(PDF) Managerial Accounting and Decision Making

ACCOUNTING FOR DECISION MAKING

EXECUTIVE SUMMARY
Decision making task is crucial for business as well as investor in order to ensure that proposed
investment delivers returns as per the expectations. The present study is based on financial
assessment of Qantas Airways and Seek Limited in detail by considering their share prices
movement and financial performance. Analysis of the study shows that higher the fluctuation
exists in share price movements the higher the percentile of risk is related to that organization.
Further Seek Ltd is performing comparatively well than Qantas Airways due comparatively
efficiency in managing liquidity and profitability of business.

TABLE OF CONTENTS
Introduction......................................................................................................................................4
Main body........................................................................................................................................4
Company Overview and Investor Information............................................................................4
Assessment of price movements..................................................................................................6
Calculation of gain or loss...........................................................................................................9
Recommendation.......................................................................................................................10
Key Financial Data and Ratio Analysis.........................................................................................10
Financial Data............................................................................................................................10
Ratio Analysis............................................................................................................................11
Liquidity Ratio...........................................................................................................................11
Profitability Ratios.....................................................................................................................12
Stability Ratio............................................................................................................................14
Conclusion.....................................................................................................................................15
References (harvard)......................................................................................................................16
Financial Statement of Qantas Airways....................................................................................16
Financial Statement of Seek Ltd................................................................................................18

INTRODUCTION
Financial assessment of an organization can be done in appropriate manner through ratio analysis
assessment as well as analyzing the performance of shares. Both of this information is
considered by an investor while making investment decision relating to any organization. Present
report revolves around assessment of Qantas Airways and Seek Limited in detail. Further ratio
analysis of same has been done in order to assess liquidity, profitability and stability of both the
companies.
MAIN BODY
Company Overview and Investor Information
Particular Qantas Airways Ltd. Seek Ltd
Company Overview Qantas Airways is flag carrier of
Australia having largest airline
with fleet size along with
international flights and global
destinations. It is believed to be
worlds third oldest airline
subsequent to KLM and Avianca,
it was set up in November 1920,
started its international travelers
flight in may 1935. The pet name
of Qantas Airways is “Flying
Kangaroo” (Annual Report of
Qantas Airways, 2017). It is
located in Sydney village of
Mascot with its main centre at
Sydney Airport. Word Qantas is
derived from word “Qantas”
which is acronym of its real name
Queensland and Northern
Territory. Qantas is founding
member of Oneworldairline
Seek Ltd is assorted group of
companies which is
comprised of united principle
that is to assist people survive
more satisfying and helpful
working lives and facilitate
association to be successful.
It is listed at the Australian
Securities Exchange having
place within top 100
company appointing more
than 6000 people as well as
market capitalisation near to
AU$6billion (Annual Report
of Seek Ltd, 2017). The
company is believed as
universal leader in formation
and functioning of online
employment market. Seek
builds optimistic contribution
to people’s live by linking

association. Since on march 2014
Qantas covers 65% share of
Australia Domestic market and
conceded 14.9% travelers
travelling in and out of Australia.
more people to related job
prospects through its market
scale and technology to create
radically more effective more
effective employment market.
Products and Services The company is engaged in
operations transportation of
passengers and air shipments.
Further it is evolved in operations
of multiple subsidiaries
comprising related business
regarding vacations, travel
operations and routed caterings
(Annual Report of Qantas
Airways, 2017). The main
business relates to transportation
of customer through application
of two complimentary brands i.e.
Qantas and Jetstar. Further the
company also operation in special
market i.e. Q catering. The
Group’s widen portfolio of
subsidiary comprises Qantas
Freight Enterprises to Qantas
Frequent Flyer.
The company provides
following services:
 Online matching of
employ and nominee
with job prospects and
associated services.
 Online assignment and
placement of
applicants into
position.
 Making investment at
initial phases of
businesses and
technologies that are
in or contiguous to the
core online
employment market.
 Allocation and
provision of higher
education courses.
Chief Executive Officer Alan Joyce Andrew R Bassat
Salary of Chief executive
officer
3890000 $4538592

Statutory Profit and Loss
(2017)
$853 million $362.0 million
Dividend Paid 7 cents dividend was paid on 13th
October 2017. Total dividend
declared was $127 million.
21.0 cents paid per share on
13th October 2017. Total
dividend paid for the year is
$73.5 million
Number of employees Approximately 23000 employees
in whole group.
Approximately 6000
employees
Share price on 18th May
2018:
52 weeks high
52 weeks low
6.52 AUD
4.77 AUD
21.29 AUD
16.14 AUD
Assessment of price movements
Qantas Airways
Date Open High Low Close Adj Close Volume
20-04-18 5.94 6.05 5.92 6.01 6.01 4839290
23-04-18 5.98 5.98 5.9 5.9 5.9 4798735
24-04-18 5.92 5.97 5.84 5.91 5.91 7766106
26-04-18 5.91 5.93 5.84 5.85 5.85 11264859
27-04-18 5.81 5.82 5.655 5.69 5.69 15883332
30-04-18 5.72 5.79 5.69 5.77 5.77 6921787
01-05-18 5.77 5.85 5.76 5.8 5.8 7314890
02-05-18 5.97 6.29 5.97 6.27 6.27 18020493
03-05-18 6.23 6.325 6.14 6.17 6.17 15419684
04-05-18 6.16 6.35 6.12 6.31 6.31 20778182
07-05-18 6.39 6.45 6.36 6.43 6.43 6416615
08-05-18 6.42 6.43 6.24 6.27 6.27 6186643
09-05-18 6.36 6.37 6.29 6.32 6.32 3978309
10-05-18 6.26 6.31 6.12 6.17 6.17 8980366
11-05-18 6.17 6.17 6.1 6.11 6.11 8404909
14-05-18 6.16 6.28 6.14 6.28 6.28 5854250
15-05-18 6.25 6.31 6.15 6.29 6.29 5673751
16-05-18 6.29 6.39 6.29 6.34 6.34 4622597
17-05-18 6.36 6.42 6.31 6.34 6.34 5194474
18-05-18 6.35 6.37 6.3 6.33 6.33 5872961

4/20/2018
4/21/2018
4/22/2018
4/23/2018
4/24/2018
4/25/2018
4/26/2018
4/27/2018
4/28/2018
4/29/2018
4/30/2018
5/1/2018
5/2/2018
5/3/2018
5/4/2018
5/5/2018
5/6/2018
5/7/2018
5/8/2018
5/9/2018
5/10/2018
5/11/2018
5/12/2018
5/13/2018
5/14/2018
5/15/2018
5/16/2018
5/17/2018
5/18/2018
5.2
5.4
5.6
5.8
6
6.2
6.4
6.6
6.01 5.9 5.91 5.85
5.69 5.77 5.8
6.276.17
6.31
6.43
6.276.32
6.176.11
6.286.296.346.346.33
Share price of Qantas Airways
It can be analyzed from above graph that Qantas Airways Ltd has been performing in more
appropriate manner to ensure stability in value. Due to same reason continue enhancement in
price of same can be accessed i.e. the price have been increased from 6.01 AUD to 6.33 AUD.
From the data of table it can be accessed that no major fluctuation have been analyzed in last one
year and the same represents the sustainability of company (Hopkin, 2017).
Seek Ltd
Date Open High Low Close Adj Close Volume
20-04-18 19.17 19.17 18.87 19.07 19.07 491198
23-04-18 19.09 19.14 18.85 18.89 18.89 318775
24-04-18 19 19.36 18.99 19.33 19.33 447642
26-04-18 19.44 19.5 19.205 19.34 19.34 1006444
27-04-18 19.47 19.73 19.45 19.6 19.6 608021
30-04-18 19.65 19.65 19.38 19.43 19.43 738836
01-05-18 19.5 19.69 19.36 19.43 19.43 2237704
02-05-18 19.54 19.99 19.52 19.89 19.89 943445
03-05-18 20.2 20.42 19.97 20.15 20.15 713413
04-05-18 20.09 20.27 19.91 20.06 20.06 366856
07-05-18 20.26 20.75 20.02 20.36 20.36 862478
08-05-18 20.52 20.78 20.26 20.38 20.38 1091853
09-05-18 20.67 20.71 20.55 20.67 20.67 735717

10-05-18 20.84 20.88 20.58 20.64 20.64 364954
11-05-18 20.73 20.82 20.62 20.76 20.76 437438
14-05-18 20.8 20.84 20.7 20.8 20.8 472034
15-05-18 20.74 20.94 20.55 20.83 20.83 837662
16-05-18 20.86 20.97 20.85 20.86 20.86 808114
17-05-18 20.84 20.9 20.605 20.75 20.75 620697
18-05-18 20.73 20.8 20.66 20.75 20.75 454374
4/20/2018
4/21/2018
4/22/2018
4/23/2018
4/24/2018
4/25/2018
4/26/2018
4/27/2018
4/28/2018
4/29/2018
4/30/2018
5/1/2018
5/2/2018
5/3/2018
5/4/2018
5/5/2018
5/6/2018
5/7/2018
5/8/2018
5/9/2018
5/10/2018
5/11/2018
5/12/2018
5/13/2018
5/14/2018
5/15/2018
5/16/2018
5/17/2018
5/18/2018
17.5
18
18.5
19
19.5
20
20.5
21
21.5
19.07 18.889999
19.33 19.34
19.6 19.4319.43
19.889999
20.1520.059999
20.36000120.379999
20.6720.63999920.76 20.79999920.8320.86000120.7520.75
Shar es prices of Seek Ltd
In case of Seek Ltd it could be accessed from above data that company was performing in
immense way. But there has been slight fluctuations in decreases in share price of Seek Ltd have
been assessed. However, the company has attained the position back till the month of May. The
changes in above share price represent that company is not performing in sustainable manner,
thus it pertains to higher risk as well as return. As per the report provided by Macquarie Australia
Conference presentation it has been assessed that enhancement in profit is not the main objective
as it is focusing on capitalizing on substantial marketing opportunities (Brigham and Ehrhardt,
2013). Further revenue of company has been increased to 48% and an enhancement of 36% has
been accessed in EBIT.
Calculation of gain or loss
Calculation relating to purchase of investment
Particular Purchase Date Share Price No. of Shares Amount in $

Qantas Airways Share 20th April 2018 6.01 831 4994.31
Seek Ltd Share 20th April 2018 18.96 263 4986.48
Total 9980.79
Calculation relating to sale of investment
Particular Sale Date Share Price No. of Shares Amount in $
Qantas Airways Share 18 th May 2018 6.33 831 5276.85
Seek Ltd Share 18th May 2018 20.75 263 5462.51
Total 10739.36
Calculation relating to profit or loss
Particular Amount in $
Total amount invested on purchase of share of both the companies 9980.79
Total amount received on sale of shares of both the companies 10739.36
Dividend received 0
Profit / (Loss) 758.57
Recommendation
It is recommended in order to take appropriate investment decision, it is necessary that historical
data as well the recent analysis provided by various economists should be considered. As in
present case even though financial performance of Seek Ltd. is more appropriate in comparison
to Qantas Ltd; but the fact cannot be denied that more fluctuation in share price have been
assessed in case of same. Thus, in case investor is ready to bear higher risk in order to attain
higher return Qantas Ltd. will be preferred over Seek Ltd. Further in case substantial return will
average risk is the choice of investor than Qantas Ltd can be chosen.
KEY FINANCIAL DATA AND RATIO ANALYSIS
Financial Data
($ millions)
Qantas Airways Seek Ltd
Revenue / Sales 13857 1053.2
Interest Expense 235 29.3

EBIT 1181+235 = 1416 437.3+29.3 = 466.6
Net Profit Before
Tax
1181 437.3
Net Profit After Tax 853 362.0
Current Assets 3119 841.9
Total Assets 17221 3683
Current Liabilities 7095 550
Total Liabilities 13681 1643.1
Total Equity 3540 2039.9
Ratio Analysis
Ratio Analysis can be referred as a methodology of assessing financial statement in order to
ascertain quick indication relating to organization financial performance in main areas. The
ratios are bifurcated in following categories:
 Short term Solvency Ratio
 Asset Management Ratio
 Market Valuation Ratio
 Profitability Ratio
Ratio analysis is significantly dependent on the availability of accounting information relating to
the organization. Further the same are being applied in order to compare the performance of two
or more organization. In present case same is being done in order to compare the performance of
Qantas Airways and Seek Ltd. The area on which further assessment is to be done is ascertained
by analyst through assessment of ratio analysis.

Liquidity Ratio
($ millions)
Liquidity Ratios Qantas Airways Seek Ltd
Working Capital Ratio 3119/7095 841.9/550.0
(Current Assets/ Current Liabilities) 0.439605356 1.53
Average days sales uncollected 784/16057*365 111.7/1053.2
(Accounts Receivable/ Total
revenue*365) 17.82 0.11
Inventory turnover 16057/(336+351/2)) 0.00
(Total Revenue/ Average Inventory) 31.39 0.00
Average days inventory in hand (336+351/2)/16057*365
(Average Inventory/ Total revenue)
*365 11.62717 0.00
Cash Ratio 1775/7095 652/550
(Cash / Current Liabilities) 0.25017618 1.19
Days of working capital (3119-7095)/(16057/365) (841.9-550)/(1053.2/365)
((Current Assets- Current Liabilities)/
(sales /365)) -90.38 101.16
Liquidity ratio assesses the capability of an organization to pay off its current as well as long
term liabilities when they become due. The ratio specifies the efficiency of company to convert
other assets into cash in order to pay off its liabilities and other current obligation (Heizer, 2016).
Cash ratio is believed to be the most significant ratio as it evaluates the ability of company to pay
off its short term liabilities with cash and cash equivalents. In present case it can be assessed that
Seek Ltd is prominent in managing payment of current liabilities as the same is having
comparatively higher cash ratio. Working capital ratio is also referred as current ratio and it
evaluates the capability of an organization to pay off its current liabilities with current assets.
The faster the assets are converted into cash the more the company will be efficient in paying off
its debt (Grant, 2016). In present case it can be assessed that Seek Ltd is efficient in same as it

has higher ratio in comparison to Qantas Airways. Overall in all the above liquidity ratio, it can
be accessed that they are higher in case of Seek Ltd, the same represents that company is more
efficient comparatively in paying off its current liabilities with current assets.
Profitability Ratios
($ millions)
Profitability Ratios Qantas Seek
Profit Margin 853/16057 362.0/(1053.2 +177.3)
(Profit / Total revenue) 0.053123248 0.29
Asset Turnover Ratio 16057/17221 (1053.2+177.3)/3683
(Total Revenue / Total Assets) 0.932408106 0.33
Return on asset 853/17221 362.0/3683
(Profit / Total Assets) 0.049532547 0.10
Return on Capital Employed (1181+235)/(17221-7095) (437.3+29.3)/(3683-550)
(EBIT / (Total assets - Current
Liabilities)) 0.14 0.15
Return on Sales 853/(13857+808) 362.0/1053.2
(Profit / Total Sales) 0.06 0.34
Return on equity 853/3540 362.0/2039.9
(Profit / Total Equity) 0.240960452 0.18
Profitability ratios reflect company’s overall effectiveness and performance. There are two types
of profitability ratios: first are margins and second are returns. Ratios which demonstrate margins
symbolize capability of firm towards transformation of sales dollars in profits on different points
of measurement (Jones, 2014). In the same way ratios which reflects returns signifies capability
of firm to access overall competence of firm into creating returns in favor of their investors.
Profit margin ration assess the percentage of profit generated from certain level of sales. Further,
it also indicates the efficiency of company in managing its expenses relating to sales. The higher
the ratio, the more the ratio is preferable. The same can be done by company through generating
more sales and lowering the expenses. It can be accessed from above analysis that Qantas

Airways is able to maintain the same in more appropriate manner in comparison to Seek Ltd.
Return on asset ratio evaluates the net income produced by total asset through comparing the net
income with its average total assets (McKinney, 2015). As the main motive of company assets is
to generate profits, thus the company as well as investor assess that whether the investment in
assets have turned into profits or not. It can be analyzed form above assessment that Seek Ltd has
appropriately converted its assets into profits. Overall Seek Ltd has attained higher ratios in
comparison to Qantas Airways Ltd, but Qantas Airways is having higher return of equity
comparatively. The same might significantly affect the decision of investor.
Stability Ratio
($ millions)
Stability Ratios Qantas Seek
13681/3540 1643.1/2039.9
Debt to Equity Ratio 3.86 0.81
(Debt / Equity)
(1181+235)/ 235
Interest Coverage 6.03 (437.3+29.3)/29.3
(EBIT/ Interest Expenses) 15.92
Net Cash Transaction Period (2067-1775)/2704*12
((930.2+37.8
-652)/2704)*12
(Net debt / Cash Flow from operating
activities)*12 1.30 13.52
Net Debt = Total borrowing - Cash & Cash
Equivalent
Debt to Market Cap Proportion
((2067-1775)/
(1853*6.35))*100
((930.2+37.8
-652)/(20.77*3476.30))
*100
(Net Debt)/ Market Capitalization *100 2.48 0.48
Stability evaluate examine how much debt a firm is able to sustain and whether debt and equity
are stable or not. It is believed as long term counter part of liquidity. Further financial stability
of an organization is necessarily to be ascertained in order to assess the step to be taken relating
to investment in that company. Debt to Equity ratio assesses the proportion of debt which is

being held by company in comparison to its equity (Petty et al. 2015). Increase in debt to equity
ratio represent that company is accomplishing its operations through assistance of finance and
which is not a positive variant from point of view of investor decision. In present case it could be
assessed from above figures that Qantas Airways is significantly dependent on finance in order
to accomplish its operations. As the ratio is higher than 2.0 which is believed as risk for investor,
thus the same should be considered while taking decision relating to same. Interest coverage
ratio represents the times company operating profits covers the interest expense relating to
borrowing (Said, 2016). The higher the ratio, the more assurance relating to same is attained. In
present case as Seek Ltd is having higher ratio which could provide relief to the investors that
even though the company has been financed from outside sources in significant manner it is
performing well, hence they should not be worried about their investment.
CONCLUSION
Assessment of price of shares is one of the significant variant which is being analyzed by the
investors prior to investing in any organization. The above study depicts that the higher the
fluctuation exists in share price movements the higher the percentile of risk is related to that
organization. Further, it can be depicted from the assessment of ratio analysis assessment that
Seek Ltd is comparatively efficient in managing liquidity as it has higher liquidity ratio in
comparison to Qantas Ltd. Further, as Seek Ltd is having lower debt to equity ratio is could be
asserted that it is able to manage funds for its operations through in-house management only
which represent the efficiency of an organization.

REFERENCES
Hopkin, P., 2017. Fundamentals of risk management: understanding, evaluating and
implementing effective risk management. Kogan Page Publishers.
Brigham, E.F. & Ehrhardt, M.C, 2013, Financial management: Theory & practice. Cengage
Learning.
Grant, R. M. 2016, Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.
Heizer, J. 2016, Operations Management, 11/e. Pearson Education India.
Jones, M., 2014, Sustainable event management: A practical guide. Routledge.
McKinney, J.B., 2015, Effective financial management in public and nonprofit agencies. ABC-
CLIO.
Petty, J.W., Titman, S., Keown, and et.al. 2015. Financial management: Principles and
applications. Pearson Higher Education AU.
Said, H.A., 2016. Using Different Probability Distributions for Managerial Accounting
Technique: The Cost-Volume-Profit Analysis. Journal of Business and Accounting, 9(1), p.3.
Annual Report of Seek Ltd. 2017. (Online). Available through
<http://member.afraccess.com/media?id=CMN://3A481116&filename=20171030/
SEK_01914393.pdf>. [Accessed on 19th May 2018]
Annual Report of Qantas Airways. 2017. (Online). Available through
<http://investor.qantas.com/FormBuilder/_Resource/_module/doLLG5ufYkCyEPjF1tpgyw/file/
annual-reports/2017AnnualReport.pdf>. [Accessed on 19th May 2018]

APPENDICES
Financial Statement of Qantas Airways
Consolidated Income Statement
Consolidated Balance Sheet

Cash Flow Statement

Financial Statement of Seek Ltd.
Consolidated Income Statement

Consolidated Balance Sheet

Cash Flow Statement