Qantas Airlines Performance Analysis

This assignment analyzes the financial performance of Qantas Airlines. It examines their recent profit record, global operations expansion, EBIT improvement, and the success of their loyalty business model. The analysis considers factors like low oil prices and tourism trends to evaluate Qantas's investment potential.

Running head: ACCOUNTING SYSTEMS AND PROCESSES
Subject Code: ACC 566
Subject Name: Accounting Systems and Processes
Assignment Task Number: 2
List of Questions Attempted: 13
List of Questions Not Attempted: 0

ACCOUNTING SYSTEMS AND PROCESSES
Acknowledgement:
The work in this assignment is my own work, and has not been plagiarised.
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Table of Contents
Answer to Question 1:.....................................................................................................................3
Answer to Question 2:.....................................................................................................................3
Answer to Question 3:.....................................................................................................................4
Answer to Question 4:.....................................................................................................................5
Answer to Question 5:.....................................................................................................................5
Answer to Question 6:.....................................................................................................................6
Answer to Question 7:.....................................................................................................................7
Answer to Question 8:.....................................................................................................................8
Answer to Question 9:...................................................................................................................13
Answer to Question 10:.................................................................................................................13
Answer to Question 11:.................................................................................................................14
Answer to Question 12:.................................................................................................................14
Answer to Question 13:.................................................................................................................14
References:....................................................................................................................................18
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Answer to Question 1:
The references are substituted by names in particular cells of a spreadsheet. The primary
reasons identified behind such substitution comprise of the ease of convenience and relationship
with the calculations and declarations represented in the specific spreadsheet (Bebbington,
Unerman & O'Dwyer, 2014). An example of substituting cell references by names is depicted as
follows:
Normal view:
Formula view:
Particulars Amount (in $)
Revenue 145000
Cost of revenue 96000
Gross profit =C4-C5
Answer to Question 2:
The negative numbers are exemplified primarily in the excel sheet through brackets in
red and the same is carried out especially in the below-depicted illustrations:
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Answer to Question 3:
For the sake of the accountants, a distinct bookkeeping or data entry is needed. This is
because it enables in representing single view of each single row. Consequently, in case of
report, a separate area is required for enabling the accountants to form the detailed reports
coupled with the needed source of data (Brusca et al., 2016). The range of data entry is used for
record of raw data, while the portion of report is used for transferring the record into meaningful
information.
A significant assertion in this context is that a separate area for record keeping is needed
to be formed for recording inaccurate bookkeeping of raw data in the spreadsheet. Thus, the
process of developing a separation area helps in easy recording of the raw data along with
eradicating the unnecessary information. The following spreadsheet illustration helps in clearing
out the idea:
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Answer to Question 4:
The “IF” function enables in giving projected intelligence to the program through which
the program could carry out the decision in relation to the developed criteria along with
ascertaining the course of the program. In the words of Ismail & King (2014), the ‘IF’ function
could be described as the function, which helps in providing the single value. If the criterion is
satisfied, it would be true and if the criterion is not met, the value would be incorrect. A
spreadsheet instance is gathered that has the application of the ‘IF’ function, which is depicted as
follows:
Answer to Question 5:
Perpetual inventory system Periodic inventory system
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Physical maintenance of the records is not
possible in case of the perpetual inventory
system, as the number of transactions would be
numerous at the unit during the period of
accounting (Loughran & McDonald, (2016).
In case of the periodic inventory system, the
users are enabled to keep manual record of the
account for each unit of inventory.
Under this system, continual updates are
inherent in the inventory journal or the general
ledger due to the occurrence of transactions
related to inventory (Monroy, Nasiri & Peláez,
2014).
In this system, the accounting entry related to
cost of revenue is not recorded in the period of
accounting until the occurrence of the physical
count, which is derived later for calculating the
cost of revenue.
Continual updates to the cost of revenue are
made at the time each unit of sale is carried out
under this system.
The cost of revenue is calculated in lump sum
at the end of the fiscal period under the
periodic inventory system (Öker & Adıgüzel,
2016).
Answer to Question 6:
In any form of the role of accounting, an individual could seek the benefit from using the
excel sheet in daily tasks. The small business owners do not possess adequate accounting
knowledge and they might find it complex to track the payments. With the help of spreadsheet,
easy solutions could be offered for tracking payments. In addition, spreadsheet enables in
utilising the analysis of money, which is incurred and the amount that is received (Simkin, M.
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Norman & Rose, 2014). In addition, spreadsheet helps an individual to segregate the cash
amount received on the part of the organisation in the accounting year. One more benefit of
utilising the spreadsheet is that organisations could link the spreadsheets together and it is
valuable in ascertaining cash flow. However, one of the benefits of spreadsheet in accounting is
its vulnerability to fraud, which might lead to huge losses and loss of control.
Answer to Question 7:
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Answer to Question 8:
Normal view:
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Formula view:
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Answer to Question 9:
Answer to Question 10:
The two different methods that could be used to estimate the bad debt include the
following:
Direct write-off method:
Under this method, when any specific amount becomes uncollectible, the loss would be
allocated to the account of bad debt expense (Thomas, 2016). For instance, an organisation has a
debtor balance of $2,550, which would be uncollectible on 31st January 2018 and the journal
entry is depicted as follows:
Allowance method:
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In this method, the expense occurring due to bad debt is represented in the income
statement of the organisation in the form of operating expense. The bad debt written off is
debited to the allowance account, instead of debiting the account of bad debt expense.
Answer to Question 11:
In the current technological era, the computers have emerged as a necessary element in
online retailing. For instance, E-Bay has used the ability of the computers in the form of vehicle
for promotion of products in order to increase the overall sales. Particularly, it has been argued
that E-bay having the right blend of organisational culture and technology could make
appropriate product offers through contemplation of the retail market (Trigo, Belfo & Estébanez,
2016). Thus, the usage of computers is necessary for E-Bay to keep records of the products
having higher growth potential.
Answer to Question 12:
Answer to Question 13:
Balanced scorecard is the driver of evaluating the performance used in the process of
strategic administration in order to locate and improve the various forms of integral functions
and the outcomes obtained. Thus, it is mandatory to offer quantitative results, since the managers
interpret the financial information usually in order to undertake effective decisions. The balanced
scorecard has helped Qantas in ensuring the net benefits of its associated stakeholders. Hence,
balanced scorecard enables in meeting the long-term objectives of the organisation, which would
enable in enhancing its financial performance in the long-run. The following is the remuneration
report of Qantas extracted from its annual report of 2017:
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The overall remuneration for the periods ended 2016 and 2017 of Qantas stood at
$21,649 million and $20,460 million respectively (Investor.qantas.com, 2018). By appointing
Gareth Evans as the CEO of the organisation, the overall marketing strategies have been
improved. In addition, on evaluating the financial statements of the organisation, it has been
identified that Qantas is able to experience adequate growth in revenue, which has helped in
increasing its overall profitability. Furthermore, the non-current assets of the organisation have
been chosen and the figures are depicted below through charts and data entry:
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Receivables
Other financial assets
Investments accounted for under the equity
method
Property, plant and equipment
Intangible assets
Deffered tax assets
Other
0% 20% 40% 60% 80% 100%
Items of non-current assets of
Qantas
2016
2017
134; 1%46; 0%197; 1%
11670; 88%
909; 7%39; 0%252; 2%
Items of non-current assets of Qantas
in 2017
Receivables Other financial assets
Investments accounted for under the
equity method Property, plant and equipment
Intangible assets Deffered tax assets
Other
Based on the above evaluation, the portion of non-current assets has increased over the
year and the investors are suggested to invest in the shares of Qantas Airways. Moreover, the
organisation has an effective liquidity position, which could be understood from the figures
reported on the part of the organisation. In addition, the profit before tax of the airline has been
$1,401 million in 2016-2017 and the profit earned is the second highest over the past 97 years in
its business operations. The outcome denotes that the company has maintained competitive
advantage at both the national and global levels after the completion of the three years of
program transformation. Along with this, the global operations of the organisation have
encountered greater extent of capacity growth while witnessing an improvement in EBIT to $327
million.
It could be observed that Qantas is involved in selling air miles to the supermarkets and
other retail partners. All the units of the airline generate profit for the organisation, since it incurs
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lower cost for redeeming these points along with selling them. Qantas has experienced rising
growth in the number of tourists and increase in revenue from the loyalty business. The aviation
industry has been highly attractive and the analysts have estimated their price target of $4.30 on
the shares of Qantas. Such type of price target discloses that there is potentiality for increase in
34% of the existing share price. As the oil prices have remained low in the market, it has been
believed that the investors would benefit from boom in global tourism. Moreover, there could be
an assertion that Qantas has a good prospect for investment to maximise the benefits of the
investors.
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References:
Bebbington, J., Unerman, J., & O'Dwyer, B. (Eds.). (2014). Sustainability accounting and
accountability. Routledge.
Brusca, I., Caperchione, E., Cohen, S., & Rossi, F. M. (Eds.). (2016). Public sector accounting
and auditing in Europe: The challenge of harmonization. Springer.
Investor.qantas.com. (2018). Retrieved 15 January 2018, from
http://investor.qantas.com/annual-report-2017/
Ismail, N. A., & King, M. (2014). Factors influencing the alignment of accounting information
systems in small and medium sized Malaysian manufacturing firms. Journal of
Information Systems and Small Business, 1(1-2), 1-20.
Loughran, T., & McDonald, B. (2016). Textual analysis in accounting and finance: A
survey. Journal of Accounting Research, 54(4), 1187-1230.
Monroy, C. R., Nasiri, A., & Peláez, M. Á. (2014). Activity Based Costing, Time-Driven
Activity Based Costing and Lean Accounting: Differences among three accounting
systems’ approach to manufacturing. In Annals of Industrial Engineering 2012 (pp. 11-
17). Springer London.
Öker, F., & Adıgüzel, H. (2016). Time‐driven activity‐based costing: An implementation in a
manufacturing company. Journal of Corporate Accounting & Finance, 27(3), 39-56.
Simkin, M. G., Norman, C. S., & Rose, J. M. (2014). Core concepts of accounting information
systems. John Wiley & Sons.
Thomas, T. F. (2016). Motivating revisions of management accounting systems: An examination
of organizational goals and accounting feedback. Accounting, Organizations and
Society, 53, 1-16.
Trigo, A., Belfo, F., & Estébanez, R. P. (2016). Accounting Information Systems: evolving
towards a business process oriented accounting. Procedia Computer Science, 100, 987-
994.
.
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