Harvey Norman Case Study

Topics: Harvey Norman, Money, Gerry Harvey Pages: 4 (1192 words) Published: May 28, 2011
Business studies

Harvey Norman Holdings Ltd is a public company in the secondary sector engaged in selling products for households and offices they include Electrical, Computers & Communications,  Small Appliances, Furniture, Bedding & Manchester, Home Improvements, Lighting and Carpet & Flooring. As a franchisor Harvey Norman grants franchisers to independent business operators, there are many stores in Australia, New Zealand, Slovenia, Ireland, Singapore and Malaysia. Harvey Norman is Australia’s is leading the retail chain. The Harvey Norman success started as a independent electrical appliance store that was opened by the company chairmen Gerry Harvey with the retailer Ian Norman at a site of a former auction house in Sydney suburb of Arncliffe at the date of 1961. A public company is a company that has issued shares to the public to buy and is traded on the stock exchange. When becoming a public company it allows the market to find out the value of the whole company through daily training.

The working capital of Harvey Norman in the year of 2009 was not that great ,It was 1.11:1 it is still a decent ratio but not enough to be able to pay off bills and other expenses. An average ratio would be on the mark of 1.5:1 but it isn’t that great so the most preferable ratio is 2:1 but in the year of 2010 the ratio is 1.61:1.Harvey Norman has increased their working capital over 1 year and is over 1.5:1 (average) but not as good as 2:1 Harvey Norman can still pay off debts and if they continue this improvement they will reach 2:1 soon but if the ratio is over 5:1 there is too much cash flow and the business should spend that money on the business.

Comments on the cash flow

Total revenue received from franchisees increased from $976.61 million for the past year to $1,024.18 million for the year that has ended on 30 June 2010, an increase of $47.57 million has been gained.

Net GST payments increased by...
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