Assessment 1 - Step 3: Cash Converters
- kmasso28
- Mar 26
- 2 min read
Welcome to Cash Converters!
This term, my assigned company is Cash Converters, and even if I learn nothing else (which I highly doubt), I have learnt that pawnbrokers aren't exactly what I thought they were. I assumed pawnbrokers were like a second-hand store that pays you for your items, kind of like a garage sale. Fun fact! Pawnbrokers actually loan money to customers and just use your items as collateral...well, at least this one does! Once a loan has been paid out, you have essentially 'bought back' your item that was held, where you can then get it back or choose to leave it to be sold by Cash Converters as a retail product. I'm assuming that this is where they collect the funds to loan out as part of their broking aspect.
Since the opening of its first store in Perth in 1984, Cash Converters has expanded to become an international franchise with 669 stores in seventeen countries, as at 30 June 2024. I found that pretty impressive, considering I've never heard of them (you must remember I virtually live under a rock lol). That means that by their 40th birthday, they had consistently opened at least 16 stores per year - it's incredible!
One thing I noticed about Cash Converters was that they seem to have a strong finance team behind them who are continuously producing reports for use by investors. This connection to shareholders was exemplified through their consistent bi-annual and annual Investor Presentations like this one which very simply give a concise overview of the firm's financial results. As someone who struggles to read and absorb large chunks of information, I think this approach has well and truly won me over!!
Now onto the juicy part you've all been waiting for...
The 2024 FY was a good one for Cash Converters, where their exceptional customer service paired with their response to product demand achieved them outstanding results, both financially and in their operations. Compared to the 2023 FY, this increased total revenue by 26% and EBITDA by a whopping 21%. Isn't it crazy that in twelve months, the firm was able to increase their overall earnings by an average of 23.5%?! They were able to generate NPAT of $17.4m, which was a massive jump of $114.6m from the after-tax loss of $97.2m in 2023. Last financial year also brought with it the growth of stores both at home and internationally where 3 new stores were opened in Australia and 42 stores in the UK were acquired as Cash Converters UK stores, with another 5 stores opening.
I'm a little nervous going into this as I'm not sure what to expect from the financials. Being a pawnbroker and not a regular retail company, I would assume that there are some complexities surrounding the firm and potentially its financials. Let's see where this takes me!
Fantastic explanation of their growth in terms that are easily understandable. You also seem so excited to be doing this unit and learning about this company.