ACCOUNTING AND FINANCIAL MANAGEMENT

Accounting and Financial Management

Table of Contents

Executive Summary2

1. Introduction2

2. Trend analysis of Fantastic Holdings Ltd4

3. Vertical analysis of Fantastic Holdings Ltd6

4. Ratio analysis of Fantastic Holdings Ltd vs. Harvey Norman Holdings Ltd7

4.1 Profitability analysis11

4.2 Asset efficiency analysis12

4.3 Liquidity analysis14

4.4 Capital structure analysis18

4.5 Market performance analysis20

5. Limitations of the analysis21

References26

Accounting and Financial Management

Executive Summary

1. Introduction

Fantastic Holdings Limited (FHL) is engaged in the retail, manufacturing and import of household furniture in Australia. Its products include sofas, chairs, dining, entertainment products, products of bedroom, occasional products, storage products, office furniture, pillows, mattresses, pillows, and lamps. The company markets its products under the Fantastic Furniture, Plush, Dare Gallery and brand names Lecornu. The company also operates two manufacturing divisions, Fantastic Factory and Lounge Royal Comfort Bedding. On June 30, 2008, it operated 93 stores. Fantastic Holdings Limited is based in Sydney, Australia. FHL operates over 110 stores across five furniture retail chains including, national retailers Fantastic Furniture, Plush and Dare Gallery as well as Le Cornu in South Australia and the Northern Territory and the Original Mattress Factory in NSW. FHL is also Australia's largest sofa manufacturer, has one of the country's leading mattress manufacturers and operates a national supply chain to service all FHL's retail brands. FHL interesting facts:

FHL is listed on the Australian Stock Exchange (FAN).

Currently there are over 1400 people employed nationally.

The group achieved sales of over $400m in the 2009 financial year.

The LeCornu retail brand boasts the largest furniture showroom in the Southern Hemisphere.

Fantastic Lounge Factory has the capacity to produce over 155,000 lounges each year.

Royal Comfort Bedding has the capacity to produce over 500 mattresses a day.

Harvey Norman is a major Australian-based retailer of electrical, computer, furniture, entertainment and bedding products. It is indeed a franchise and the main brand owned by Harvey Norman Holdings Limited. There are more than 160 Harvey Norman stores in Australia, New Zealand, Slovenia, Ireland, Malaysia and Singapore altogether.Harvey Norman Holdings Limited is the franchisor of several other retail chains such as Australian Domayne, Space Furniture, household Ariston household and Joyce Mayne. Harvey Norman's operating structure is unusual in that each store department (bedding, furniture, computer and/or electrical) is operated by a separate franchisee. Thus many superstores are a combination of three or four separate businesses with each franchisee contributing revenue to Harvey Norman Holdings Ltd through lease payments and a portion of sales. ( Gebhardt, 2009)

As each section is a separate franchise the salespeople will only work within their franchise, for example, an employee in the computer department will generally not be permitted to assist customers in the furniture, bedding and electrical departments. Each department also has its own checkout for its products. The warehouse is shared by the separate franchisees.

2. Trend analysis of Fantastic Holdings Ltd

The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of wtlich form the basis of making the judgments about carrying values of assets and liabilities ...