Annual Financial Report Business Liabilities

Question: Discuss about the Annual Financial Report for Business Liabilities. Answer: The liabilities of the company can be extracted from the balance sheet which summarises the financial position of the company as on June 30, 2016. The liabilities of the company have been sub-divided into two sections based on the respective maturity period. While the current liabilities reflect those with maturity period of lesser than one year, the non-current liabilities reflect those with maturity in excess of one year. The major liabilities associated with the company at the end of June 30, 2016 or FY2016 are stated below along with their respective values (JBHiFi, 2016). Trade and other Payables ($ 384.928 million or 65.5% of the total liabilities of $ 587.679 million) Provisions ($ 46.032 million or 7.83% of the total liabilities of $ 587.679 million) Current tax liabilities ($ 10.92 million or 1.86% of the total liabilities of $ 587.679 million) Borrowings ($ 109.736 million or 18.67% of the total liabilities of $ 587.679 million) Other non-current liabilities ($ 24.729 million or 4.20% of the total liabilities of $ 587.679 million) Based on the above, it is apparent that for the company, trade and other payables constitute a majority of the total liabilities as indicated in the computation done above. Hence, the majority of the liabilities of the business are of current nature only with the non-current liabilities having a small share and are dominated by borrowings only. This is majorly attributed to the nature of the business which is primarily merchandise based and hence there are creditors who are paid after a delay as credit period is provided as a standard business practice. Further, the presence of no short term borrowings augers well for the company as it reduces the overall debt and related interest payments (JBHiFi, 2016). The amount of cash that is raised through loans and repaid back can be stated using the cash flow statement of the company and also can be reflected from the changes in the balance sheet when the corresponding figures at the end of FY2016 are compared with those at the end of FY2015. No cash has been raised by the company through the mechanism of interest bearing liabilities in the year FY2015 and FY2016. This is apparent from the information extracted from the cash flow from financing which reflects cash being raised only on account of issue of fresh equity (JBHiFi, 2016). Repayment of borrowings in FY2016 = $ 30 million Repayment of borrowings in FY2015 = $ 40.113 million It is apparent from the above that higher repayments of loan were done by the company in the previous year i.e. FY2015 as compared to the current year i.e. FY2016. Clearly, this reflects well for the company as it indicates that the leverage level of the company is constantly decreasing (JBHiFi, 2016). Reference JBHiFi 2016, Annual Report 2016, JBHiFi Limited, Available online from https://www.jbhifi.com.au/Documents/Appendix%204E%20and%20Annual%20Report%20-%202016.pdf (Accessed on September 10, 2016).