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In this report we will be discussing several points and aspects of Harvey Norman Ltd and Myer Ltd. Various analysis and financial aspects will be discussed to identify many important points that will depicts in which company investors should invest their money in the long run. Ratio analysis and profitability of both companies has been taken into consideration to evaluate the similarity between both companies. There are complete study has been made on Liquidity ratio, profitability ratio and other financial analysis to grasp the clear view point on the both companies.
Harvey Norman is comprised of complex set of activities and providing its services and goods all over the world either online or via its retail stores. On the other hand Mayer is also working in the retail industry offering market and has been providing its services all over the world since the long time. Both companies are following international polices and frameworks in order to create customized product as per the needs and demand of the customers.
Is it appropriate to compare between Harvey Norman Holdings Ltd and Myer Holdings Ltd? Why or why not? To what extent are these two entities similar or different in terms of their structure and line of business? You may use additional resources for answering this part. If you use additional resources, they must be referenced (Harvard) in your report.
Yes it is appropriate to make compression between Harvey Norman and Mayer Ltd as both companies are engaged in retail industry sector for providing and distribution of goods and services all over the world.
With the complete level of facts and aspects shown in the financial statement of both companies we could easily bifurcate identification and difference between companies.
Similarities between Harvey Norman and Mayer Holding Ltd
Differences between Harvey Norman and Mayer Holding Ltd
Both companies are using international strategies to customized products as per the consumers demands and needs in the market
Harvey Norman follows different stargazes and different time. as some of the places where franchises contract has been made standard product are produced
All the strategically decisions are taken at the top levels in both companies
Mayer Holding has centralized approach in several decisions which are core to the company’s success.
Structure of both companies are comprised debts and equity
Harvey Norman has high level of debts portion in its capital structure.
Being a financial advisor of clients compute the required ratio of both companies and identifies whose shares are more beneficial for the investors in the long run?.
Computation of ratio of Harvey Norman and Myer holding Ltd
Harvey Norman2014( Amount AUD $ '000)
Harvey Norman 2015 ( Amount AUD $ '000)
Myer holding Ltd 2014 ( Amount AUD $ '000)
Myer holding Ltd 2015 ( Amount AUD $ '000)
Total share holders’ equity
Net Profit Margin ratio
Average Account Receivables
Receivable turnover Ratio
Average stock turnover of the company
This above computation has been made to identify both company’s performance and how they are working during two years. Being a financial advisor I have observed all the relevant aspects of the financial statement in which liquidity ratio, Quick ratio, Assets turnover ratio, and Profit margin ration have been computed above (Hymowitz, 2013).
Current ratio is the ratio which establishes the relation between current assets and current liabilities of both companies. In this computation current ratio of Harvey Norman is more than 1 which is showing that company is having sound current payable capacity of the company as compare to Myer Ltd.
Current assets/ current liabilities
Net profit margin can be computed with the help of companies earning capacity and how both companies use their resources in order to earn more profit. Net profit earned of Harvey Norman is also quite good that is .70 which is far more than Myer Ltd profit margin .30.
Net profit margin/total sales
Solvency ratio-This ratio shows companies capacity to pay off its debts in limited time. This ratio is the main factors to the investors in determining their investment decision as finical risk and operating risk both are bases upon this ratio analysis. There is found that company Harvey Norman is having .060 solvency ratios which are also more than Myer Ltd .015.
a. Investment of the Harvey Norman in 2015 is AUD $ 21,425 24,912 which is also more than Myer Ltd investment amount in the capital market.
b. Total investment shown in the assets side of the balance sheet of the company
This complete level of aspects of financial results shown in the balance sheet of both companies depicts that Harvey Norman has been earning more profit and generated more assets to the companies. In addition to this financial risk with the amount invest by shareholders and debt holders are also very less. In the year 2014 Myer Ltd was performing very well but due to the high competition and high share market grabbed by the Harvey Norman in retail market company was facing lot of hurdles in its business functioning. Myer was showcasing slow growth in its earning capacity and assets turnover ratio is also not much effective. On the other hand Harvey Norman was observing changes in its value chain process system and current ration and profitably of the company has increased very high which has been computed above. Investors are the common persons who are having very short amount of information and in order to give them valuable advice on their portfolio Financial advisor should suggest investors to make investment in Harvey Norman Ltd as this company is giving high amount of return and making sustainable growth in the present time era with availed resources. Investment of Harvey Norman in other companies is also very effective that will gradually bring addition value in the assets of the company with high amount. Assets turnover of both companies depicts that Myer Ltd is blocking high amount in maintaining inventories for the production process whereas Harvey Norman was having .33 turnovers which is adequate enough for the proper running of the business.( Audit", 2014).
Both companies are making their consistent efforts to sell its produced goods to the consumers and generating high value to its stake holders at large. Harvey Norman and Myer Ltd are very much identical to each other with some difference. With the complete level of computation of annual report of both companies I have observed that all the investors should be making their investment in Harvey Norman as this company has been showing effective growing results throughout the time. Now I conclude up with my finical words that investors before their decisions needs to make financial analysis with the company’s performance in the long run (Goldston, 2010).
"Audit", 2014, International Journal of Stroke, vol. 9, no. S4, pp. 36-37.
"Audit: Abstracts", 2015, International Journal of Stroke, vol. 10, pp. 70-70.
Goldston, D. 2010, "Financial planning", Nature, vol. 454, no. 7205, pp. 680-680.
Hymowitz, C. 2013, "Financial planning", Bloomberg Businessweek, , no. 4351, pp. 53.