A. Industry Analysis

1. The main products in this industry
This industry retails new electronics and appliances from point-of-sale locations, such as LCD televisions, audio/visual, digital camera photography, portable audio, in-car entertainment, computer/video games, DVD movies, gadgets and information technology. (‘NAICS Definitions’ 2002)

2. The most likely prospect for the industry in next year, in next five years, and in the long run
According to the data of 2004-2009, the channel’s strong performance of the electronics and appliance specialist retailers is expected to continue until 2014 but within an evolving retail environment. (‘The Future’s Electric: Prospects for Electronics and Appliance Specialist Retailers – World’ 2010)

In next five years, the market share of this industry will change due to high level of competition in this industry, especially in Australia. In long run, further growths opportunities in this industry will depend on new technologies. Therefore, industry will pay more attention on advanced technology and the competition will focus on the application of advanced technologies in operations.

3. Main players in this industry and their positions in the industry.
JB HI-FI, Dick Smith Electronics Harvey Norman and Clive Peeters are four main players in this industry. They are very successful in Australia and compete sincerely with in the industry.

(Richards 2009, p. 1 of 2).

B. Company Analysis

4. The reason to choose this company for the project
It is difficult to overstate the challenges from the global and local economies. However, in this environment JB HI-FI has delivered an outstanding result, which is representative. Moreover, JB HI-FI is one of Australasia's fastest growing and largest retailers of home entertainment and was floated on the Australian Stock Exchange (‘About Us’ n.d.).

5. The history of JB HI-FI Time | Event | 1974 | established in Melbourne. | 1983 | Richard Bouris and David Rodd who expanded JB Hi-Fi into a chain of ten stores in Melbourne and Sydney. | 1991 | became one of the first Australian music retailers offering exclusively CDs. | 2003 | floated on the Australian Stock Exchange. | 2007 | became Australia's biggest CD retailer and second in terms of sales of computer games, televisions and car stereos. | Currently | opened many new stores and later expanded to other states and now a major retailer for new electronics and appliances in Australia.number 1 retailer of Apple Computer hardware in Australia and is also the sole store in Australia that sells Dell Computer hardware in retail stores. |
(‘About Us’ n.d.).

6. The competitive advantages of JB HI-FI
JB Hi-Fi owns such competitive advantages as best brands, huge range, cheapest prices and convenient locations, especially genuine personal service and experienced specialist staff (‘About Us’ n.d.).
7. SWOT analysis Opportunities | Threats | * Developing further e-commerce operations; * Strong Australian dollars; * Popular concept of time-saving; * Information technology * International market. | * Gloom global economic outlook; * Strong Australian dollars; * Increase in government regulations to protect its smaller rivals; * high level of competitive in industry； * It is difficult to negotiate with landlord and enhance their bargaining power to get a cost effective rental arrangements (JB HI-FI Limited – Annual Report 2011); * JB HI-FI has strong challenge in meet the growth prospects; * Higher labour and other operating costs. | Strengths | Weaknesses | * Best brands; * Cheapest prices; * Convenient locations; * Genuine personal service and experienced specialist staff; * Scalability of its operations and low Operating costs; * Relatively high stock turns. (JB HI-FI Limited – Annual Report, 2010) | * No assurance about this relatively low cost operating structure can be maintained; * High rental arrangement. |

8. The most likely prospect for this company in next year, in next five years, and in the long run.
In next year, JB HI-FI may use advanced technology to develop their information system in order to achieve customers’ need and maximize the efficiency of the company’s operation and performance (JB HI-FI Limited – Financial statements, 2011). Then, it will expend operations in smaller emerging markets such as Vietnam and develop the large international market, like the Asia countries.

In long-term, JB HI-FI will have strong growth in sales and profit margin depending on suitable product selection, abilities to establish and operate new store and the recently domestic economic condition (JB HI-FI Limited – Financial statements, 2011).

9. The performance of the company in the last three years seemed to be good: continuous growth of revenues, expenses, and cash flows.
Sales revenues kept a stable growth during the past three years, from $2.33 billion(Appendix A table 1) during 2009 to $2.9 billion( Appendix C table 1)during 2011. Expense experienced a continuous increase from $2.2 billion(Appendix A table 1) to $2.8 billion( Appendix C table 1). Similarly, cash flows from operating increased stably from $0.146 billion(Appendix A table 1) to $0.152 billion( Appendix C table 1) during the three-year period.

10. Managers have incentives to manipulate earnings due to poor economic environment and other negative factors.
For instance, the corporate increased non-current borrowings significantly from $0.03 million(Appendix B table 3) in 2010 to $0.2 billion in 2011( Appendix C table 3). This huge increase of debt is likely to negatively influence the performance of the company.

11. Evidence of earnings manipulations can be found in the financial statements.
The company recorded a sales growth of 13.3% in 2011(This can be calculated according to Appendix C table 1), which means provisions for bad debt should have increased the same percentage. However, impairment of trade receivables was $5 million ( Appendix C table 1) in 2011 and $ $0.7 million( Appendix B table 1) in 2010. This indicates that managers try to manipulate expenses to present larger earnings.

12. Adjustment to the accounting numbers and estimate are necessary.
Financial cost should have been increased significantly in 2011 due to the heavy leverage. However interest expense decreased $10 million(Appendix C table 1). Although the company paid back the current borrowings of $0.035 billion( Appendix C table 3), this cannot have a major impact on the overall financial costs. So interest expense should be re-estimated.

C. Project and Teamwork

Information regarding the company's financial health and management are mainly obtained from the JB HIFI company annual report 2011 as well as JB HIFI limited prospectus. Forecasting are made base on historical data from previous financial years such as the sales growth rate is forecasted according to the average of sales growth rate in last five years. The reserve bank of Australia and treasury department both look into further increase in Australian economic situation, which provide us with more information to accurately analyze the company's potential. The information provides critical parameters for evaluation and analysis.
From searching the proper information source to locating financial figures and come up with ready-to-use analysis report requires us to manage our knowledge and compile them together. Each of our team members are dedicated in broadly searching for industry information and forming the ideas for structure of the project and also equally divide the responsibility to each one of us. The team demonstrates excellent skill in problem solving and teamwork to, especially when the any team member is encountered with difficulties during the project.

Reference List

Richards 2009, ‘How JB Hi Fi Is Hurting Woolworths And Dick Smith Stores’, Smart Office, viewed 3rd April 2012, http://www.smartoffice.com.au/Business/Technology/ L6S4M7E4?page=2.

U.S. Census Bureau, 2002, ‘NAICS Definitions’, census, viewed 3rd April 2012, http://www.census.gov/epcd/naics02/def/NDEF443.HTM. ‘The Future’s Electric: Prospects for Electronics and Appliance Specialist Retailers – World’ 2010, Euromonitor, viewed 3rd April 2012, http://www.euromonitor.com/the-futures-electric-prospects-for-electronics-and-appliance-specialist-retailers-world/report.

‘About us’, n.d., JB HI-FI, viewed by 3rd April 2012, http://www.jbhifi.com.au/about-us/.

JB HI-FI Limited – financial statements, 2009
JB HI-FI Limited – financial statements, 2010
JB HI-FI Limited – financial statements, 2011

APPENDIX A Financial statements for the financial year ended 30 June 2009
Table 1

Table 2

Table 3

Table 4

APPENDIX B Financial statements for the financial year ended 30 June 2010
Table 1

Table 2

Table 3

Table 4

Table 5

APPENDIX C Financial statements for the financial year ended 30 June 2011
Table 1

Table 2

Table 3

Table 4

Table 5