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JB Hi Fi Reduce Debt Levels As Harvey Norman Increases Theirs

As Harvey Norman moves to increase its debit levels JB Hi Fi has moved to reduce their liabilities.

Over the past year, JBH has reduced its debt from AU$559m to AU$470m – this includes both the current and long-term debt.

With this debt payback, JBH currently has AU$72m remaining in cash and short-term investments for investing into the business. On top of this, the CE and appliance retailer has also generated cash from operations of AU$292m in the last twelve months, leading to an operating cash to total debt ratio of 62%, meaning that JBH’s debt is appropriately covered by operating cash.

In comparison Harvey Norman has ramped up its debt from AU$721m to AU$925m – this includes both the current and long-term debt.

With this rise in debt, HVN’s cash and short-term investments stands at AU$202m

Analysts claim that ‘With current liabilities at AU$917m, it appears that JB Hi Fi has maintained a safe level of current assets to meet its obligations, with the current ratio last standing at 1.32x. Generally, for Specialty Retail companies, this is a reasonable ratio since there is a bit of a cash buffer without leaving too much capital in a low-return environment’.