Analysis of corporate liquidity – Your role is to use the annual reports from JB HiFi to investigate the liquidity and insolvency risk of JB HiFi from an accounting perspective. In 2017, JB HiFi was worrying investors because their take over of the Good Guys retail business was not going as well as forecast. Similarly, it suffered a drop in share price in February 2018, when it disclosed slower sales than expected at the Good Guys. . In this maximum 2000-word essay, you must use the IDEALS framework to critically analyse the performance of JB HiFi and whether or not it is in danger of becoming insolvent. Essential elements of the essay are:
1. In defining the context you must calculate all the liquidity ratios covered in class, and the Altman’s Z-score for JB HiFi and its major competitor Harvey Norman Holdings for at least the past three years.
2. From the context of the liquidity ratios, identify and provide reasons for selecting three core financial performance issues that JB HiFi should address to improve their financial performance and lower the risk of insolvency.
3. Further discuss the strengths and weaknesses of the three key performance issues compared to its major competitor Harvey Norman Holdings by referring to data from the financial report, operating and financial reviews and comparisons with retail industry benchmarks.
4. To conclude the essay, identify what the most important financial performance issue JB HiFi needs to address to prevent potential insolvency.
5. In your closing self-reflection, outline some critical concerns about the role played by financial and non-financial information found in corporate annual reports. A reference list is required and does not form part of the word count.It is required that you use EndNote for referencing and the APA 6th Style for your reference list.
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