Accounting and Finance

Running head: ACCOUNTING AND FINANCE
Accounting and Finance
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1ACCOUNTING AND FINANCE
Executive Summary:
The present report is aimed at reviewing the ratios of Easy Jet Airways. Initially the report
would assess the benefits and limitations of accounting ratios. In the later part the
profitability, liquidity and interest cover ratios would be computed to assess the financial
position of Easy Jet Airways. The computation of financial ratios would be based from the
financial year of 2015 to 2018. Easy Jet Airways is an established british low cost airline
carrier which is listed in the London stock exchange under the FTSE Index 100.

2ACCOUNTING AND FINANCE
Table of Contents
Introduction................................................................................................................................4
Ratio Analysis:...........................................................................................................................4
Benefits of Ratio Analysis:....................................................................................................4
Limitations of Ratio Analysis:...............................................................................................5
Profitability Ratios:....................................................................................................................6
ROCE ratio:............................................................................................................................6
Gross Profit Margin:..............................................................................................................6
Operating Profit Ratio:...........................................................................................................7
Liquidity Ratios:.........................................................................................................................7
Current Ratio:.........................................................................................................................8
Acid Test Ratio:.....................................................................................................................8
Gearing/Capital Structure Ratios:..............................................................................................9
Gearing Ratio:........................................................................................................................9
Interest Cover Ratio:..............................................................................................................9
Conclusion:..............................................................................................................................10
References:...............................................................................................................................11
Appendices:..............................................................................................................................13
Appendix 1: Ratio Summary................................................................................................13
Appendix 2: Easy Jet Airways Financial Information Summary:.......................................13
Appendix 3: Annual Report Extracts:..................................................................................14

3ACCOUNTING AND FINANCE
Introduction
Easy Jet Airline is the British low cost airline carrier that has its headquarter in
London Luton Airport. The company operates both the international and domestic services in
more than 820 routes to more than 30 nations. The company is listed on the FTSE 100 index
and has the largest shareholders stake of 34.62% (Corporate.easyjet.com 2019). The company
employs more than 11,000 employees that is based through Europe large part of the
employees are based in UK.
Easy Jet has witnessed expansion from the day it was established in 1995. Easy Jet
has growth through the combination of acquisition and the base opening is boosted by
customer demands for lost cost transportation. Easy Jet together with its associate company
Easy Jet Europe and Easy Jet Switzerland operates greater than 200 carriers with majority are
Airbus A320 (Corporate.easyjet.com 2019). During the year 2007 Easy Jet acquired the
entire share of GB Airways from the Bland Group. While in 2011 Easy Jet opened its
eleventh British airline base at London Southend Airport.
Ratio Analysis:
According to (_) ratio analysis is defined as the analysis and interpretation of the
figures that appears on the financial reports. Ratio analysis is regarded as the procedure of
comparing the figures of one year against another year. Ratio analysis provides the users of
financial report such as government, shareholders, creditor and investors to better understand
the financial reports.
Benefits of Ratio Analysis:
The benefits of ratio analysis are as follows;