Your parents are considering investing in David Jones Ltd (DJS) shares. They ask you, an accounting expert, to make an analysis of the entity for them. An extract from the five-year summary included in David Jones Ltd 2013 annual report is presented below. All figures are in thousands.

Required

(a) Prepare a 5-year trend (horizontal) analysis of sales, gross profit, department store EBIT, financial services EBIT and profit after tax using 2009 as the base year. Comment on the significance of the trend results.

(b) Calculate the following for 2013 and 2012:

1. Debt to total assets ratio.

2. Profit margin.

3. Asset turnover.

4. Return on shareholders’ equity.

5. Dividend payout.

(c) How would you evaluate David Jones Ltd’s profitability, solvency and investment potential?

(d) What other information may be useful in making a decision about investing in David Jones Ltd (DJS) shares?

Transcribed Image Text:

Sales Gross profit Department store-EBIT Financial services-EBIT Total EBIT Profit after tax Total assets Total liabilities Total equity Basic earnings per share (cents) Dividends per share (cents) DAVID JONES LTD Five-year summary 2009-2013 ($'000) 2013 $1845 012 706 144 99 532 49 466 148 998 101 554 1237785 436 689 801 096 19.2 17 2012 $1867817 699 830 104 995 49418 154413 101 103 1240 897 465 193 775704 19.4 17.5 2011 $1961744 767 269 199 003 47707 246710 168 139 1214550 429 070 785 480 33 28 2010 $2 053 087 815729 204 798 44 379 249 177 170 766 1194921 450 683 744 238 34 30 2009 $1985 490 786 146 184 377 41 274 225 651 156522 1124674 439 832 684 842 31.5 28