Financial Analysis For Joyce Corporation Ltd
Profitability
Discuss about the Financial Analysis for Joyce Corporation Ltd.
The main area of its business for Joyce Corporation is about Auctioneers and Valuers, home furnishings and kitchen ware. The company is listed at ASX having its head office at Perth, Western Australia. The company’s 4 units are Lloyds-Auctioneers and Valuers, Wallspan—Kitchens & Wardrobes, Kitchen Connection—kitchen & Wardrobes and Bedshed—all about bedroom furnishings. It is listed in the Australian Securities Exchange or ASX. It also started property business but it makes divestment in this business. It started foam and furniture manufacturing business. The company was established in 1886 and is based in Osborne Park, Australia (Joycecorp, 2016).
There are in total 44 store locations with 209 staff members and 4 business units. Company is I the business of Bedshed Franchising & Company Stores (Bedshed). The Company’s different portfolios include Stores owned by the company, retail kitchen stores operation and franchising. The stores owned by the company are mostly in absolute retail business in retail and kitchen sector or industry. KWB Group Pty Ltd (KWB) is in operation of customised designing of kitchens and wardrobes. The furniture retailing business stores is very specialist type of furniture type like bedding and bedroom products which are in good demand in South Australia, Queensland, and Victoria, Western Australia (Joycecorp, 2016).
The company is 130 years old and is having its headquarters at Perth, Western Australia. It mostly serves the Australian market. The business of the company has grown many folds in last two years. The sales have increased significantly in 2015 compared to 2014 figures. The company plans to consolidate all its warehouse locations to a centrally located area either in Perth or at a place where its location will help in logistics to become economical. Bedshed stores are all located in Western Australia, Queensland, and New South Wales. The leasing business of commercial property started with leasing at New South Wales. The company also started retailing in bed linens, kid beds, beds, mattresses, wardrobes and kitchens customized (Drake, Pamela Peterson, 2015).
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RATIO ANALYSIS |
2015 |
2014 |
||
|
JC |
JC |
JC |
JC |
|
|
RETURN ON ASSETS |
11.40% |
4.29% |
||
|
PAT |
5221 |
1570 |
||
|
ASSETS |
45814 |
36618 |
||
|
RETURN ON EQUITY |
19.74% |
6.91% |
||
|
NET INCOME |
5221 |
1570 |
||
|
EQUITY |
26450 |
22730 |
||
|
GROSS PROFIT MARGIN |
50% |
7% |
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|
GP |
17259 |
854 |
||
|
SALES |
34737 |
12657 |
||
|
NET PROFIT MARGIN |
15% |
12% |
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|
PAT |
5221 |
1570 |
||
|
SALES |
34737 |
12657 |
The net profit from continuing operations for the year 2014 is $ 1,570,000 which is approximate about 1.5 times the profit of the year 2013 which was $ 668,000. While the profit for the year 2015 grew from $ 1,570,000 of the year 2014 to $ 5,221,000 which is approximately 3.325 times. This phenomenal jump is a very positive sign that the company’s operations are moving in the right, targeted, desired growth path and this is evident from the jump of a profit from $ 668,000 for the years 2013 to $ 5,221,000 for the year 2015. That means a growth by almost eight times within a time period of 2 years. The bottom line has increase significantly compared to top line of the company. The bottom line has improved but significant improvement can be seen in the top line. The indication is proper growth in revenue and of the margin of the company (Edmister, 1972).
Asset Efficiency
Total current assets have grown from $ 5,464 in the year 2014 to $ 32,866 in the year 2015 making the growth by 6 times. This means that the business is growing very fast and if the trend is kept ongoing then it will be a great competitor to face.
|
RATIO ANALYSIS |
2015 |
2014 |
||
|
JC |
JC |
JC |
JC |
|
|
DAYS INVENTORY TURNOVER |
44.8262 |
180.943 |
||
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AVERAGE INVENTORY X 365 |
783472.5 |
742410 |
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COGS |
17478 |
4103 |
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ASSETS TURNOVER |
0.8428 |
0.34188 |
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TOTAL SALES |
34737 |
12657 |
||
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AVERAGE ASSETS |
41216 |
37022 |
||
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DAYS DEBTOR TURNOVER |
5.21699 |
20.4604 |
||
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AVERAGE DEBTORS X 365 |
181222.5 |
258967.5 |
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SALES REVENUE |
34737 |
12657 |
The turnover days of inventory has improved dramatically. In 2015 days inventory turnover is of 45 days improved from 181 days. This indicates the fact that rollover of inventory has improved. Higher rollover or the turnover is favourable to boost sales. The better sales figure reflects to the bottom line of the company. The asset turnover figure indicates the efficiency of the management to use the assets to the fullest to boost sales. The sales have improved dramatically in 2015 and the asset turnover has also improved to 0.84. This indicates better asset management. The improvement of the debtor’s turnover days indicate that the company is managing receivables properly and ensuring that the cash is collected from the receivable in proper time (Myaccountingcourse, 2016).
The cash position for the years 2014 was $ 816 which grew to a very high level of $ 5,962 in the year 2015. That means the cash in hand have grown by almost 7.3 times within a year’s time. This shows that the operations are better than a year ago. The main area of concern here is that the expenses on the payments made to the employers and suppliers have also grown by 2.13 times from the year 2014 in the year 2015. If this can be controlled it would be better.
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RATIO ANALYSIS |
2015 |
2014 |
||
|
JC |
JC |
JC |
JC |
|
|
CURRENT RATIO |
2.45708732 |
1.37736325 |
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|
CA |
32866 |
5464 |
||
|
CL |
13376 |
3967 |
||
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QUICK RATIO |
2.29373505 |
1.27249811 |
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CA-INVENTORY |
30681 |
5048 |
||
|
CL |
13376 |
3967 |
Despite lower inventory and lesser collection days the current asset of the company increased in 2015 and the improvement is significant. The asset quality has also improved. The quality of current assets has improved compared to current liability. This indicates proper financial condition of the company (www.inc.com, 2016).
This consists of contributed equity, Reserves, Non-controlling interests, Retained earnings/ (Accumulated losses). The amount for Capital structure of Equity for the year 2014 was $ 22,730 which grew to $ 26,450 in the year 2015. That means a very nominal growth by 1.16 times but this increase is quite substantial as the amount included retained earnings for $ 5,314 for the year 2015 which grew from $ (-482) in the year 2014, that means a growth by 11 times in the year 2015 from 2014.
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RATIO ANALYSIS |
2015 |
2014 |
||
|
JC |
JC |
JC |
JC |
|
|
DEBT EQUITY |
0.7321 |
0.611 |
||
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TOTAL LIABILITY |
19364 |
13888 |
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TOTAL EQUITY |
26450 |
22730 |
||
|
GEARING RATIO |
0.4227 |
0.379 |
||
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TOTAL LIABILITY |
19364 |
13888 |
||
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TOTAL ASSETS |
45814 |
36618 |
||
|
EQUITY RATIO |
0.5773 |
0.621 |
||
|
TOTAL EQUITY |
26450 |
22730 |
||
|
TOTAL ASSET |
45814 |
36618 |
Liquidity
The liability has increased compared to equity on the other hand the liability has also increased compared to assets. This indicates that the company has leveraged it position to invest in assets. The assets added in 2015 are funded out of debt not out of the equity. The acceptable level of leverage is better for every company (www.investopedia.com, 2016).
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RATIO ANALYSIS |
2015 |
2014 |
||
|
JC |
JC |
JC |
JC |
|
|
INTEREST COVERAGE |
4.4656 |
2.809 |
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|
EBIT |
1170 |
958 |
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|
INTEREST |
262 |
341 |
The increase in bottom line and the EBIT figure is indicating better interest coverage position for the company in 2015. The net profit is at the comfortable level despite increased leverage position of the company in 2015.
Three main sections of company’s net cash flow areas
Receipts from customers.
Cash acquired from business combination, net of considered cash.
Proceeds from sale of assets.
Section showing strongest net cash flow Receipts from customers.
The reason for its strong net cash flow from investing activities—due to two factors the cash flow from this sector is strong because of sale proceeds from asset sales and from business combination cash gain after netting off consideration.
Despite payment of the borrowed amount in 2015, the company has managed to hold on to $5962000 in 2015. This indicates better financial condition and the cash position of the company (www.inc.com, 2016).
The company is in competition with a few company’s who are in the similar business in the Australian region. The main competitors are
Adairs Limited: this company is one of the main competitors of Joyce Corporation Ltd. It has five types of store formats like Adairs, Adairs Homemaker, Adairs Outlets, Urban Home Republic (UHR) and Adiars. This company is in retail business of home furnishings and home wares.
Kingform Health Home textile Group Limited: this is a holding company dealing with home textiles like quilt, memory pillow, microfiber quilt bedding sets, fabric microfiber filling polyester cotton, embroidery pillow, silk jacquard bedding sets.
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RATIO ANALYSIS |
2015 |
2014 |
||
|
JC |
JC |
JC |
JC |
|
|
P/E RATIO |
9.5062 |
0.895 |
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MARKET PRICE |
1.54 |
0.51 |
||
|
EPS |
0.162 |
0.57 |
Company’s share prices as on 30th June, 2015—$ 1.08 per share. Company’s share prices is as on 30th June, 2014–$ 0.51 per share. The share price has jumped by almost 2.11 times per share within a span of 1 year from $ 0.51 in 2014 to $ 1.08 in 2015. Due to better financial performance the market price has doubled with in the span of one year. The P/E has also improved along with better performance of the company (Google, 2016).
References:
Drake, Pamela Peterson, 2015. Financial ratio Analysis. [Online] Available at: https://educ.jmu.edu/~drakepp/principles/module2/fin_rat.pdf [Accessed 19 September 2016].
Edmister, R.O., 1972. An Empirical Test of Financial Ratio Analysis for Small Business Failure Prediction. [Online] Available at: https://journals.cambridge.org/action/displayAbstract?fromPage=online&aid=6318448&fileId=S0022109000017567 [Accessed 13 September 2016].
Google, 2016. Joyce Corporation Ltd. [Online] www.google.com Available at: https://www.google.com/finance?cid=680892 [Accessed 19 September 2016].
Joycecorp, 2016. ABOUT. [Online] joycecorp.com.au Available at: https://joycecorp.com.au/ [Accessed 18 September 2016].
Joycecorp, 2016. Corporate History. [Online] joycecorp.com.au Available at: https://joycecorp.com.au/index.php/corporate-history/ [Accessed 16 September 2016].
Myaccountingcourse, 2016. Financial Ratio Analysis. [Online] Available at: https://www.myaccountingcourse.com/financial-ratios/ [Accessed 19 September 2016].
Nigudkar, A., 2016. How to Analyze Financial Health of a Company in 6 Easy Steps. [Online] www.financewalk.com Available at: https://www.financewalk.com/financial-health-company-analysis/ [Accessed 13 September 2016].
www.inc.com, 2016. Cash Management. [Online] Available at: https://www.inc.com/guides/finance/cashmanagement.html [Accessed 18 June 2016].
www.investopedia.com, 2016. Ratio Analysis. [Online] Available at: https://www.investopedia.com/terms/r/ratioanalysis.asp [Accessed 15 Augustus 2016].