Addis Ababa Science and Technology PDF
Added on 2022-01-19
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Finance
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Addis Ababa Science and Technology University
College of Natural and Social Sciences
MBA (Industrial Management)
Investment Analysis and Financial Management
(MBAD6031)
Assignment on
Financial Ratio Analysis, for Ethiopian Airline Annual
Report of 2015 and 2016
Submitted to: - Giday G (PhD in Finance)
Submitted by: - Mr. Arkbom Hailu (GSR 034/13)
Mr. Samuel Tekelehana (GSR 045/13)
April 2021
College of Natural and Social Sciences
MBA (Industrial Management)
Investment Analysis and Financial Management
(MBAD6031)
Assignment on
Financial Ratio Analysis, for Ethiopian Airline Annual
Report of 2015 and 2016
Submitted to: - Giday G (PhD in Finance)
Submitted by: - Mr. Arkbom Hailu (GSR 034/13)
Mr. Samuel Tekelehana (GSR 045/13)
April 2021
Financial Ratio Analysis, for Ethiopian Airline Annual Report of 2015 and 2016
Investment Analysis and Financial Management pg. ii
Table of Contents
1. Introduction ............................................................................................................................. 1
1.1. Financial Statement and Financial Analysis .................................................................... 1
1.2. Financial Ratio Analysis .................................................................................................. 1
1.2.1. Liquidity (Short term) ratio....................................................................................... 1
1.2.2. Asset or Activity (efficiency) ratio ........................................................................... 2
1.2.3. Leverage Ratio, Solvency or Debt (Long term) Ratio .............................................. 4
1.2.4. Profitability Ratio...................................................................................................... 5
1.3. Financial Ratio for Ethiopian Airline for the year of 2015-2016..................................... 8
2. Reference ............................................................................................................................... 15
Investment Analysis and Financial Management pg. ii
Table of Contents
1. Introduction ............................................................................................................................. 1
1.1. Financial Statement and Financial Analysis .................................................................... 1
1.2. Financial Ratio Analysis .................................................................................................. 1
1.2.1. Liquidity (Short term) ratio....................................................................................... 1
1.2.2. Asset or Activity (efficiency) ratio ........................................................................... 2
1.2.3. Leverage Ratio, Solvency or Debt (Long term) Ratio .............................................. 4
1.2.4. Profitability Ratio...................................................................................................... 5
1.3. Financial Ratio for Ethiopian Airline for the year of 2015-2016..................................... 8
2. Reference ............................................................................................................................... 15
Financial Ratio Analysis, for Ethiopian Airline Annual Report of 2015 and 2016
Investment Analysis and Financial Management pg. 1
1. Introduction
1.1. Financial Statement and Financial Analysis
The performance, efficiency or effectiveness of a company in utilizing its resource i.e., financial,
any tangible and intangible asset will be evaluating using financial ratio analysis. This financial
ratio analysis will also used to evaluated the liquidity or short-term liability or payment ability as
well as solvency or long-term status debt recovery capacity of the company. Asset or activity
management ratio will also help the financial manager or any creditors to see how the asset has
been utilize and how the account receivables or payable are managed in the company.
Ratio Analysis is a very helpful mathematical tool for any financial manager, employee, external
body like creditor to determine the financial status of the company in as compare to its strength
and weakness in obtaining profit out of the initial investment.
Always, in order to execute a financial ratio, a balance sheet and income statement of the company
must be there. Without these two-accounting financial statement, ration analysis couldn’t be
possible.
This paper will evaluate the financial ratio of one inter-company in the aviation industry, Ethiopian
Airline. For evaluating a horizontal five-year annual financial statement data is collected starting
from 2011-2012 to 2015-2016 E.C but for this assignment we only used the last two-year financial
statement for comparison.
1.2. Financial Ratio Analysis
There are different ration analyses which are particularly focused on
A) Liquidity (Short term) loan
B) Asset (Activity) Management
C) Solvency (Debt) or Capital Structure (Long term) debt and
D) Profit
1.2.1. Liquidity (Short term) ratio
Liquidity or Short-term ratio evaluate a company short term liquidate ability; it is the financial
capacity of the company to overcome a short-term loan. If the asset for current ratio analysis is
two times of the liability, then we can say that the company is in health condition. Similarly for
Investment Analysis and Financial Management pg. 1
1. Introduction
1.1. Financial Statement and Financial Analysis
The performance, efficiency or effectiveness of a company in utilizing its resource i.e., financial,
any tangible and intangible asset will be evaluating using financial ratio analysis. This financial
ratio analysis will also used to evaluated the liquidity or short-term liability or payment ability as
well as solvency or long-term status debt recovery capacity of the company. Asset or activity
management ratio will also help the financial manager or any creditors to see how the asset has
been utilize and how the account receivables or payable are managed in the company.
Ratio Analysis is a very helpful mathematical tool for any financial manager, employee, external
body like creditor to determine the financial status of the company in as compare to its strength
and weakness in obtaining profit out of the initial investment.
Always, in order to execute a financial ratio, a balance sheet and income statement of the company
must be there. Without these two-accounting financial statement, ration analysis couldn’t be
possible.
This paper will evaluate the financial ratio of one inter-company in the aviation industry, Ethiopian
Airline. For evaluating a horizontal five-year annual financial statement data is collected starting
from 2011-2012 to 2015-2016 E.C but for this assignment we only used the last two-year financial
statement for comparison.
1.2. Financial Ratio Analysis
There are different ration analyses which are particularly focused on
A) Liquidity (Short term) loan
B) Asset (Activity) Management
C) Solvency (Debt) or Capital Structure (Long term) debt and
D) Profit
1.2.1. Liquidity (Short term) ratio
Liquidity or Short-term ratio evaluate a company short term liquidate ability; it is the financial
capacity of the company to overcome a short-term loan. If the asset for current ratio analysis is
two times of the liability, then we can say that the company is in health condition. Similarly for
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