Financial Analysis and Control Awareness

Question: Discuss about the Financial Analysis and Control Awareness . Answer: Introduction: Financial analysis is the method of analysing projects, businesses, budgets and other finance-related corporations for ascertaining their suitability and performance. Therefore, the current assignment aims to conduct financial evaluation of JB Hi-Fi. The organisation is a retailer of consumer products in Australia and New Zealand dealing with Blu-rays, DVDs, CDs, home appliances, video games and electronics (Jbhifi.com.au 2017). The assignment aims at finding the number of ordinary shares issued on the part of JB Hi-Fi at the end of 2016. Finally, the assignment sheds light on ascertaining whether the organisation has not paid its issued shares in the particular financial year. Ordinary shares issued by JB Hi-Fi at the end of 2016: As commented by Birchall (2014), ordinary shares depict the primary voting shares of an organisation. In addition, the holders of ordinary shares are permitted to put one vote per share and they do not possess any predetermined amount of dividend. The ordinary shares are often referred as the common shares both from the viewpoint of the organisation and the shareholders. After evaluation of the annual report of JB Hi-Fi for the year 2016, it has been identified that the organisation has issued 671,849 ordinary shares to the employees under its plans of share option (Jbhifi.com.au 2017). However, JB Hi-Fi has repurchased 714,441 ordinary shares in the month of September 2015. Such repurchase of ordinary shares is equivalent to 0.7% of the overall share capital of the organisation, which amounts to $13,181,290. This repurchase has been conducted for offsetting the diluted effects of the issued shares. Determination of any non-payment of issued shares at the end of 2016: After conducting careful examination of the annual report of JB Hi-Fi for the year 2016, the organisation has fully paid its ordinary shares and there has not been any partial payment of ordinary shares. The below-depicted table depicts the relevant interest of the directors in terms of debentures, shares and options or rights in debentures or shares of the organisation: According to the above table, it has been identified that R. Murray has owned maximum of the fully paid ordinary shares amounting to 102,000. However, the above table does not take into account any option, which the board has granted in August 2016. The above table depicts that the P. Green has been provided with 2,092 ordinary shares in 2016, which was 13 in 2015. This illustrates that the organisation has no call-in-arrears in the year 2016 by making full payment to the ordinary shares. In this regard, Brigham and Ehrhardt (2013) stated that the shareholders are not needed to make any additional payment to the organisation on the share values. However, as argued by Christensen, Baker and Cottrell (2014), the full payment of the ordinary shares might limit the ability of the organisation in generating additional funds from the shareholders. The above table mainly helps in demonstrating the share options granted on the part of the organisation in 2016. It has been found that the entire shares are identified as the ordinary shares and there are no partial payments to such shares. Therefore, the organisation has experienced full payments to the issued ordinary shares in 2016. In this regard, Mihajlovic, Stankovic and Nikolic (2015) advocated that when the price range is depicted, the options falling under the series have been exercised on various dates throughout the period. However, Thibierge and Beresford (2015) argued that the shareholders often bear the operational risks of the organisation and they might not receive any payment, even if full payments are made. Therefore, it could be inferred that the ordinary shares of JB Hi-Fi have been fully paid and no partial payment has been made in the financial year 2016. Conclusion: From the above discussion, it has been found that JB Hi-Fi has issued 671,849 ordinary shares to its employees. However, it has been engaged in share repurchase of 714,441 for the month of September 2015. In addition, the statement of changes in equity of JB Hi-Fi has been evaluated critically in order to find out whether full payment of the issued shares are made in the financial year 2016. Therefore, different extracts from the annual report of the organisation have been represented, which signify that there is no partial or zero payment to the ordinary shares issued on the part of the organisation. References: Birchall, A., 2014.Financial analysis and control: financial awareness for students Brigham, E.F. and Ehrhardt, M.C., 2013.Financial management: Theory practice. Cengage Learning. Christensen, T.E., Baker, R.E. and Cottrell, D.M., 2014.Advanced Financial Accounting. The McGraw-Hill Companies, Inc Jbhifi.com.au. (2017). [online] Available at: https://www.jbhifi.com.au/Documents/2016%20JB%20Hi-Fi%20Annual%20Report_ASX.pdf [Accessed 16 Jan. 2017]. Mihajlovic, D., Stankovic, S. and Nikolic, M., 2015.Analysis financial balance as base management company(No. 2015-01). Ekonomika Society of Economists, Ni (Serbia). Thibierge, C. and Beresford, A., 2015. Financial analysis. InA Practical Guide to Corporate Finance(pp. 8-46). Palgrave Macmillan UK.