BAO1101 Accounting Analysis - Assignment Solution

(a) Brief Description of Each Company

	Harvey Norman (HVN: BHP)
Products	Franchising Operation Integrated Retail Business Property Development Digital System
Services	Harvey Norman operates under a franchise system in Australia and consistently delivers an unparalleled retail offering to Australian consumers with an extensive product range, cutting-edge technology and market leadership in key product categories.
Name of Chief Executive Officer or Managing Director	Kay Lesley Page
Salary of Chief Executive Officer or Managing Director	$3.12 million per annum
Profit and Loss after Tax	$377.03 million
Latest Dividend Paid	21¢ (11 Oct 2019)
Size of Business by Total Assets	$ 4.58 billion
Number of Employees	5,420
Share Price – 52 Weeks (High and Low)	High: 4.644 Low: 2.936

Table 1: Comparative Description of Each Company

(b) Graphs, Share price table and All Ordinaries Index of Each Company

Date	AORD Close	HVN Close
02/09/2019	6677.50	4.32
03/09/2019	6673.50	4.29
04/09/2019	6656.10	4.29
05/09/2019	6720.80	4.31
06/09/2019	6752.70	4.34
09/09/2019	6760.10	4.44
10/09/2019	6728.00	4.38
11/09/2019	6752.20	4.38
12/09/2019	6765.70	4.39
13/09/2019	6777.10	4.46
16/09/2019	6782.00	4.49
17/09/2019	6801.70	4.50
18/09/2019	6791.20	4.48
19/09/2019	6825.20	4.53
20/09/2019	6839.00	4.56
23/09/2019	6861.10	4.58
24/09/2019	6856.60	4.53
25/09/2019	6814.70	4.51
26/09/2019	6785.60	4.52
27/09/2019	6824.10	4.54
30/09/2019	6800.60	4.53
01/10/2019	6853.00	4.62
02/10/2019	6753.30	4.63
03/10/2019	6611.70	4.51
04/10/2019	6636.90	4.47
07/10/2019	6686.70	4.48

Table 2: Closing Prices of HVN with All Ordinaries Index from 02-September-2019 to 07-October-2019

Chart 1: All Ordinaries Index Chart

Chart 2: HVN Share Price Closing

Chart 2: HVN Share Price Closing Comparison with AORD

(c) Overview of Share price Performance

Strong financial health means that HVN's current cash and short-term investment investments will cover all of its expected obligation payments. This involves HVN managing its cash and costs properly, a major determinant for the health of the company. HVN seems to have used leverage well, producing a total operating money of 0.44x of the prior year's gross indebtedness. This is a strong sign that debt is fairly covered by money. The stock price of HVN is trading at below its true value which is currently low in terms of the market sentiment for the stock. The stock price of HVN is below the average of the group. (St, 2019). The stock dipped 12¢ on 3rd October when the index dipped by 141.6 points, after announcing the dividend the shares of HVN shows a strong future with the improving economic condition of the country. The broker indicated that the international company of Harvey Norman was a major driver of earnings growth, and shows signs of slowing in some countries during the second half of FY19. The international economic recession from the US-China war, in the time of monitoring of the trade war between China and the United States, benchmark rates and share prices are heavily influenced the international and domestic threat is unpredictable in the economy, where all the industries are impacted irrespective of their direct consequences. In this war Australia is suffering because the United States is its main strategic ally, while China is its main commercial partner. The battle could lead not to a US-centric economic system but to an economic system universal in the future. The threat of rough Brexit and challenging comparable for the group's activities in New Zealand (a region where Harvey Norman is aggressively expanding) are other winds to be competed for by Harvey Norman (Motley Fool Australia, 2019).