David Jones analysis

3197 Words Feb 26th, 2014 13 Pages
A RATIO ANALYSIS
COURSE CODE
LECTURER
STUDENT

EXECUTIVE SUMMARY

In this paper, we demonstrate the use of actual financial data for financial ratio analysis, namely: liquidity, profitability, assets, capital and market. We construct a financial and industry analysis for David Jones Limited in comparing the company’s behavior between 2011 and 2012. The objective is to show exactly how to compute ratios for an actual company. This paper also demonstrates the comparison of the financial ratios of David Jones Limited with main rival Myer Holdings.

TABLE OF CONTENTS

1. INTRODUCTION
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As part of Future Strategic Plan, the intention is to put up several village format stores that will focus on Fashion and Beauty. For additional portfolio, David Jones added 85 new brands that includes Valentino, James Perse, Gary Bigene, Viviene Westwood, Paul & Joe Sister and Nicholas Kirkwood.
For its Financial Services, the company invested $1.8million to increase spend, balances and the number of issue cards. The latter business strategy will enhance the growth of new David Jones Platinum American Express Card, Qantas Frequent Flyer points under the David Jones American Express Card and for renewed promotions.

BODY
I. Profitability Ratio

A. Return on Equity (ROE) Table 1. ROE Year
ROE
2008
22.2%
2009
22.9%
2010
22.9%
2011
21.4%
2012
13.0%
Analysis
Return on Equity ratio is specifically for shareholders and is aimed at measuring the return they should expect from their shares in the business. The company’s return on equity ratio on 2012 is 13.0%, which shows that after investing in company it will get back 13.0%.

B. Return on Assets (ROA) Table 2. ROA Year
ROA
2008
13.94%
2009
20.06%
2010
20.85%
2011
20.29%
2012
12.44%
Analysis
Return on assets indicates the number of cents earned on each dollar of assets. In 2012, the ROA decreases from 20.29% to 12.44%. The decrease in value says the asset of the company is not generating more income

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