Comparative Analysis of Easy Jet Plc and Ryanair
Added on 2023-04-21
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Running head: ACCOUNTING
Accounting
Name of the Student
Name of the University
Authors Note
Course ID
Accounting
Name of the Student
Name of the University
Authors Note
Course ID
1ACCOUNTING
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
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
2ACCOUNTING
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
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
3ACCOUNTING
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
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
4ACCOUNTING
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 Ratio
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:
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 Ratio
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:
5ACCOUNTING
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
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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