Financial Analysis of Thomas Cook: Reasons for Failure and Comparison with Competitor TUI Travels

ACCOUNTING FOR
MANAGERS

Table of Contents
TASK 1...........................................................................................................................................3
Financial Analysis.......................................................................................................................3
TASK 2............................................................................................................................................6
Rationale.....................................................................................................................................6
TASK 3............................................................................................................................................8
REFERENCES..............................................................................................................................11

TASK 1
Financial Analysis
Thomas Cook
Profitability ratio
analysis
Particulars Formulas 2015 2016 2017 2018
Gross Profit 1,772 1,822 1,990 1,933
Net profit 19 9 9 -163
Sales revenue 7,834 7,812 9,006 9,584
GP ratio Gross profit / sales * 100 22.62% 23.32% 22.10% 20.17%
NP ratio Net profit / sales * 100 0.24% 0.12% 0.10% -1.70%
Working capital
ratio analysis
Particulars Formulas 2015 2016 2017 2018
Current assets 2,035 2,656 1,576 1,793
Current liabilities 3702 4630 152 356
Inventory 32 43 0 0
Prepaid expenses 0 0
Quick assets 2003 2613 1576 1793
Current ratio Current assets / current liabilities 0.55 0.57 10.4 5.0
Quick ratio Current assets - (stock + prepaid expenses) 0.54 0.56 10.37 5.04
Solvency ratio
analysis
Particulars Formulas 2015 2016 2017 2018
Long-term debt 1038 847 653 659
Shareholder's equity 368 391 2858 2874
Debt-equity ratio Long-term debt / shareholders’ equity 2.82 2.17 0.23 0.23
Financial structure ratio
Financial structure

ratio
Particulars Formulas 2015 2016 2017 2018
Long-term debt 1038 847 653 659
Capital employed 2256 2325 6453 6213
Gearing ratio Long-term debt / capital employed * 100 46% 36% 10% 11%
Investment ratio analysis
Particulars Formulas 2015 2016 2017 2018
DPS - 0.5 p 0.6p Nil
EPS 1.6 p 0.8p 0.7p (10.6)p
Competitor analysis
TUI Travels
TUI travel
Ratio analysis
Particulars 2015 2016 2017 2018
Profitability
ratios
Gross profit 2395 1907 2000 1982
Sales 20012 17185 18535 19524
Gross profit ratio 11.97% 11.10% 10.79% 10.15%
Net profit 340 1037 645 733
Sales 20012 17185 18535 19524
Net profit ratio 1.70% 6.03% 3.48% 3.75%