Evaluation Of Corporate Governance Principles And Financial Performance Of JB Hifi

Part 1: Correlation between the financial performances of JB Hifi with the corporate governance modal of JB Hifi

Corporate governance systems can be defined as the relevant policies and procedures established for directing and controlling an organization. The Board of directors holds the responsibility for developing and establishing an effective governance mechanism within an organization.

In this context, Australian Securities Exchange (ASX) has developed a Corporate Governance Council for maintaining a system of effective corporate governance within the business entities listed on ASX. The council has developed the eight ASX corporate governance principles that need to be followed by business entities in Australia for developing their corporate governance system. In this context, the present report is developed for examining the compliance of these principles by an ASX listed entity through analyzing the financial information disclosed in its annual report.

            The company selected for the purpose is JB Hi-Fi, a recognized retail company of Australia listed on ASX. In this context, the present report is developed for undertaking an evaluation of the financial performance of the company through the use of ratio analysis technique during the period 2017-2018. This is done mainly to evaluate whether the financial performance has met or exceeded the corporate governance model of the company that has been discussed in detail in the previous assignment. The director statement of the company has been analyzed for evaluating whether the Board’s appraisal matches or differ in accordance with its financial performance.

The correlation of the financial performance indicator with the ASX corporate governance principle is carried out for determining whether the strong model of the corporate governance of the company identified can also be ascertained from its financial performance. As such, it can be stated that the corporate governance model of the company evaluated in the previous assignment has been used for ascertaining whether its financial performance is in accordance with that estimated as per the model. This report is developed to be used internally by the independent non-executive board of directors of the company.  It has identified and discussed each of the ASX corporate governance principles for assessing their correlation with the actual translated financial performance in the years 2017-2018. 

This report will examine correlation between corporate governance modal reported in assignment one and actual financial performance of JB Hifi as reported in Annual General Financial Report. This will be performed through comparing level of financial performance required and actual financial performance reported in annual report. Assignment one has identified that JB Hifi has strong corporate governance and it is expected that it will have strong financial performance in accordance with strong corporate financial performance.

Evaluation of financial performance indicator provided itself in Assignment 1

Firstly, actual financial performance will be correlated with level of financial performance indicated under the points mentioned in strong financial performance criteria. Financial performance identified in first part will be correlated with the industry average provided. Statement by Chairman and board directors will be evaluated to report on how well JB Hifi has performed as per the financial performance indicated in the statement of Chairman and board of directors. Lastly, financial performance indicators are lined with the benchmark identified by eight corporate governance principles.

Evaluation of Corporate Governance principles and Financial Performance of JB Hifi

Part 1: Correlation between the financial performances of JB Hifi with the corporate governance modal of JB Hifi 

In order to identified the correlation between financial performance and corporate governance modal identified in assignment there is need to calculate various performance ratios of JB Hifi for year 2017 and correlate them level of performance measure to report on whether the corporate governance modal identified in assignment one matches the performance or not. As per assignment one, the corporate governance modal of JB Hifi is strong which indicates that there is need to find out whether financial performance indictor matches the corporate governance modal.

Financial performance of JB HiFi has been evaluated using the information provided in the Annual General Report of the company and this report can access from the website link: https://www.jbhifi.com.au/Documents/2017%20Annual%20Report.pdf .

There are various financial indicators provided in the assignment that can be used to assess the corporate governance modal identified in assignment one. Here it is need to evaluate the financial performance of JB Hifi as per the strong financial indicator provided itself in assignment. To evaluate the financial performance there is need to find the trend in various financial ratios during past years so that level (weak, semi strong and strong) of financial performance can be found and evaluated as per points mentioned in strong financial performance (Darweesh, 2015).

Following are very important financial performance indicators that are used to evaluate the corporate governance modal:

High range earnings before interest and tax % (EBIT): EBIT refers to income that has been earned by the company after bearing all the expenses except interest and tax. The high range of EBIT means actions of the board and other executive managers have helped to increase EBIT in recent year as compared to previous year. Following table shows EBIT percentage during last five years and its comparison with year 2017:

Evaluation of Annual General Report

EBIT margin = EBIT/Net Revenue

Financial Items	Years
	2013	2014	2015	2016	2017
	Amount in $ million
EBIT	$     177.75	$     191.12	$     202.58	$     222.32	$     308.10
Net Revenue	$  3,308.52	$  3,483.89	$  3,652.77	$  3,955.01	$  5,630.00
EBIT %	5.37%	5.49%	5.55%	5.62%	5.47%

(Morning Star, 2018)

Looking at the above table and graph it can be said that there has been no major change in percentage of EBIT during the last five years and in year 2017 the percentage has been decreased as compared to percentage in year 2016. Overall it can be said that EBIT performance is not strong or can be said that it is semi-strong.

High range net profit after tax % (NPAT): Net profit after tax is best measurement to performance of board of directors as per agency theory. The agents (Directors and managers) must work in best interest of owner’s (Shareholder’s) as per agency theory. The main desire of the owner’s of the company is to receive maximum return on their investment and it can be measured through evaluating net profit after tax. So as per corporate governance principles it is responsibility of board of directors and senior managers must formulate such strategies and polices that can help to earn maximum revenue to the company.

Net profit margin = NPAT /Net Revenue

Financial Items	Years
	2013	2014	2015	2016	2017
	Amount in $ million
Net Profit (NPAT)	$     116.63	$     128.45	$     136.51	$     152.18	$     172.40
Net Revenue	$  3,308.52	$  3,483.89	$  3,652.77	$  3,955.01	$  5,630.00
NPAT (in %)	3.53%	3.69%	3.74%	3.85%	3.06%

(Morning Star, 2018)

It can be said that NPAT (in %) has not met the performance measurement set under strong financial performance because during  the last five year board of directors and other senior managers has not worked in manner as required to increase the net profit after tax of the JB Hifi. It was highly expected from the board members and managers to deliver performance that requires maximization of shareholder’s wealth but it was seen from the above table that board members has failed to deliver what has been expected from them. So it can be said that JB Hifi has semi strong financial performance according to NPAT (Opanga, 2011).

High Range Share Price: Share price refers to the market price of ordinary share of a company. An increase in share price means increase holding period return of the shareholder over the period of time. Financial performance of company especially profitability has wide impact on the share price of the company. The below graph will show the share price movement of JB Hifi during the last five years.

Share price of JB Hifi has shown increasing trend during 2013 to 2016 but in year 2017 the share price of the company got decrease. The decrease in share price can have many reason behind it but it shows that board members has not taken any measures to maintain or increase the share price of the company. Therefore, JB HiFi has not strong share price during year 2017 when compared to previous year performance.

Evaluation of compliance with ASX Corporate Governance Principles

High Range Dividend Payment: Dividend payment refers to the return that company provides to their shareholder’s on the investment they make in ordinary share of the company. It is desire of shareholders to have maximum dividend from the company they invest in as it increases their overall wealth over the time period. The chart below depicts the dividend payment by JB HiFi over last five years. Dividend includes final dividend as well as interim dividend.

JB Hifi has made the significant efforts to deliver maximum dividend to their shareholders despite of low volume of profits in the respective year. JB Hifi has maintained increasing trend in dividend payment that clearly signifies that it has high range of dividend payments.

High range liquidity ratio: Liquidity means working capital that management keeps to finance the day to day working of the company operations. The most common ratios used to evaluate the liquidity are current ratio and quick ratio but among both liquidity ratios quick ratio is better as it provides true liquidity performance. Below graph will show the liquidity performance of JB Hifi during the last five years.

Quick Ratio: Quick Assets/Current Liabilities (Shah, Kouser, Aamir and Hussain, 2012)

Where, quick assets is equal to current assets less inventories less prepaid expenses

Financial Items	Years
	2013	2014	2015	2016	2017
	Amount in $ million
Current Assets	$     563.65	$     578.15	$     616.90	$     702.52	$  1,170.70
Inventory	$     426.00	$     458.62	$     478.87	$     546.44	$     859.90
Prepaid Expenses	$          4.26	$          3.71	$          3.94	$               –	$        29.80
Quick Assets	$     133.39	$     115.82	$     134.09	$     156.08	$     281.00
Current Liabilities	$     442.38	$     352.19	$     380.34	$     446.83	$     885.80
Quick Ratio	0.30	0.33	0.35	0.35	0.32

(Morning Star, 2018)

It is very important to maintain the proper flow of liquidity in the company in order to have enough working capital to finance the business. The above table and graph clearly shows JB Hifi has failed to keep enough quick assets to pay the current liabilities or short term liabilities on time. The ideal quick ratio must be approx 1:1 but for companies like JB Hifi there is definition of ideal quick ratio as they derive maximum current assets from the inventories. Although, management must work to improve the quick ratio over the years and make efforts not to fall below certain level but no such efforts has been seen from the management. In this regard, it can be said that JB Hifi has weak or semi strong financial performance (Aggarwal, 2013).

 Low range Debt/Equity Ratio: Debt Equity ratio refers to the leverage ratio as it measures proportion of debt in comparison to the proportion of equity. It is the desired of every company to maintain low debt equity ratio as it reduces the burden of interest and allow company to think heavily on the expansion due to major proportion of capital is finance from use of equity capital.

Correlation of Financial Performance with Industry Benchmarks

Debt Equity Ratio: Total Liabilities/Total Shareholder’s Equity (Sáenz González and García-meca, 2014)

Financial Items	Years
	2013	2014	2015	2016	2017
	Amount in $ million
Total Liabilities	$     599.48	$     565.21	$     551.53	$     587.68	$  1,598.80
Shareholders’ Equity	$     243.83	$     294.63	$     343.48	$     404.70	$     853.50
Debt Equity Ratio	2.46	1.92	1.61	1.45	1.87

(Morning Star, 2018)

On the basis of above chart and graph it can be said JB Hifi has very high debt equity ratio and in has increased in year 2017 as compared to year 2016. So it can be said that JB Hifi has weak financial performance as it very high debt equity ratio.

High range assets/liabilities ratio: This ratio also measures the leverage position of the company as it provides relation of assets and liabilities. This ratio indicates how much assets have been financed through use of liabilities or debt. In short, high level of assets/liabilities ratio will be preferable to the company as it indicates maximum use of equity capital to finance the assets.

Assets/Liabilities: Total Assets/Total Liabilities (Reddy and Locke, 2010)

Financial Items	Years
	2013	2014	2015	2016	2017
	Amount in $ million
Total Liabilities	$     599.48	$     565.21	$     551.53	$     587.68	$  1,598.80
Total Assets	$     843.30	$     859.84	$     895.01	$     992.38	$  2,452.30
Assets/Liabilities	1.41	1.52	1.62	1.69	1.53

(Morning Star, 2018)

The assets/liabilities ratio of JB Hifi for last five years clearly indicates that maximum part of assets has been financed through use of liabilities (debt). There was significantly decrease in this ratio during year 2017 as compared to year 2016. It clearly indicates JB Hifi has semi strong solvency position which clearly means it falls under the semi strong financial performance category.

High range efficiency index for CEO remuneration: Efficiency index of CEO remuneration indicates that does the increase in CEO remuneration has also increased the profit of the company.

Formula: (NPAT+EBIT/2)/CEO Total Remuneration

Financial Items	Years
		2014	2015	2016	2017
	Amount in $ million
CEO Total Remuneration		$          4.10	$          2.00	$          2.75	$          3.05
NPAT		$     128.45	$     136.51	$     152.18	$     172.40
EBIT		$     191.12	$     202.58	$     222.32	$     308.10
Efficiency index for CEO remuneration		54.64	118.90	95.76	107.03

(Morning Star, 2018) and (Annual Report, 2017)

Most likely it has been found that efficiency index of CEO has been increased in year 2017 as compared to previous year 2016 but in year 2015 JB Hifi has reported maximum efficiency of CEO. So, it was highly expected from the CEO, R. Murray that he will deliver maximum efficiency to maximise the profit. Looking at the efficiency of CEO remuneration ratio for last four years it has been found that current CEO has tried to increase the profit but he has not succeeded completely. So it can be said that JB Hifi has semi strong Efficiency index for CEO remuneration (Nicolaescu, 2012).

High Range Efficiency Index for Executive Director Remuneration: It is similar to above ratio but in this ratio remuneration of executive directors has been considered irrespective of CEO remuneration.

Formula: (NPAT+EBIT/2)/Executive Director Total Remuneration

As JB Hifi has same person as CEO and Executive Director, Mr. R. Murray, therefore above ratio will be same as in this ratio.

Assessment of Director Statement

High range return on assets (ROA): It is expected from the management that they must use the available resources in optimum manner so that they must derive maximum return on the assets used.

Formula: NPAT/Total assets (Mangunyi, 2011)

Financial Items	Years
	2013	2014	2015	2016	2017
	Amount in $ million
NPAT	$     116.63	$     128.45	$     136.51	$     152.18	$     172.40
Total Assets	$     843.30	$     859.84	$     895.01	$     992.38	$  2,452.30
Return on Assets	13.8%	14.9%	15.3%	15.3%	7.0%

(Morning Star, 2018)

It has been seen from the above table in year 2017; the return on assets has decreased to 7% in year 2017 as compare to 15.3% in year 2016. It shows management has failed to utilize the resources in optimum manner in year 2017. Through looking at the above table it has been found that JB Hifi has semi strong return on assets.

High Range Return on Equity (ROE): The return on equity is very important from the investor’s point of view as it provides exact percentage of profit earned by the shareholders on their investment.

Formula: NPAT/Shareholder Equity (Man, 2013)

Financial Items	Years
	2013	2014	2015	2016	2017
	Amount in $ million
NPAT	$     116.63	$     128.45	$     136.51	$     152.18	$     172.40
Shareholders’ Equity	$     243.83	$     294.63	$     343.48	$     404.70	$     853.50
Return on Equity	47.8%	43.6%	39.7%	37.6%	20.2%

 In year 2017, there has been great decline in return on equity ratio that clearly shows that board members and executives has failed to deliver that has been expected by them. So here, it is vital to tell that JB Hifi has semi strong return on equity (Lin, 2010).

Comparison of industry bench marks of financial ratios with financial performance ratio identified in above part

In order to compare the industry bench mark of financial ratios with financial ratios of JB Hifi, a table has been prepared below that shows detailed information of the industry benchmark and calculated ratios of company together with the explanation.

Ratios	Industry Benchmark (Ratios) (Year 2017)	Ratios of JB Hifi (Year 2017)	Comparison (Above or below the industry average)	Explanation
EBIT margin	9.41%	5.47%	Below the industry average	EBIT margin ratio of JB Hifi is below the industry that indicates weak financial performance of the JB Hifi during year 2017. Weak financial performance is due to very low EBIT in comparison to industry average.
NPAT Margin	5.41%	3.06%	Below the industry average	NPAT margin is far below the industry average that indicates the poor net profit ratio of the JB Hifi as compared to the industry average.
Liquidity Ratio (Quick Ratio)	1.44:1	0.32:1	Below the industry average	JB Hifi has very poor liquidity performance as it does not provide enough quick assets to pay the short term liabilities.
Debt/Equity Ratio	1.37:1	1.87:1	Above the industry average	As debt equity ratio of JB Hifi is very high that shows that there was high percentage of debt capital as compare to equity capital. It means it has very poor solvency ratio.
Assets/Liabilities	6.83:1	1.53:1	Below the industry average	The below performance of Assets/Liabilities as compared to industry shows that JB Hifi has weak or semi strong solvency performance.
Efficiency Index for CEO Remuneration	244.084	107.03	Below the industry average	Efficiency index of CEO is lower than the industry average that indicates poor performance of CEO of JB Hifi.
Efficiency Index for Executive Director Remuneration	819.767	107.03	Below the industry average	Efficiency index of CEO is lower than the industry average that indicates poor performance of Executive Director of JB Hifi.
Return on Assets (ROA)	2.69%	7.00%	Above the industry average	Return on assets is very high as compare to industry average that shows strong profitability performance as compare to industry.
Return on Equity (ROE)	8.54%	20.2%	Above the industry average	Return on equity is very high as compare to industry average that shows strong profitability performance as compare to industry.

(Hong and Nguyen, 2017) and (Morning Star, 2018)

 Analysis of director statement for year 2017 and comparison financial performance reported by directors and actual financial performance reported in the financial statement of JB Hifi

On the basis of analysis it has been found that directors has mainly focused on those performance measure that shows positive results and completely ignores financial items that reflects poor financial performance. In the director’s statement the change in profitability measures during year 2017 as compared to year 2016 has been reported as it shows positive results but it has ignored actual performance in the same year that can be accessed by ratio analysis. It can be seen through below picture taken from the director statement given in annual report

(Source: Annual report, 2017, Web Link: https://www.aspecthuntley.com.au.ezproxy.usq.edu.au/asxdata/20170915/pdf/01896440.pdf )

It has been mentioned in director statement that sales has been increased in year 2017 which is true but it there is need to check the increase in cost of sales which was more than the increase in sales and same has not been reported in the director statement. Earnings per share and dividend per share has been increased in year 2017 as reported in the director statement and it true as per the financial performance reported in the financial statement.

Assessment of Chair Persons statement

The performance of JB Hifi has been segmented in two major areas JB Hifi Australia and JB Hifi New Zealand as reported in the director statement. Segmented results of the areas are reported as below in the statement

(Source: Annual report, 2017, Web Link: https://www.aspecthuntley.com.au.ezproxy.usq.edu.au/asxdata/20170915/pdf/01896440.pdf )

(Source: Annual report, 2017, Web Link: https://www.aspecthuntley.com.au.ezproxy.usq.edu.au/asxdata/20170915/pdf/01896440.pdf )

It has been form the above divisional performance chart that performance of New Zealand Division has decreased while JB Hifi Australia Division shows positive results. When a result of both the divisions has been group to measure the group performance, it has been noted that results shows same performance as the group financial statements. Overall it can be said that director statement has shown positive results as well as negative results of the company which clearly indicates there was no difference between financial performances as depicted by directors and as provided in the financial statements (Annual Report, 2017).

 Link between the financial performance indicators identified in this report with the bench mark under corporate governance principles identified in assignment one

The compliance of the ASX corporate governance principles and guidelines by the company can be assessed by benchmarking it against the financial performance indicator as follows:

Principle 1: Developing Solid Foundations for Management and Oversight

ASX listed business entities such as Jb Hi –Fi, need to provide all the roles and responsibilities of the board and management. The company in its corporate governance statement has clearly stated the diverse roles and responsibilities of the Board and the management. It has also been illustrated that company is having strong corporate governance statement in the previous assignment.

Jb Hi-Fi as per the principle of ASX recommendations has maintained an effective internal control by effective segregation of the responsibilities between the executives and the Board. As per the agency theory, the board is responsible for protecting the interests of the stakeholders by taking the decisions that result in maximizing the profitability of a company. The major responsibility of the Board in this context can be stated to hiring the CEO and evaluating the company performance. The Board and management needs to protect the interests of the shareholders and provides maximum return to them for maintaining their interest within the company’s operations (Baek, Kang and Park, 2010).

This corporate governance principle can be effectively benchmark against the financial performance indicator of the high range of dividend payments. The company is delivering increasing returns to the shareholders as analyzed from the financial results obtained of the dividend payout ratio of the year 2013-2017. Thus, it can be said that its strong corporate governance model is reassessed as per the company’s financial performance also (Annual Report, 2017).

Conclusion

Principle 2: Structuring to Board to add Value

ASX has stated that the Board needs to have effective composition for adding value to the company. The Board needs to have members belonging to different expertise and backgrounds as per the size of the company. It possesses an effective blend of expertise and professionals in its Board that are responsible for creating value for the company. The various members of Board include members from different backgrounds such as finance, management, retail and governance as illustrated in the previous assignment.

The Board composition includes non-executives directors out of which the majority one’s are independent and the company is regarded to strong comply with this corporate governance principle. It can be stated as per the theory of resource dependency that a larger Board may results in greater supervision of management, diverse pool of experience and gaining access to different range of resources (Levišauskait?, 2012). Thus, it can be said that larger size of Board may also significantly results in delivering high profitability and market value due to presence of higher expertise and skills of different Board members (Corporate Governance Statement, 2018).

However, it has been illustrated from the financial indicators of Earnings before interest and tax (EBIT) and net profit after tax (NPAT) that the returns realized by the company is semi-strong as its profitability position has not increased over the period 2013-2017. Thus, it can be said that the strong Board size as illustrated by the corporate governance model of the company assessed in the previous assignment has not been supported by its financial performance indicator (Annual Report, 2017).

Principle 3: Ethical and Responsible way of Acting

Jb Hi-Fi as per the ASX principles of corporate governance need to have established an effective code of conduct for providing guidance to the directors and executives for meeting their roles and responsibilities. The code of the conduct has established that the company needs to have safe working environment for maintaining the integrity and transparency in the business operations (Leung and Horwitz, 2010). The companies abiding with the ethical principles and guidelines have high value within the market due to their goodwill and thereby lead to increase in the share price. However, it has been illustrated that the share price of the company has decreased significantly in the year 2017. As such, it can be assumed that the goodwill of the company has decreased significantly in the year 2017 as compared with the previous year performances.

Principle 4: Integrity in Corporate Reporting

It has also been illustrated from the Assignment 1 that Jb Hi-Fi has maintained strong integrity in its financial reporting process as per the Corporations Act. It has provided all the relevant financial information to the stakeholders which can also be illustrated from the calculated financial ratio’s that are based on the information extracted from the financial reports developed by the company on a continuous basis (Corporate Governance Statement, 2018).

Principle 5: Timely and Balanced Disclosures

Jb Hi-Fi as per the ASX governance principles has adopted a continuous disclosure policy for providing timely and balanced financial information to the stakeholders. In this context, the company develops and discloses the financial information in its annual report in a balanced and timely manner (Lama, 2012).

Principle 6: Shareholder’s Rights

It has also been stated by the ASX principle that company need to make regular announcements regarding its key financial performance areas through developing annual reports, market announcements and through other public disclosures to provide relevant information to the stakeholders. The various financial ratios calculated by the company for the year 2017 have indicated that its financial performance has been disclosed to the shareholders through stating the values of key financial items.  The key financial items disclosed in the financial statements have been sued for calculation of the financial ratios of the company to assess its performance (Annual Report, 2017).

Principle 7: Recognizing and Risk Management

  The company as per the ASX principle needs to have an effective risk management framework for identification of any potential financial or operational risk in advance so that effective steps can be taken for resolving it. In this context, the company conducts an external audit of the company on an annual basis for ensuring that the financial information delivered to the stakeholders is accurate. However, it lacks an internal audit that is also essential for identifying the internal risk that can impact its financial performance in the future context (Corporate Governance Statement, 2018).

Principle 8: Fair Remuneration

It has been illustrated from the corporate governance model of the company that it has developed an effective remuneration committee for ensuring that the executives and directors are provided with fair remuneration. The fact is also supported by the financial performance indicators of the ratio’s depicting CEO and executive remuneration that the company is providing maximum efficacy index for their remuneration. Thus, the company remunerates the executive and directors in a fair manner (Ersoy, 2012).

Analysis of financial performance appraisal by the Chair Person and comparison with the financial performance reported in financial statements

In the chairman and CEO report or statement it has been clearly mentioned that year 2017 was a great success in the history of company which is partially correct as sales has increased but on the contrary cost of sales and other operating expenses has also increased.

The proportion of increase in cost of sales was much as compare to increase in sales. The Chairman statement does not show any sign of increase of expenses during the year 2017 which was not fair as it is very significant item of financial statement. No doubt NPAT of the company has increased by 13.3% which is very low in comparison to increase in sales of 42.3% (Annual Report, 2017). It shows that, Chairman has missed very important part of the financial performance that has to be included his statement. A small preview of chairman statement can be seen in below picture.

(Source: Annual report, 2017, Web Link: https://www.aspecthuntley.com.au.ezproxy.usq.edu.au/asxdata/20170915/pdf/01896440.pdf )

In the chairman statement it was mentioned that balance sheet indicates improved financial and operating leverage ratio which is completely wrong as debt equity ratio has been increased in year 2017 as compared to previous year. Below image reflects the same

(Source: Annual report, 2017, Web Link: https://www.aspecthuntley.com.au.ezproxy.usq.edu.au/asxdata/20170915/pdf/01896440.pdf )

Overall it can be said that chairman report has highlighted only the positive points and ignore the weak performance of the company in year 2017 which is not fairly correct on the part of company chairman and CEO. Lastly it can be said that financial performance reported in financial statement differs from the financial performance reported in chairman report (Annual Report, 2017).

Conclusion 

On the basis of overall analysis of financial performance reported in the annual general financial report and its correlation with the corporate governance statement it has been found that there was negative correlation or no relation between the corporate governance reported in assignment 1 and financial performance found in this assignment.

As it was assessed in the assignment 1 that corporate governance was very strong and on the basis of that it was expected from the management and board of directors that they must deliver strong financial performance in year 2017. The detailed analysis of financial performance of JB Hifi of year 2017 shows that it has semi strong performance in major of the financial indicators and in few financial indicators it shows weak financial performance. So it can be said that there was no correlation between corporate governance reported by JB Hifi and its financial performance reported in annual general financial report.

Reflection Report

This assignment has enhanced my knowledge regarding the importance of complying with the ASX corporate governance best practices by the business entities operating within Australia. The importance of developing an effective system of corporate governance has been provided by the assignment. Also, the principles that are developed by the ASX Council for improving the accountability within the business operations have been understood through the assignment. The use of the ASX corporate governance principle for benchmarking the financial performance of the company has been understood after the assignment completion. The correlation developed in the assignment between the corporate governance model and the financial performance indicators have widened my understanding of the regarding how companies performance can be evaluated with the use of corporate governance mechanisms.  

I did not have any information regarding the accountability, integrity and transparency maintained by the company JB Hi-Fi before carrying out the assignment task. However, after carrying out the assignment my level of knowledge regarding the company do operational activities and the governance systems have significantly improved. The significance of presence of effective governance practices within an organization to deliver maximum return to the shareholders has been achieved through completing the assignment task. As such, I became aware of the importance of corporate governance legislations and ASX reporting requirements for protecting the interests of the stakeholders of a company.

The assignment has also improved my knowledge of the various ASX listing rules that requires the companies to continuously disclose the financial information. It has improved my knowledge of the various ASX listing rules that are developed for reporting entities. Also, before carrying out the assignment task did not possess the knowledge regarding analyzing, reviewing and interpreting the various information disclosed in the annual report of a company. However, my analytical and literacy skills has significantly improved after carrying the assignment as I possess adequate knowledge in relation to identification, location, evaluation and application of the information in relation to a particular issue. The improvement in any literacy skills and the wide information gained as result of the assignment completion will help me to a large extent in reviewing and evaluating the financial worth of any other company.

 References

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Annual Report. 2017. JB Hifi. [Online]. Available at: https://www.jbhifi.com.au/Documents/2017%20Annual%20Report.pdf [Accessed on: 25 October 2018].

Baek, Kang, and Park, K. 2010. Corporate governance and ?rm value: Evidence from the Korean ?nancial crisis. Journal of Financial Economics 71, 265–313.

Corporate Governance Statement. 2018. Corporate Governance. [Online]. Available at: https://investors.jbhifi.com.au/corporate-governance/ [Accessed on: 25 October 2018].

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