portfolio writing based on my project report in accounting course
chintamona
harvey_norman_1_0.docxHarvey Norman
Ratio Analysis:
Profitability Ratios:
Operating Margin:
Operating margin is a tool (ratio) which can be used to determine and analyze the strategy of a company regarding the operational efficiency and pricing. It is most of the times expressed as a percentage of the sales revenue. For HVN, operating margin for the last three years has shown a growth which means that the company is having robust procedures for operational efficiency and is having a suitable pricing strategy. Is also indicates that the company is having good cost control procedures in place as it is an indication of profitability and the operating margin of HVN has been increased by an increase of 4.15% from 2013 to 2014 which shows a high increment and this means that either the company has controlled the COGS and operating expenses or these were inherently low in these years, but this increment has been limited in 2015 by just having an increase of about 1%. This shows that again COGS and operating expenses became high.
Liquidity Ratios:
Current Ratio:
This is a liquidity and efficiency ratios which indicates the liquidity level of a company that to which extent is the company able to be converted into cash, or being more specific, it is a company’s ability to satisfy its short-term liabilities with its current assets. An ideal current ratio is 1:1 or 1: above1 because this situation means that the company is easily able to pay off its short term loans from the current assets. For HVN, current ratio has been stable at a robust level indicating its healthily able to pay off its short term debts from its current assets by having current ratio of 1.84, 1.27 and 1.31 in 2013, 2014 and 2015 respectively. However the ratio has slumped down in 2014 which means that the company didn’t had enough current assets in 2014, this could be also linked with the above ratio that increased operating margin may be due to the lessening of current assets like inventory due to higher sales in 2014.
Research Question:
Sustainability is one of the topics in the business industry these days, especially where big corporations are involved, the first question is about their environmental foot print, sustainable business policies and corporate citizenship. As in the annual reports of HVN, there is no information available on environmental or sustainable business issues.
