Monday, June 17, 2019

Myer Holdings Ltd. and Harvey Norman Holdings Ltd Essay

Myer Holdings Ltd. and Harvey Norman Holdings Ltd - Essay Exampleby comparing the ratios of both companies for the years 2011 and 2012 individually and among distributively other in order to arrive at recommendations regarding the best entity for making investments. Myer Holdings Limited is one of the largest department stores groups of Australia being in the fashion industry since pull round 100 years. However, Harvey Norman Holdings is involved in the sale and distribution of goods under Harvey Norman brands via different independent franchises. The study also outlines the limitations in the ratio psychoanalysis of the financial statements of these Companies. Table of Contents Executive Summary 2 Table of Contents 3 1.0 Introduction 4 1.1 balances Analysis 5 1.1.1 liquid Ratios Analysis. 5 1.1.2 Leverage Ratios Analysis. 6 1.3 Recommendation and Conclusion 11 References 12 1.0 Introduction This report outlines the ratio analysis of the financial statements of Myer Holdings Li mited and Harvey Norman Holdings Limited for the periods 2011 and 2012. The paper also highlights the limitations of evaluations using ratios analysis. As outlined in the Harvey Norman corporate website the Harvey Norman Holdings Limited is involved in giving the franchise agreements to independent product line entities for the supply of household and office equipments under the banner of Harvey Norman. It deals in a wide variety of goods and the business is spread over many geographical regions. (Harvey Norman Company 2008) As per the Myer holdings official website the company claims to be Australias largest department store group, and a leader in Australian retailing involved in the management and running of departmental stores and retail business especially of fashion goods all over Australia. (Myer Holdings Company 2012) 1.1 Ratios Analysis Accounting ratios ar calculated in a way that relationships between two or more figures of the financial statements are rated. In this pa rt the ratios provided for Myer Holdings Limited and Harvey Norman Holdings Limited for 2011 and 2012 are compared. 1.1.1 Liquidity Ratios Analysis. Liquidity is defined as the ability of a company to realize value in money. The liquidity ratios are used to evaluate the financial stableness of a company in short term. (Kishore 2009, p.62). The following liquidity ratios are provided in the question Myer Holdings Limited Harvey Norman Holdings Limited Key Ratios 2011 2012 2011 2012 Current Ratio 0.81 0.88 1.64 1.63 Quick Ratio 0.12 0.11 1.3 1.35 As per Kishore current ratios are defined as a measure of the short term solvency of a company. (Kishore 2009, p.62). It indicates the amount of current assets that are available to drowse off every $1 of current liability. The current ratio of 1 or more shows that a company is in a final result position indicating having enough assets to discharge its liabilities. As per the given ratios it is quite evident that the solvency position of Ha rvey Norman with a current ratio of 1.63 in 2012 is much offend than that of Myer Holdings with a current ratio of 0.88 in 2012. It can also be concluded that the solvency position of Myer Holdings Limited have improved by 0.07 from 2011s 0.81 to 2012s 0.88. As far as Harvey Norman Holdings is considered there is an extremely minor deterioration in the year 2012 by 0.01. Quick ratio is used to evaluate the ability of a company to discharge its current liabilities from the realization of quick assets (current assets inventories). This ratio gives out the amount in $ of the quick assets available with the company to discharge current liabilities worth $1. (Kishore 2009, p.63). As evident from the given data, Harvey Norman Holdings Limited seems to be highly stable in this regard with a quick

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