The short-term liquidity of JB HI-FI is captured by the capability company sell its assets to raise cash through calculation of metrics includes current, quick and operating cash flow ratio. Particularly, the average current ratio of the company is 1.47 that indicates that for every dollar earned, the company will get $1.47 presented in the asset to change into cash. JB HI-FI quick and cash ratio are getting highest ratio in 2015 while a decrease in 2016. However, it is a non-concern signs since company’s ratio is still above industry benchmark, which is 1, as the company still able to meet their current target. The composition of 75% inventory in current asset and trade credit, account payable in current liabilities is give JB HI-FI high stock turnover, which quickly converts into cash. …show more content…
Although company’s operating cash flow is under benchmark, their cash position of business at the end of 2016 is very healthy. Specifically, the company generated alone $3.954m on that year, they able to purchase PPE at $53,434 and also repay debts at $30,000. However, changing company’ product line via Omni distribution channels can be one of the key solutions improve its liquidity. 6.2 DEBT SERVICING – SOLVENCY BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB Over the last five periods, JB HI-FI major cash flow is from operating activities and the achievement of assets. Financial obligations such as debt are repaid directed from this source. Specifically, the interest coverage earnings have increased 37.75 and interest cover also increased 23.56. The ratio of debt/ cash flow from operating decrease, this indicates that debts can still be repaid with operating cash flow 0.6 years only. Generally, it believed that the company’s liquidity to repay short-term debts is positives while need more efforts to meet long-term