|BUSINESS ANALYSIS AND VALUATION | | | |DAVID JONES LTD | | | | | |BY SENIOR FINANCIAL ANALYSTS | |FROM | | | |[pic] | | | | | | | |[pic] | | | | |
TABLE OF CONTENT
DAVID JONES AND THE RETAIL INDUSTRY
PROSPECT OF THE INDUSTRY
CORPORATE STRATEGY ANALYSIS
PROSPECT OF THE COMPANY
EVIDENCE OF EARNINGS MANAGEMENT
TIME SERIES ANALYSIS
Evaluating Operating Management
Evaluating Investment Management
Evaluating Financial Management
CROSS SECTIONAL ANALYSIS
FORECASTS AND VALUATIONS
WORKING CAPITAL TO SALES
NET LONGTERM ASSETS TO SALES
COST OF EQUITY
COST OF DEBT
David Jones is one of the leading department chain-stores in Australia, consisting of more than 30 stores nationwide. Moreover, David Jones is the oldest department store in the world that is still trading under its original name. Throughout our efforts, we would like to find out whether the company can operate well and be prosperous in this new century, confronting with current and emerging challenges and difficulties.
David Jones takes differentiation competitive strategy by selling many exclusive brands and products to customers with high purchasing power. The company has recently launched a new David Jones Master Card with the expectation of high earnings growth. Besides, four-year store expansion and store refurbishment plan indicates that David Jones confidence in its business outlook. However, David Jones has to face weak sales due to economic recession, while its major competitor Myer is taking greater market share by targeting the lower income customers.
Based on accounting analysis and financial analysis have been performed in the report, we found no distinct evidence about earnings manipulation despite some areas of suspicion.
David Jones has been outperforming the retail industry over years. Sales kept increasing while cost of doing business kept declining over time. The company has been efficient in keeping most of the turnover ratios high. The only concern would be the increasing debt level that may affect company’s capital structure. High debt level may affect its credit rating and raise doubts about the company’s ability to repay debt as well.
Over the years, David Jones has been outperforming its close...
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