Comparative Analysis of Easy Jet Plc and Ryanair

This report provides a comparative analysis of performance between Easy Jet Plc and its competitor Ryanair. It includes ratio analysis, profitability ratios, liquidity ratios, and recommendations for investors.

Running head: ACCOUNTING
Accounting
Name of the Student
Name of the University
Authors Note
Course ID

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Table of Contents
Brief Overview:..........................................................................................................................2
Task One - Ratio Analysis:........................................................................................................2
Profitability Ratios:................................................................................................................2
Liquidity Ratios:.....................................................................................................................6
Working Capital Efficiency Ratios:.......................................................................................9
Long term financial structure ratios:....................................................................................11
Investors Perspective Ratio:.................................................................................................12
Task Two: Recommendation to Buy, Sell or Hold for investors and potential Investors:......14
Task Three: Supply Chain Management System of Easy Jet..................................................15
Types of Models in Supply Chain Management......................................................................16
Issues faced by Easy Jet...........................................................................................................18
References:...............................................................................................................................19
Appendix: Workings................................................................................................................21

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Brief Overview:
Easy Jet Plc is one of the British low cost airline company having its headquarter in
London Luton Airport. The airline operates both in the overseas and domestic segment
having greater than 820 routes in around 30 nations. Ryanair on the other hand is Irish low-
cost airline that has its headquarter in Dublin Ireland. The company has its primary
operations at Dublin and London Stanstead airports.
The present report here provides a comparative analysis of performance between Easy
Jet Plc and its competitor Ryanair. The report would consider the five-year analysis of
financial ratio between Easy Jet Plc and benchmarking the same with its competitor Ryanair.
Later the report would also determine the rationale for making investment in the shares of
EasyJet Plc from the perspective of investors. Finally, analysis of EasyJet supply chain
management process would be considered in this report with an appropriate conclusion
supporting the analysis.
Task One - Ratio Analysis:
Profitability Ratios:
Operating Profit:
This ratio measures the percentage of revenues that are made up from the operating
income (Deegan 2013).
Operating Profit Ratio = (Operating Income / Net Sales) x 100
Years 2013 2014 2015 2016 2017
Operating Income 497 581 688 498 404
Net Sales 4258 4527 4686 4669 5047
Workings 497/4258 581/4527 688/1646 498/4669 404/5047
Operating Profit Ratio 11.67% 12.83% 14.68% 10.67% 8.00%
Accounting Ratios for EasyJet Plc
Profitability Ratios
Operating Profit Ratio

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Years 2013 2014 2015 2016 2017
Operating Income 718.2 658.6 1042.9 1460.1 1534
Net Sales 4884 5036.7 5654 6535.8 6647.8
Workings 718.2/4884 658.6/5036.7 1042.9/5654 1460.1/6535.8 1534/6647.8
Operating Profit Ratio 14.71% 13.08% 18.45% 22.34% 23.08%
Accounting Ratios for Ryanair
Profitability Ratios
Operating Profit Ratio
2013 2014 2015 2016 2017
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
11.67% 12.83%
14.68%
10.67%
8.00%
14.71%
13.08%
18.45%
22.34% 23.08%
Operating Profit Ratio
Easy Jet Ryanair
The operating margin for Easy Jet over the five-year trend represented a continuous
fall mainly due to fall in the operating income. While Ryanair posted a strong operating profit
margin mainly because of its improved sales revenue and controlled operating expenses.
Gross Profit Ratio:
The gross profit ratio provides a comparative view of business gross margin with its
net sales (Henderson et al. 2015).
Gross Profit Margin = (Gross Profit / Sales) x 100
EasyJet PLC

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Years 2013 2014 2015 2016 2017
Sales Revenue 4258 4527 4686 4669 5047
Cost of Sales 3547 3704 3506 3665 4022
Gross Profit 711 823 1180 1004 1025
Workings 4258/711 4527/823 4686/1180 4669/1004 5047/1025
Gross Profit Margin 16.70% 18.18% 25.18% 21.50% 20.31%
Gross Profit Ratio
Ryanair:
Years 2013 2014 2015 2016 2017
Sales Revenue 4884 5036.7 5654 6535.8 6647.8
Cost of Sales 4378.1 4163 4353 4750 4758
Gross Profit 505.9 873.7 1301 1785.8 1889.8
Workings 4884/505.9 5036.7/873.7 5654/1301 6535.8/1785.8 6647.8/1889.8
Gross Profit Margin 10.36% 17.35% 23.01% 27.32% 28.43%
Gross Profit Ratio
2013 2014 2015 2016 2017
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
16.70% 18.18%
25.18%
21.50% 20.31%
10.36%
17.35%
23.01%
27.32% 28.43%
Gross Profi t Rati o
Easy Jet Ryanair
The gross profit margin for the company has represented an uneven trend where the
revenues for EasyJet has increased in five-year span but the cost of sales have also increased
simultaneously. For Ryanair, the gross profit margin stood strongly with progressive trend in
than its competitor EasyJet. Given the strong profitability growth both Ryanair and EasyJet
can explore the areas of growth for streamlining the selling costs.
ROCE:

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This ratio evaluates the profitability of an organization and the efficiency through
which a firm employs its capital (Lin et al. 2015).
EasyJet PLC:
Years 2013 2014 2015 2016 2017
Operting Profit 497 581 688 498 404
Total Assets 4412 4482 4828 5505 5971
Current Liabilities 1379 1420 1768 1573 1670
Capital Employed 3033 3062 3060 3932 4301
Workings 497/3033 581/3062 688/3060 498/3932 404/4301
ROCE 16.39% 18.97% 22.48% 12.67% 9.39%
Return on Capital Employed
Ryanair:
Years 2013 2014 2015 2016 2017
Operting Profit 718.2 658.6 1042.9 1460.1 1534
Total Assets 8943 8812 12185.4 11218.3 11989.7
Current Liabilities 1911.7 2274.5 3346 3369.5 3011.8
Capital Employed 7031.3 6537.5 8839.4 7848.8 8977.9
Workings 718.2/7031.3 658.6/6537.5 1042.9/8839.4 1460.1/7848.8 1534/8977.9
ROCE 10.21% 10.07% 11.80% 18.60% 17.09%
Return on Capital Employed
2013 2014 2015 2016 2017
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
16.39%
18.97%
22.48%
12.67%
9.39%
10.21% 10.07%
11.80%
18.60% 17.09%
Return on Capital Employed
Easy Jet Ryanair
The ROEC for EasyJet PLC represented a progressive decline in the ratio between
2015 to 2018 with ratio falling as low as 9.39%. The reason for this is that the operating
profit has declined leading to fall in current liabilities. While Ryanair operating in the same

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industry posted a progressive ROCE during five-year span with as high as 17.09 in 2017
mainly because of lower cost of operations.
Liquidity Ratios:
Current Ratio:
This ratio evaluates the position of liquidity for a business in order to determine the
short-term and long term obligations (Macve 2015).
Formula = Current Assets / Current Liabilities
EasyJet Plc
Years 2013 2014 2015 2016 2017
Current Assets 1448 1261 1279 1454 1734
Current Liabilities 1379 1420 1768 1573 1670
Workings 1448/1379 1261/1420 1279/1769 1454/1573 1734/1670
Current Ratio 1.05 0.89 0.72 0.92 1.04
Liquidity Ratios - Current Ratio
Ryanair:
Years 2013 2014 2015 2016 2017
Current Assets 3763.6 3444.3 5742 4821.5 4706.1
Current Liabilities 1911.7 2274.5 3346 3369.5 3011.8
Workings 3763.6/1911.7 3444.3/2274.5 5742/3346 4821.5/3369.5 4706.1/3011.8
Current Ratio 1.97 1.51 1.72 1.43 1.56
Liquidity Ratios - Current Ratio

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2013 2014 2015 2016 2017
0.00
0.50
1.00
1.50
2.00
2.50
1.05 0.89
0.72
0.92 1.04
1.97
1.51
1.72
1.43 1.56
Current Rati o
Easy Jet Ryanair
The current ratio for EasyJet during the year stood less than one while in 2017 it
marginally increased to 1.04. This signifies that there is a larger proportion of EasyJet current
liabilities than its current assets, meaning that the EasyJet has less potential of meeting short
term obligations. While the current ratio for Ryanair has been fluctuating over five-year span
but stood greater than one, meaning that Ryanair is better placed to meet its short-term debt
obligations. Ryanair is better placed than EasyJet in terms of liquidity to meet its short term
obligations.
Acid-Test Ratio:
The acid-test ratio is also regarded as quick ratio that assess the ability of a firm in
meeting their current liabilities whenever it becomes due from its quick assets (Brigham et al.
2016).
Formula = Current Assets – Inventory – Prepaid Expenses / Current Liabilities
EasyJet PLC

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Years 2013 2014 2015 2016 2017
Current Assets 1448 1261 1279 1454 1734
Derivative Financial Instrument 53 17 128 268 131
Current Liabilities 1379 1420 1768 1573 1670
Workings (1448-53)1379 (1261-17)/1420 (1279-128)/1768 (1454-268)/1573 (1734-131)/1670
Acid Test Ratio 1.01 0.88 0.65 0.75 0.96
Acid Test Ratio
Ryanair:
Years 2013 2014 2015 2016 2017
Current Assets 3763.6 3444.3 5742 4821.5 4706.1
Derivative Financial Instrument 78.1 16.7 744.4 269.1 286.3
Less: Inventories 2.1 3.3 3.1
Quick Assets 3685.5 3427.6 4995.5 4549.1 4416.7
Current Liabilities 1911.7 2274.5 3346 3369.5 3011.8
Workings 3685.5/1911.7 3427.6/2274.5 4995.5/3346 4549.1/3369.5 4416.7/3011.8
Acid Test Ratio 1.93 1.51 1.49 1.35 1.47
Acid Test Ratio
2013 2014 2015 2016 2017
0.00
0.50
1.00
1.50
2.00
2.50
1.01 0.88
0.65 0.75
0.96
1.93
1.51 1.49 1.35 1.47
Quick Ratio
Easy Jet Ryanair
Unlike the current ratio the acid-test ratio for EasyJet PLC has represented a fall and
stood less than one from 2014 to 2017. This signifies that EasyJet is less liquid in satisfying
its short term debt obligations. While Ryanair has reported a declining trend of current ratio
but stood relatively greater than one, meaning that Ryanair has greater proportion of current
assets to meet its short term obligations.

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Working Capital Efficiency Ratios:
Trade Receivables Collection Period:
This ratio determines the period of trade receivables settlement period and the time
taken on average basis to receive money from the debtors (Khan 2015).
EasyJet PLC:
Years 2013 2014 2015 2016 2017
Trade Receivables 194 200 206 217 275
Total Sales 4258 4527 4686 4669 5047
Workings (194/4258)x365 (200/4527)x365 )(206/4686)x365 (217/4669)x365 (275/5047)x365
Trade Receivables Period 16.63 16.13 16.05 16.96 19.89
Trade Receivables Collection Period
Working Capital Efficiency Ratios
Ryanair:
Years 2013 2014 2015 2016 2017
Trade Receivables 56.1 58.1 60.1 66.1 54.3
Total Sales 4884 5036.7 5654 6535.8 6647.8
Workings (56.1/4884)x365 (58.1/5036.7)x365 (60.1/5654)x365 (66.1/6535.8)x365(54.3/6647.8)x365
Trade Receivables Period 4.19 4.21 3.88 3.69 2.98
Working Capital Efficiency Ratios
Trade Receivables Collection Period
2013 2014 2015 2016 2017
0.00
5.00
10.00
15.00
20.00
25.00
16.63 16.13 16.05 16.96
19.89
4.19 4.21 3.88 3.69 2.98
Trade Receivables Collecti on Period
Easy Jet Ryanair
The trade receivables period for EasyJet averages around 18 to 20 days which
signifies that business receives its outstanding dues from the debtors within a month. While

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Ryanair reported a significantly improved trade receivables period with the ratio standing
averagely 3 to 4 days. This is advantageous for the company as its sales credit is settled
promptly within time without decrementing its cash flow from business.
Trade Payables Payment Period:
This ratio determines the time taken by the company on the average basis to pay their
creditors that supplied the goods and services on credit basis (Hoyle, Schaefer and Doupnik
2015).
EasyJet PLC:
Years 2013 2014 2015 2016 2017
Trade Payables 1093 1110 495 564 714
Cost of Goods Sold 3547 3704 3506 3665 4022
Workings (1093/3547)x365(1110/3704)x365(495/3506)x365 (565/3665)x365 (714/4022)x365
Trade payable period 112.47 109.38 51.53 56.17 64.80
Trade Payables Payment Period
Ryanair:
Years 2013 2014 2015 2016 2017
Trade Payables 138.3 150 196.5 230.6 294.1
Cost of Goods Sold 4378.1 4163 4353 4750 4758
Trade payable period 11.53 13.15 16.48 17.72 22.56
Trade Payables Payment Period
2013 2014 2015 2016 2017
0.00
20.00
40.00
60.00
80.00
100.00
120.00 112.47 109.38
51.53 56.17
64.80
11.53 13.15 16.48 17.72 22.56
Trade Payables Collection Period
Easy Jet Ryanair

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Computations from the above stated table for EasyJet signifies that the company
settles its trade payables in fifty to sixty days averagely. The payment period has though fell
down but because of its poor liquidity EasyJet may suffer loss of goodwill in meeting its debt
obligations. While Ryanair are settling their creditors quicker than its competitors as it
averages around twenty days. It seems that Ryanair has been consistent with its timeframe to
avoid the loss of goodwill.
Long term financial structure ratios:
Gearing Ratio:
The gearing ratio determines the contributions of the long term lenders with the long
term capital structure for a business (Barth 2015).
EasyJet PLC:
Years 2013 2014 2015 2016 2017
Long term debt 472 592 322 664 963
Share Capital 108 108 108 108 108
Workings 472/(472/108) 592(592/108) 322/(322+108) 664/(664+108) 963/(664+108)
Gearings Ratio 81.38% 84.57% 74.88% 86.01% 89.92%
Long term Financial Structure Ratios
Ryanair:
Years 2013 2014 2015 2016 2017
Long term debt 3098.4 2615.7 4032 3573.1 3928.6
Share Capital 3272.6 3285.8 4035.1 3596.8 4423
Workings 3098.4/3272.6 2615.7/3285.8 4032/4035.1 3573.1/3596.8 3928.6/4423
Gearings Ratio 48.63% 44.32% 49.98% 49.83% 47.04%
Long term Financial Structure Ratios

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2013 2014 2015 2016 2017
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
100.00%
81.38% 84.57%
74.88%
86.01% 89.92%
48.63% 44.32% 49.98% 49.83% 47.04%
Gearing Ratio
Easy Jet Ryanair
The gearing ratio for EasyJet PLC is on the rising trend as the company’s long term
debt has been increasingly significantly during its five-year span. The ratio went as high as
89.92% during 2017 indicating that EasyJet is subjected to higher business risks because the
excessive debts can result in higher financial difficulties. Ryanair posted relatively lower
gearing ratio in its five-year span as the company is not using higher debt to pay its
continuous operations.
Investors Perspective Ratio:
Interest Coverage Ratio:
This ratio is helpful in measuring the amount of profit that is available with the
company to meet its interest expenses (Carlon et al. 2015).
EasyJet PLC:
Years 2013 2014 2015 2016 2017
Operating Profit 497 581 688 498 404
interest Payable 24 11 11 13 29
Workings 497/24 581/11 688/11 498/13 404/29
Interest Coverage 20.71 52.82 62.55 38.31 13.93
Interest Coverage
Investors Perspective
Ryanair:

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Years 2013 2014 2015 2016 2017
Operating Profit 718.2 658.6 1042.9 1460.1 1534
interest Payable 99.3 83.2 74.2 71.1 67.2
Workings 718.2/99.3 658.6/83.2 1042.9/74.2 1460.1/71.1 1534/67.2
Interest Coverage 7.23 7.92 14.06 20.54 22.83
Interest Coverage
Investors Perspective
2013 2014 2015 2016 2017
0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
20.71
52.82
62.55
38.31
13.93
7.23 7.92
14.06
20.54 22.83
Interest Coverage
Easy Jet Ryanair
The interest coverage ratio for EasyJet and Ryanair relatively shows that the company
is having relatively higher operating profit in comparison to its interest payable. This signifies
that interest would be payable in light of the falling or increasing operating profit margins.
Dividend Pay-out Ratio:
This ratio measures the percentage of net earnings that are distributed among the
shareholders (Macve 2015).
EasyJet:
Years 2013 2014 2015 2016 2017
Total Dividends 85 308 180 219 214
Net Income 398 450 548 427 305
Workings 85/398 308/450 180/548 219/427 214/305
Dividend Payout Ratio 21% 68% 33% 51% 70%
Dividend Payout Ratio
Ryanair

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Years 2013 2014 2015 2016 2017
Total Dividends 491.5 520 397.9
Net Income 569.3 522.8 866.7 1559.1 1315.9
Workings 491.5/569.3 NA 520/866.7 397.9/1559.1 NA
Dividend Payout Ratio 86% 0% 60% 26% 0%
Dividend Payout Ratio
2013 2014 2015 2016 2017
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
21%
68%
33%
51%
70%
86%
0%
60%
26%
0%
Dividend Payout
Easy Jet Ryanair
In spite of the poor liquidity EasyJet during its five-year span has been consistent in
paying out dividend to its shareholders. The investors of EasyJet may be particularly
interested in the dividend pay-out ratio due the fact the company is paying a reasonable
portion of net income to its investors. While Ryanair has a poor record of dividend paying as
it did not paid dividend in 2017. The investors may not be attracted to invest in the shares of
Ryanair.
Task Two: Recommendation to Buy, Sell or Hold for investors and potential Investors:
For those that are committed in adopting the patient buy and hold strategy however,
the analyst believe that EasyJet shares is rapidly approaching value (Grant 2016). By posting
a strong performance in the recently concluded fiscal year the pre-tax profit for the full year
would be in the upper half of the previous guidance between £570m to £580m. The number
of passengers for EasyJet in the last 12 months is anticipated to increase by 5.4% which is
greater than £85 million. The total revenue per seat is anticipated to increase by 6.5% based

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on the constant currency. The overall reported revenue for the full year including the
operations of company at Berlin is projected to be little less than £5.9 billion.
The company is also optimistic in its outlook and predicts the capacity to rise by
nearly 10% to approximately 105 million seats. Furthermore, an improved performance at
Tangle over the fourth quarter has resulted the company in predicting that it would break
even in Berlin during the next year (Weygandt, Kimmel and Kieso 2015). With little under
ten times forecast earnings for the next financial year, the share price of easy jet is looking
better in terms of value, the shares of EasyJet are certainly cheaper in comparison to the
rivals Ryanair and Wizz Air as both has witnessed slip up in stocks. A recommendation can
be made to the existing shareholders to hold the shares while for the potential investors they
can buy the shares of EasyJet as analyst are forecasting a 26% hike in total dividend, equating
5.25% yield in present share price.
Task Three: Supply Chain Management System of Easy Jet
Supply Chain Management refers to the broad range of activities which are
undertaken by a business for the purpose of planning, controlling and executing the flow of
products which is offered by the business. The business of easyJet is recognized recently as
the best value airline which is operating in UK which is mainly due to the appropriate quality
of services which is offered by the airlines (Christopher 2016). The management of the
company needs to makes improvement in the supply chain management of the company as
the demand for services is increasing day by day for both domestic and foreign travels.
The airlines aim to establish a cost-effective system and also set up various loyalty
schemes in order to attract customers who are mostly driven by cost effective travel
programs. It is a known fact that bringing about efficiency in supply chain management
system can lower the overall costs of the business and thereby in case of easyJet can lower

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the prices of flight fare. The increase in demands of the business has resulted in increase in
the number of aircrafts which is operated by easyJet and the company has taken an ex-Air
Berlin aircraft over on lease for meeting the demands of the business (Seuring 2013). The
management of the company follows lean supply chain management system as the aim of the
business is to reduce the wastage of resources and thereby also ensure that the overall costs of
the business is reduced drastically.
Types of Models in Supply Chain Management
In case of supply chain management there are various other models which can be
selected by the business of easyJet and some of the models are given below:
 Efficient Supply Chain Model: This type of supply chain models is mostly selected in
competitive industries and even small details are considered in the decision-making
process. This supply chain model allows maximizing efficiency and includes higher rate
of asset utilization.
 Fast Supply Chain Model: This type of supply chain management system is best suited
for companies which are engaged in producing products which has a short lifecycle
(Sturman 2019). This type of Forecasting system enhances the management ability to
forecast.
 Continuous Flow Model: This type of supply chain system is suitable for businesses
which have high demand stability. This type of supply chain is best suited for industries
which have little or no variation in customer demand profile.
 Lean Flow Model: This supply chain model is applicable to business who wants to
make complete use of resources and thereby also ensure that there is no wastage of
resources of the business (Farahani et al. 2014). This model is followed by the business
of easyJet as the aim of the business is to reduce the costs of the business without
compromising the quality of services which is offered by the business.

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The lean model which is followed by easyJet is selected just because the same suits the
needs of the business and also serve the objectives of the company. The model requires
management to optimize the activities of the business and ensure all the resources of the
business are used in an efficient manner.
Figure 1: (Supply Chain with KPI)
(Source: Sturman 2019)
The above figures show the KPI of the business in supply chain management and
from the above figure, it is also clear that the management of the company needs to ensure

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that the business has better maintenance of resources of the business and more aircrafts at the
operation of the business.
Issues faced by Easy Jet
The implementation of lean management system may not be applicable to all
companies which is also considered to be one of the disadvantages of the system (Martínez-
Jurado and Moyano-Fuentes 2014). Most of the companies cannot adopt lean management
system as the system requires expertise management skills and this might become costly for
the organizations. In addition to this, there is a risk that supply chain system would increase
the costs of the business without bringing about appropriate results. The lean supply chain
system also requires management to outsource resources in order to support the system.
The aviation sector has been facing problems due to hike in the prices of the fuel for
aircrafts. In case of easyJet, the business suffers from high costs for the business which is
there due to a large number of factors. The business also faces significant risks from the high
level of competition in the market. The high level of competition has affected the revenue
generation capacity of the business which needs to be improved.

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References:
Barth, M.E., 2015. Financial accounting research, practice, and financial
accountability. Abacus, 51(4), pp.499-510.
Brigham, E.F., Ehrhardt, M.C., Nason, R.R. and Gessaroli, J., 2016. Financial Managment:
Theory And Practice, Canadian Edition. Nelson Education.
Carlon, S., McAlpine-Mladenovic, R., Palm, C., Mitrione, L., Kirk, N. and Wong, L.,
2015. Financial accounting: Reporting, analysis and decision making. John Wiley and Sons
Australia.
Christopher, M., 2016. Logistics & supply chain management. Pearson UK.
Deegan, C., 2013. Financial accounting theory. McGraw-Hill Education Australia.
Farahani, R.Z., Rezapour, S., Drezner, T. and Fallah, S., 2014. Competitive supply chain
network design: An overview of classifications, models, solution techniques and
applications. Omega, 45, pp.92-118.
Grant, R.M., 2016. Contemporary strategy analysis: Text and cases edition. John Wiley &
Sons.
Henderson, S., Peirson, G., Herbohn, K. and Howieson, B., 2015. Issues in financial
accounting. Pearson Higher Education AU.
Hoyle, J.B., Schaefer, T. and Doupnik, T., 2015. Advanced accounting. McGraw Hill.
Khan, M., 2015. Accounting: Financial. In Encyclopedia of Public Administration and Public
Policy, Third Edition-5 Volume Set (pp. 1-6). Routledge.

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Lin, C.C., Chiu, A.A., Huang, S.Y. and Yen, D.C., 2015. Detecting the financial statement
fraud: The analysis of the differences between data mining techniques and experts’
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Macve, R., 2015. A Conceptual Framework for Financial Accounting and Reporting: Vision,
Tool, Or Threat?. Routledge.
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Tool, Or Threat?. Routledge.
Martínez-Jurado, P.J. and Moyano-Fuentes, J., 2014. Lean management, supply chain
management and sustainability: a literature review. Journal of Cleaner Production, 85,
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Seuring, S., 2013. A review of modeling approaches for sustainable supply chain
management. Decision support systems, 54(4), pp.1513-1520.
Sturman, C. (2019). Inside easyJet’s industry-leading Supply Chain team. [online]
Supplychaindigital.com. Available at: https://www.supplychaindigital.com/company/inside-
easyjets-industry-leading-supply-chain-team# [Accessed 7 Jan. 2019].
Weygandt, J.J., Kimmel, P.D. and Kieso, D.E., 2015. Financial & managerial accounting.
John Wiley & Sons.

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Appendix: Workings
EasyJet PLC
Accounting Ratios for EasyJet Plc
Profitability Ratios
Operating Profit Ratio
Years 2017
Operating Income (A) 404
Net Sales (B) 5047
Workings 404/5047
Operating Profit Ratio (A/B) 8.00%
Gross Profit Ratio
Years 2017
Sales Revenue (A) 5047
Less: Cost of Sales (B) 4022
Gross Profit © 1025
Workings 5047/1025
Gross Profit Margin (A-B)/© 20.31%
Return on Capital Employed
Years 2017
Operating Profit (A) 404
Total Assets (B) 5971
Current Liabilities ( C) 1670
Capital Employed (D) 4301
Workings 404/4301
ROCE (B-C = D) (A/D) 9.39%
Liquidity Ratios - Current Ratio
Years 2017
Current Assets (A) 1734
Current Liabilities (B) 1670
Workings 1734/1670
Current Ratio (A/B) 1.04
Acid Test Ratio
Years 2017
Current Assets (A) 1734
Less: Derivative Financial Instrument (B) 131
Current Liabilities (C ) 1670
Workings (1734-131)/1670
Acid Test Ratio (A-B)/C) 0.96

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Working Capital Efficiency Ratios
Trade Receivables Collection Period
Years 2017
Trade Receivables (A) 275
Total Sales (B) 5047
Workings (275/5047)x365
Trade Receivables Period (A/Bx365) 19.89
Trade Payables Payment Period
Years 2017
Trade Payables (A) 714
Cost of Goods Sold (B) 4022
Workings (714/4022)x365
Trade payable period (A/Bx365) 64.80
Long term Financial Structure Ratios
Years 2017
Long term debt (A) 963
Share Capital (B) 108
Workings 963/(664+108)
Gearings Ratio (A/(A+B)) 89.92%
Investors Perspective
Interest Coverage
Years 2017
Operating Profit (A) 404
interest Payable (B) 29
Workings 404/29
Interest Coverage (A/B) 13.93
Dividend Payout Ratio
Years 2017
Total Dividends (A) 214
Net Income (B) 305
Workings 214/305
Dividend Payout Ratio (A/B) 70%
Ryanair:

23ACCOUNTING
Accounting Ratios for Ryanair
Profitability Ratios
Operating Profit Ratio
Years 2017
Operating Income (A) 1534
Net Sales (B) 6647.8
Workings 1534/6647.8
Operating Profit Ratio (A/B) 23.08%
Gross Profit Ratio
Years 2017
Sales Revenue (A) 6647.8
Less: Cost of Sales (B) 4758
Gross Profit © 1889.8
Workings 6647.8/1889.8
Gross Profit Margin (A-B)/© 28.43%
Return on Capital Employed
Years 2017
Operting Profit (A) 1534
Total Assets (B) 11989.7
Current Liabilities ( C) 3011.8
Less: Capital Employed (D) 8977.9
Workings 1534/8977.9
ROCE (B-C = D) (A/D) 17.09%
Liquidity Ratios - Current Ratio
Years 2017
Current Assets (A) 4706.1
Current Liabilities (B) 3011.8
Workings 4706.1/3011.8
Current Ratio (A/B) 1.56
Acid Test Ratio
Years 2017
Current Assets (A) 4706.1
Derivative Financial Instrument (B) 286.3
Less: Inventories (C ) 3.1
Quick Assets (D) 4416.7
Current Liabilities (E ) 3011.8
Workings 4416.7/3011.8
Acid Test Ratio (A-B-C) = D/E) 1.47
Working Capital Efficiency Ratios

24ACCOUNTING
Trade Receivables Collection Period
Years 2017
Trade Receivables (A) 54.3
Total Sales (B) 6647.8
Workings (54.3/6647.8)x365
Trade Receivables Period (A/Bx365) 2.98
Trade Payables Payment Period
Years 2017
Trade Payables (A) 294.1
Cost of Goods Sold (B) 4758
Trade payable period (A/Bx365) 22.56
Long term Financial Structure Ratios
Years 2017
Long term debt (A) 3928.6
Share Capital (B) 4423
Workings 3928.6/4423
Gearings Ratio (A/(A+B)) 47.04%
Investors Perspective
Interest Coverage
Years 2017
Operating Profit (A) 1534
interest Payable (B) 67.2
Workings 1534/67.2
Interest Coverage (A/B) 22.83
Dividend Payout Ratio
Years 2017
Total Dividends (A)
Net Income (B) 1315.9
Workings NA
Dividend Pay-out Ratio (A/B) 0%