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Report On Financial Analysis Of Joyce Corporation As Per The Financial Statement

Question

Task: Provide a brief but valid financial analysis of Joyce Corporation Ltd.

Answer

Introduction
Joyce Corporation is an ASX listed company, which has its chief operative area in the market of Kitchenware, House Furnishing, Auctioneers and Bidders. The headquarters of the Joyce Company is located at Perth, Western Australia. The company has divided its organization into four different units which are Wall span dealing with Kitchens & Wardrobes, Kitchen Connection dealing with kitchen, Lloyds dealing with Auctioneers & Valuers, and Wardrobes and Bedshed dealing with the market of all bedroom related furnishing. As these divisions come under the Joyce corporation, all of them are listed under the Australian Securities Exchange i.e. the ASX consequently. Although the company had started to concentrate on the property business, the action had resulted in divestment of the company property. Later the company had started the business producing Foam and furniture in the market. This company was being launched in 1886 in Osborne Park of Australia (Joycecorp, 2016).

The Joyce Corporation retains an overall total of 44 stores that employees 209 workers who are working under the afore mentioned 4 business units. The major focus of the company is in Bedshed Franchising and Company Stores. The corporation owns a large network of outlets, stores, franchising offices, etc. The majority of the stores operated under the company are dealing with retail-level business in the kitchen industry. Another section of the company, i.e. the KWB Group Pty Ltd is being provided with the responsibility of handle business in kitchen designing and wardrobes market. The retail stores which operates in business of furniture retain an exquisite collection of bedrooms designing products which are facing great requirement and demand from the Western Australia, Queensland, South Australia and Victoria (Joycecorp, 2016).

Profitability: Joyce Company inherits a history of 130 years in the market which is headquartered at the Perth of Western Australia. Although being an international company most of the business share of the company is from Australia itself. If analyzed the transactions and financial ratios of the company in the previous two years, it could be contemplated that its business has multiplied exponentially with time. If compared to the financial statistics of 2015 from 2014, it could be observed that the company has made much progress in the revenue acquisition. It was being decided by the company that all of its stores and warehouses should be associated in a single location, which was planned to be either in Perth or another location which facilitates the cost-effective conduct of logistics. The company’s Bedshed outlets are all positioned in the states of New South Wales, Western Australia, and Queensland. The organization had started its renting and leasing business by lending out the properties in New South Wales. Thereafter the company expanded its business in other fields like beds, wardrobes, beds for kids, designing items for the kitchen, bed linens, etc. (Drake, Pamela Peterson, 2015).

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%

GP

17259

 

854

 

SALES

34737

 

12657

 

NET PROFIT MARGIN

 

15%

 

12%

PAT

5221

 

1570

 

SALES

34737

 

12657

 

From the above table, it could be calculated that the net profit accrued in the business year 2014 which amounted to $ 1,570,000 was around 1.5 times the profit made in the financial year of 2013 which was $ 668,000. The profit of the company enlarged from the amount of $ 1,570,000 obtained in the year 2014 to a whopping profit of $ 5,221,000 that was around 3.325 times as compared to the previous year. This statistical trend of accelerated growth signifies that the company is in the right path of strategy building and operations and well justified from the fact that its profit increased from a mere amount of $ 668,000 in 2013 to a giant figure of $ 5,221,000 obtained in 2015. If analyzed the figures for 2013 with those of 2015, it could be observed that the profit has multiplied to 8 times in the time period of 2 years. This tremendous growth in the Joyce corporation signifies a positive route of the voyage in revenue and the company margin (Edmister, 1972).

Asset Efficiency: The total extent of the Joyce Corporation has accumulated from the amount of $ 5,464 in the year 2014 to $ 32,866 in 2014 which was approximately 6 times the amount accrued in 2013. This increase in the asset signifies the tremendous growth in operation and profit of the Joyce Corporation and if maintained the present course, the company will be a major threat to other companies.

RATIO ANALYSIS

2015

2014

 

JC

JC

JC

JC

DAYS INVENTORY TURNOVER

 

44.8262

 

180.943

AVERAGE INVENTORY X 365

783472.5

 

742410

 

COGS

17478

 

4103

 

ASSETS TURNOVER

 

0.8428

 

0.34188

TOTAL SALES

34737

 

12657

 

AVERAGE ASSETS

41216

 

37022

 

DAYS DEBTOR TURNOVER

 

5.21699

 

20.4604

AVERAGE DEBTORS X 365

181222.5

 

258967.5

 

SALES REVENUE

34737

 

12657

 

If taken a look at the above-given table, it could be detected that the turnover days of the inventory has increased in a very rapid way. The year of 2015 had witnessed a growth of day inventory turnover from 45 days to that of a respectable figure of 181 days. The figures of day inventory turnover indicate that the rollover statistics of the company has increased. The increase in the figure of rollover eventually results in an enhanced and uplifted level of sales. It is not needed to specially mention that the higher level of sales will result in a higher bottom line and outcome for the company. If evaluated it can be perceived that the turnover for the company has increased in 2015 contributing to the asset turnover growth of 0.84. These improved figures reflect the brilliant effort put forward by the management of Joyce Corporation in asset management. Apart from this the development in the figures of the debtor’s turnover days point out that the officials in the company are dealing with the receivables in a proper manner thus making it sure that the collection of receivables is done punctually (Myaccountingcourse, 2016).

Liquidity: If the considered the financial ratio of cash position, the denomination at $ 816 in 2014 which elevated to a towering figure of $ 5,962 in 2015. This figure signifies that the company had accumulated cash in hand up to 7.3 times it had a year ago. These figures also contemplate that the company has improved its business operations in a year. Although most of the financial ratios have shown positive development, it should be noted that the expenditure for employee payroll and supplier payment has increased by 2.13 times from 2014 to 2015. The company may perform better if this aspect should be controlled by the management.

RATIO ANALYSIS

2015

2014

 

JC

JC

JC

JC

CURRENT RATIO

 

2.45708732

 

1.37736325

CA

32866

 

5464

 

CL

13376

 

3967

 

QUICK RATIO

 

2.29373505

 

1.27249811

CA-INVENTORY

30681

 

5048

 

CL

13376

 

3967

 

 

Even though the company had faced the period with the low collection and lesser inventory, it had portrayed better and evident performance in the year 2015. The company had also signified a better improvement in quality. The present statistics of the company denotes the stabilized financial position of the company (www.inc.com, 2016).

Capital Structure: The capital structure of Joyce Corporation involves the factors like Non- Controlled interest, contributed equity, accumulated losses / Retained earnings, and Reserves. According to the recent statistics of Joyce Corporation, the capital structure of equity pertaining to the financial year of 2014 which amounted to $ 22,730 increased to $ 26,450 in 2015. Even though shows a simple increase of 16%, the advance is very significant as the amount of $ 5,314 was generated by it in the year 2015 i.e. $ 482 increase if compared to the year 2014. This data specifies a giant growth of 11 times that from 2014 to 2015.

RATIO ANALYSIS

2015

2014

 

JC

JC

JC

JC

DEBT EQUITY

 

0.7321

 

0.611

TOTAL LIABILITY

19364

 

13888

 

TOTAL EQUITY

26450

 

22730

 

GEARING RATIO

 

0.4227

 

0.379

TOTAL LIABILITY

19364

 

13888

 

TOTAL ASSETS

45814

 

36618

 

EQUITY RATIO

 

0.5773

 

0.621

TOTAL EQUITY

26450

 

22730

 

TOTAL ASSET

45814

 

36618

 

As compared to the equity of the company the liability has also mounted if considered with the assets. It should be ascertained from it that the Joyce Corporation had focused more on investing in its assets in order to upgrade its position in the market. The supplemented assets in the tear of 2015 were blackened from loans and debts rather than from the equity. Most of the companies maintain a certain level f leverage to enhance their assets (www.investopedia.com, 2016).

Interest Serving Ratio

RATIO ANALYSIS

2015

2014

 

JC

JC

JC

JC

INTEREST COVERAGE

 

4.4656

 

2.809

EBIT

1170

 

958

 

INTEREST

262

 

341

 

By observing the above table, you may have noticed that the figures of EBIT and Bottom line is increasing. This though indicates the improved coverage position of interest in the Joyce Corporation in 2015. Although the leverage and debt level of the company are high in 2015, the profit generated per year is in respectable figures.

Cash flow: The net cash flow of the Joyce Corporation could be classified into 4. They are: -

  1. Income occurred from selling assets.
  2. Revenue from the customers.
  3. The returns gathered from the combination of business, net of considered cash.
  4. The segment displaying sound net cash flow from customer receipts.

The sound and strong yearly cash flow for the purpose of investing activities are happening because of 2 features which are the strong inflow cash from the sales of assets and the returns gathered from the combination of business, net of considered cash.

The company had paid off its debts and leverages in the year 2015. Even after the payment of debts, the company was able to withhold the total asset of $5962000. It could be understood from this that the Joyce Corporation is having a stabilized position in the market with a better financial position (www.inc.com, 2016).

Market Performance: If contemplated the case of Joy Corporation, it has a few competitors who are also doing well in the domestic market of Australia. The major challenges of Joyce Corporation are: -

Kingform Health Home Textile Group Limited: This company is a property dealing company that also trades in textile items for the household purpose like quilt bedding sets with microfiber, microfiber fabrics stuffed with polyester cotton, silk jacquard bedding, memory pillow, embroidery pillow, quilt, etc.

Adairs Limited: This company is one of the major challenges to the business of Joyce Corporation. The major field of Adairs limited is in the retail market of Homewares and furniture for the home. The company is equipped with various types of stores of which 4 kinds are a major one. They are: -

Adairs Outlets, UHR/ Urban Home Republic, Adairs Homemaker, and Adairs.

RATIO ANALYSIS

2015

2014

 

JC

JC

JC

JC

P/E RATIO

 

9.5062

 

0.895

MARKET PRICE

1.54

 

0.51

 

EPS

0.162

 

0.57

 

As per the ASX records the company retained the share price of $ 1.08 on 30th June of 2015. If we looked at the share price of the company on 30th June 2014, it was only $ 0.51 per share. If calculated it could be observed that the company share of the Joyce Corporation has boosted to 2.11 times in the span of 1 year i.e. from 2014 to 2015. This increase in price occurred due to the excellent performance put forward by the company in the financial aspect. Along with these aspects and ratios, the P/E of the company has also increased by the thrust of excellent performance (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 the 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].


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Joyce Corporation Financial Analysis Assignment


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