big jump in profit with big fall in price, page-24

Another thread under the same title seems to have started up under the same name so I will re post this for the benefit of any one who missed it by trying to click on just thread...

I'm just having a look at their half yearly report ending 31 DEC 07. Comsec seem a little slow to update their info.

By my calucaltion the debt/equity ratio is 87% which is still highter than their sector and market.

A measure of company's ability to repay debt is its Current Ratio (defined as current assets / current liabilities).

JBH have a current ratio of 1.7 now not 1.37 which comsec claim. This is about par for their sector.

However the majority of their current assets is inventory which is not really that tangable. I would have expected to see some inventory listed as a non-current asset.

Just 11% of their current assets are cash ($46million).

Total current liabilities (must be paid in the next 12 months) are $340million.

The majority of their borrowings are catagorised as a non-current asset meaning that the company doesn't expect to have to pay them for over 12 months this sum is $100million.

So they have enough cash on hand to pay the borrowings that are expected to pay over the next year but not their full current liabilities. I'm am not sure of their rate of inventory turnover to comment on whether this is a problem or not.

This seems like a highly geared company however profits have been good to date and the company seem to be using to reduce its level of debt. However note that the JBH doesn't sell staple items. If interest rates rise and the economy slows then consumers will slow down their buying of CD, DVD's...unlike things like bread and milk.

In short I see a quite a bit of risk here but not enough to say the company is going to colapse.

Now i've only had a quick look but that is the way I see it. Perhaps someone who holds shares and has done more research can share a bit more thorough research.