a percentage of sales: Selling expences Administration expenses EBIT before non-recurring IPO transaction costs Finance costs Net finance costs Profit before income tax before nonrecurring IPO transaction costs Income tax expense Profit for the period before non-recurring IPO transaction costs Initial Public Offering transaction costs Total assets turnover ratio = sales/average total assets Rate of return of shareholders' equity (ROE) = (net profit-preference dividends)/average ordinary shareholders' equity Cost of interest & finance charges = Interest and finance charge expenses/Average total liabilities Basic Earnings Per Share (EPS) in cents EFFICIENCY RATIOS Accounts recievable turnover = sales/ average trade accounts recievable
2009
2008
13.72% 2.02% 39.64%
12.28% 3.34% 37.57%
22.17% 11.14% 41.97%
21.96% 9.55% 8.13% 1.34% 1.26% 6.87% 1.95%
22.21% 9.74% 7.23% 2.69% 2.52% 4.71% 1.38%
26.00% 10.78% 14.77% 3.12% 2.58% 12.19% 1.05%
4.92% 3.34% 2.90% -
168.71%
169.71%
150.17%
10.86%
32.12%
83.42%
3.28% 12.3
5.19% 5.86% 23.8 -
226.57
238.51
238.65

Average days of sales uncollected = days in year/ accounts recievabe turnover Inventory turnover = COGS/average inventory Inventory turnover in days = days in the period/iventory turnover Accounts payable turnover= Purchases/ Average trade accounts payable Average days of accounts payable= days in the period/ accounts payable turnover LIQUIDITY RATIOS Short term Current ratio= current assets/current liabilities Quick ratio= (current assetsinventories)/current liabilities cash flow from operations to current liabilities ratio = cash flow from operations/average current liabilities LONG TERM Debt to equity ratio= total libailities/total shareholders' equity Debt to total assets ratio = total liabilities/ total assets Leverage ratio = total assets/ total shareholders' equity Cash flow from operations to total liabilities ratio = cash flow from operations/average total liabilities($) Interest and finance coverage= EBIT/Interest and finance expense
BUSN 1001
1.61 -4.72 -77.32 7.59 48.06
1.53 -4.76 -76.61 7.95 45.89
1.53 4.91 74.31
9.13
39.99
0.87 0.23
1.01 0.41
0.93 0.34
0.43
0.28
0.26
127.88% 56.12% 227.88%
422.67% 80.87% 522.67%
524.74% 83.99% 624.74%
0.22 6.10
0.10 2.87
0.10 4.73
Table 14: Ratio analysis for half year 29/01/2011 PROFITABILITY RATIOS Rate of return on assets (ROA) = EBIT/ average total assets Net Profit margin = Net profit/sales 23/01/2010
8.35% 6.16%
9.13% 1.19% Tutor: Libby Zhang | 61

Gross Profit margin = gross profit/sales Expenses as a percentage of sales Selling expences Administration expenses EBIT before non-recurring IPO transaction costs Finance costs Net finance costs Profit before income tax before nonrecurring IPO transaction costs Income tax expense Profit for the period before non-recurring IPO transaction costs Initial Public Offering transaction costs Total assets turnover ratio = sales/average total assets Rate of return of shareholders' equity (ROE) = (net profit-preference dividends)/average ordinary shareholders' equity Cost of interest & finance charges = Interest and finance charge expenses/Average total liabilities Basic Earnings Per Share (EPS) in cents EFFICIENCY RATIOS Accounts recievable turnover = sales/ average trade accounts recievable Average days of sales uncollected = days in year/ accounts recievabe turnover Inventory turnover = COGS/average inventory Inventory turnover in days = days in the period/iventory turnover Accounts payable turnover= Purchases/ Average trade accounts payable Average days of accounts payable= days in the period/ accounts payable turnover LIQUIDITY RATIOS 40.54% 39.63%
BUSN 1001
21.36% 9.48% 9.71% 1.09% 1.02% 8.69% 2.40% 6.28% 0.12%
20.61% 8.97% 10.05% 1.46% 1.37% 8.68% 2.29% 6.39% 5.21%
86.03%
90.82%
12.16%
3.41%
1.56% 18.4
1.81% 4.1
-2.37 -76.29
2.57 70.54

Short term Current ratio= current assets/current liabilities Quick ratio= (current assetsinventories)/current liabilities cash flow from operations to current liabilities ratio = cash flow from operations/average current liabilities LONG TERM Debt to equity ratio= total libailities/total shareholders' equity Debt to total assets ratio = total liabilities/ total assets Leverage ratio = total assets/ total shareholders' equity Cash flow from operations to total liabilities ratio = cash flow from operations/average total liabilities($) Interest and finance coverage= EBIT/Interest and finance expense
BUSN 1001
0.92 0.32
1.00 0.39
0.34
0.30
130.99% 56.71% 230.99%
126.74% 55.90% 226.74%
0.18 9.51
0.16 7.36
6.3 Appendix C: Harvey Norman


2010 Sales revenue Cost Of Sales Gross Profit Other income Distribution expenses Marketing expenses Occupancy expenses Administration expenses Other expenses 94 93 98 104 113 115 136 102 115 2009 101 100 104 98 128 104 127 110 163 2008 100 100 100 100 100 100 100 100 100

Finanse costs Share of net profit of joint venture entities Share of joint venture property revaluation Profit before income tax expense Earnigns Before Interest & Tax (EBIT) Income tax expense Net profit for the period Profit from continuing operations attributable to minority interests Profit from continuing operations attributable to members of the parent Other comprehensive income Foreign currency translation Net fair value gain on available- for-sale investments Cash flow hedges: Gain/(loss) taken to equity Cash flow hedges: Transferred realised gains to other income Cash flow hedges: Transferred to statement of financial position Fair value revaluation of land and building Total other comprehensive income/loss for the period, net of tax Total comprehensive income for the period Basic earnigns per share (cents per share) Diluted earnings per share (cents per share) 102 198 (26) 74 76 94 65 0 0 0 0 0 0 0 0 65 65 105 154 38 67 69 81 60 100 60 0 0 0 0 0 0 0 0 60 60
BUSN 1001 100 100 100 100 100 100 100 100 100 100 100

1/12/2010 Sales revenue Cost Of Sales Gross Profit Other income Distribution expenses Marketing expenses 93 93 95 106 88 111 1/12/2009 100 100 100 100 100 100

Occupancy expenses Administration expenses Other expenses Finance costs Share of net profit of joint venture entities Share of joint venture property revaluation Profit before income tax expense Earnings Before Interest & Tax (EBIT) Income tax expense Net profit for the period Profit from continuing operations attributable to minority interests Profit from continuing operations attributable to members of the parent Other comprehensive income Foreign currency translation Net fair value gain on available- for-sale investments Cash flow hedges: Gain/(loss) taken to equity Cash flow hedges: Transferred realised gains to other income Cash flow hedges: Transferred to statement of financial position Fair value revaluation of land and building Total other comprehensive income/loss for the period, net of tax Total comprehensive income for the period Basic earnings per share (cents per share) Diluted earnings per share (cents per share) 107 93 70 97 129 (69) 111 110 115 108 3 179 225 (2) (9,000) 33 20 100 108 108 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100
BUSN 1001
2010 Sales revenue 100 2009 100 2008 100

Cost Of Sales Gross Profit Other income Distribution expenses Marketing expenses Occupancy expenses Administration expenses Other expenses Finance costs Share of net profit of joint venture entities Share of joint venture property revaluation Profit before income tax expense Earnings Before Interest & Tax (EBIT) Income tax expense Net profit for the period Profit from continuing operations attributable to minority interests Profit from continuing operations attributable to members of the parent Other comprehensive income Foreign currency translation Net fair value gain on available- for-sale investments Cash flow hedges: Gain/(loss) taken to equity Cash flow hedges: Transferred realised gains to other income Cash flow hedges: Transferred to statement of financial position Fair value revaluation of land and building Total other comprehensive income/loss for the period, net of tax Total comprehensive income for the period Basic earnigns per share (cents per share) Diluted earnings per share (cents per share) (72) 28 82 (1) (26) (17) (28) (6) (3) 1 (1) 29 31 (11) 18 0 0 0 (0) 0 0 0 0 18 0 0 (72) 28 72 (1) (22) (15) (28) (8) (2) 0 1 24 27 (9) 15 (0) 15 0 1 0 (0) (0) (0) 1 2 17 0 0
BUSN 1001 (73) 27 74 (1) (22) (12) (26) (5) (2) 0 3 37 39 (11) 25 (0) 25 0 0 0

1/12/2010 Sales revenue Cost Of Sales Gross Profit Other income Distribution expenses Marketing expenses Occupancy expenses Administration expenses Other expenses Finance costs Share of net profit of joint venture entities Share of joint venture property revaluation Profit before income tax expense Earnings Before Interest & Tax (EBIT) Income tax expense Net profit for the period Profit from continuing operations attributable to minority interests Profit from continuing operations attributable to members of the parent Other comprehensive income Foreign currency translation Net fair value gain on available- for-sale investments Cash flow hedges: Gain/(loss) taken to equity Cash flow hedges: Transferred realised gains to other income Cash flow hedges: Transferred to statement of financial position Fair value revaluation of land and building Total other comprehensive income/loss for the period, net of tax Total comprehensive income for the period Basic earnings per share (cents per share) Diluted earnings per share (cents per share) 100 (73) 27 73 (1) 27 (14) (28) (5) (3) 1 0 25 27 (8) 17 0 16 0 (3) 0 0 (0) (0) 0 (0) 14 0 0
BUSN 1001
1/12/2009 100 (73) 27 83 (1) (27) (16) (26) (5) (2) 1 (0) 33 35 (11) 22 0 22 0 (1) 0 (0) 0 0 0 (0) 22 0 0

2010 PROFITABILITY RATIOS Rate of return on assets (ROA) = EBIT/ average total assets Net Profit margin = Net profit/sales Gross Profit margin = gross profit/sales Expenses as a percentage of sales = Expenses/Sales Distribution expenses Marketing expenses Occupancy expenses Administration expenses Other expenses Finance costs Income tax expense Total assets turnover ratio = sales/average total assets Rate of return of shareholders' equity (ROE) = (net profit-preference dividends)/average ordinary shareholders' equity Cost of interest & finance charges = Interest and finance charge expenses/Average total liabilities Basic Earnings Per Share (EPS) in cents EFFICIENCY RATIOS Accounts recievable turnover = sales/ average trade accounts recievable Average days of sales uncollected = days in year/ accounts recievabe turnover Inventory turnover = COGS/average inventory 0.68% 26.41% 16.97% 27.81% 6.38% 2.50% 11.04% 0.72% 22.24% 14.83% 28.00% 8.45% 2.41% 8.95% 11.41% 17.70% 27.98% 10.91% 15.23% 27.59% 2009
BUSN 1001
2008
16.93% 25.44% 26.74%
0.56% 21.55% 11.75% 25.75% 5.22% 2.32% 11.10%
0.37
0.41
0.44
11.29%
10.95%
19.70%
5.46% 21.78
8.08% 20.18
5.88% 33.76
1.25 292.95 3.71
1.39 263.22 4.29
1.41 259.23 4.67

Inventory turnover in days = days in the period/iventory turnover Accounts payable turnover= Purchases/ Average trade accounts payable Average days of accounts payable= days in the period/ accounts payable turnover LIQUIDITY RATIOS Short term Current ratio= current assets/current liabilities Quick ratio= (current assetsinventories)/current liabilities cash flow from operations to current liabilities ratio = cash flow from operations/average current liabilities LONG TERM Debt to equity ratio= total libailities/total shareholders' equity Debt to total assets ratio = total liabilities/ total assets Leverage ratio = total assets/ total shareholders' equity Cash flow from operations to total liabilities ratio = cash flow from operations/average total liabilities($) Interest and finance coverage= EBIT/Interest and finance expense 98.30 1.31 278.28 85.00 1.61 227.20
BUSN 1001
78.19 1.70 214.89
1.62 1.35 0.40
1.11 0.92 0.32
1.24 1.03 0.27
71.73% 41.77% 171.73% 0.25 4.90
77.56% 43.68% 177.56% 0.28 3.14
72.82% 42.14% 172.82% 0.20 7.44
Table 14: Ratio analysis for half year 12/2010 PROFITABILITY RATIOS Rate of return on assets (ROA) = EBIT/ average total assets Net Profit margin = Net profit/sales Gross Profit margin = gross profit/sales Expenses as a percentage of sales = Expenses/Sales Distribution expenses 5.55% 16.66% 26.79% 5.18% 22.43% 27.08% 12/2009
50.53%
59.95% Tutor: Libby Zhang | 69

Marketing expenses Occupancy expenses Administration expenses Other expenses Finanse costs Income tax expense Total assets turnover ratio = sales/average total assets Rate of return of shareholders' equity (ROE) = (net profit-preference dividends)/average ordinary shareholders' equity Cost of interest & finance charges = Interest and finance charge expenses/Average total liabilities Basic Earnings Per Share (EPS) in cents EFFICIENCY RATIOS Accounts recievable turnover = sales/ average trade accounts recievable Average days of sales uncollected = days in year/ accounts recievabe turnover Inventory turnover = COGS/average inventory Inventory turnover in days = days in the period/iventory turnover Accounts payable turnover= Purchases/ Average trade accounts payable Average days of accounts payable= days in the period/ accounts payable turnover LIQUIDITY RATIOS Short term Current ratio= current assets/current liabilities Quick ratio= (current assetsinventories)/current liabilities cash flow from operations to current liabilities ratio = cash flow from operations/average current liabilities LONG TERM 2656.65% 1405.90% 2766.04% 546.31% 265.49% 803.45% 0.21 2717.34% 1583.54% 2635.57% 516.09% 214.13% 1079.33% 0.19
BUSN 1001
6.17%
7.62%
2.57% 12.39
2.26% 14.95
0.71 255.94 1.89 95.52 0.84 216.43
0.63 287.27 1.88 96.42 0.71 253.47
1.58 1.26 0.08
1.59 1.32 0.12

Debt to equity ratio= total libailities/total shareholders' equity Debt to total assets ratio = total liabilities/ total assets Leverage ratio = total assets/ total shareholders' equity Cash flow from operations to total liabilities ratio = cash flow from operations/average total liabilities($) Interest and finance coverage= EBIT/Interest and finance expense 85.24% 46.02% 185.24% 0.05 5.01 77.74% 43.74% 177.74% 0.08 6.85
BUSN 1001

Inancial Nalysis OF Avid Ones Imited: Financial Analysis of David Jones

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Financial Analysis of David Jones

DAVID JONES LIMITED

Tutor: Libby Zhang | 1

Financial Analysis of David Jones

Tutor: Libby Zhang | 2

Financial Analysis of David Jones

Financial Analysis of David Jones

6.3.3 Ratio Analysis ..................................................................................................................... 67

David Jones Limited

Tutor: Libby Zhang | 4

Financial Analysis of David Jones

Harvey Norman Holdings Limited

Tutor: Libby Zhang | 5

Financial Analysis of David Jones

Financial Analysis of David Jones

3. Conclusion & Recommendation Conclusion:

Tutor: Libby Zhang | 7

Financial Analysis of David Jones

Tutor: Libby Zhang | 8

Financial Analysis of David Jones

4.2 Common Size Statements

Tutor: Libby Zhang | 9

Financial Analysis of David Jones

4.3 Ratio Analysis

1. Rate of return on Assets (ROA)

Tutor: Libby Zhang | 10

Financial Analysis of David Jones

2. Net Profit Margin Ratio

3. Gross Profit Margin Ratio (GP Ratio)

Tutor: Libby Zhang | 11

Financial Analysis of David Jones

4. Sales and Marketing Expenses as a percentage of Sales

5. Administrative expenses as a percentage of Sales

Tutor: Libby Zhang | 12

Financial Analysis of David Jones

6. Net finance costs as a percentage of Sales

7. Income tax expenses as a percentage of Sales

8. Total Assets Turnover Ratio

Financial Analysis of David Jones

10. Cost of interest & finance charges

4.3.2 Efficiency Ratios

12. Accounts receivable turnover

Tutor: Libby Zhang | 15

Financial Analysis of David Jones 13. Average days of sales uncollected

14. Inventory turnover

Tutor: Libby Zhang | 16

Financial Analysis of David Jones 15. Inventory turnover in days

16. Accounts payable turnover

Tutor: Libby Zhang | 17

Financial Analysis of David Jones 17. Average days of accounts payable

4.3.3 Liquidity Ratios

Tutor: Libby Zhang | 18

Financial Analysis of David Jones 18. Current ratio

19. Quick ratio

Tutor: Libby Zhang | 19

Financial Analysis of David Jones

20. Cash flow from operations to current liabilities ratio ($)

LONG TERM 21. Debt to equity ratio

Financial Analysis of David Jones

22. Debt to total assets ratio

23. Leverage ratio

Financial Analysis of David Jones