Horizontal Analysis of Qantas' Financial Statements
Added on 2019-10-30
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Running head: ANALYSIS OF QANTAS1Analysis of QantasAuthor’s NameInstitution’s NameDate
ANALYSIS OF QANTAS2Executive SummaryThis report presents analysis of Qantas financial statements.Qantas Airlines was established in 1920 in the rural Queensland. It is one of the largest international and domesticairlines in Australia. The company operates in the world most dynamic and exciting sectors and have continued to be successful and grow all the years. The analysis was based on Qantasfinancial performance based on its 2016 annual report. It financial health was analysed on thebasis of liquidity, market performance, efficiency and profitability ratios. Based on the analysis, Qantas is financially health. This is based on the fact that the company profitability, efficiency and solvency ratios for the last three years have increased significantly.To be more specific, with the increased profit margin, ROA and ROE, it can be concluded that the company management is effective enough in managing its shareholder’s equity and assets to generate income. Furthermore, with high or increasing interest coverage, it is evident that the company is having easier time in settling its interest expenses. Hence, it would be recommendable for any potential investor to invest in Qantas in order to enjoy high returns given that it has been experiencing significant increase in its sales, gross profit and net profit.
ANALYSIS OF QANTAS3Analysis of QantasIntroduction Qantas Airlines was established in 1920 in the rural Queensland. It is one of the largest international and domestic airlines in Australia (MELBOURNE, 2011). Furthermore, it is the leading long-distance airways across the world and the strongest brands operating in Australia. It is the flag carrier airway in Australia and the largest airline by size, international destination and international flights. Furthermore, it is the third oldest airline carriers in the globe (Qantas, 2011). The company operates in the world most dynamic and exciting sectors and have continued to be successful and grow all the years. It flies to over 200 destinations across the globe in over 45 nations. It owns low-fare carrier Jetstar and regional carrier QantasLink, both of which are said to operate in Asia/Pacific and Australi region. On overall,its fleet comprises of 300 aircrafts. Qantas also generate its revenues from catering, touring and cargo operations (Qantas, 2016). The company believes in development of its diverse workforce. Thus, it is its priority to reflect a wide range of clients it serve across the globe and acknowledging diverse cultures across its workforce. To achieve this, the company has set up different programs aimed at attracting and retaining personnel from diverse cultural and personal backgrounds. Qantas have built reputation for it excellence in operational reliability, maintenance, customer service, engineering and safety (MELBOURNE, 2011). It key operation is usually transportation of client using its two complementary airline brands; that is, Jetstar and Qantas. In addition, Qantas operate other subsidiary business such as other business and airlines in the specialist markets like Q Catering (Qantas, 2016). Its brands operate domestic, international and regional services. With these considerations, this paper aims to present analysis of Qantas financial performance based on its 2016 annual report. This will be based
ANALYSIS OF QANTAS4on analysis of its competitors, and financial statements. It financial health would be analysed on the basis of liquidity, market performance, efficiency and profitability ratiosCompetitorsQantas chief competitors are United Continental Holding, LAN Airlines, Cathay Pacific Airways, Virgin Australia Holding and Singapore Airlines. Nonetheless, despite of these rivals, Qantas one of the largest airline operating in Australia, has shown no signal of violent completion in the international flights as it add extra volume (Qantas, 2016). The speedy growth experienced in the past one year had obligated this company to bid some exceptional airfare reductions hurting the travel airlines and agents (MELBOURNE, 2011). This was as a result of growth in international competitor by 11% forcing the company to reduce its airfares, sending ticket revenues per the international seat downward by around 9%and making its earnings from international operations to decrease by 22%.Critical Analysis of Qantas’ Financial Statements Ratio analysisThis entails quantitative analysis of financial information of an organization. This is mainly based on the line items in income statement, cash flow and income statement. In addition, ratio analysis is utilized in assessing numerous aspect of the organization’s financialand operating performance like liquidity, solvency, efficiency and profitability (Altman, 1968). This helps in checking whether an organization is deteriorating or improving. Basically, financial ratios help in measuring financial performance of a given organization. To be more specific, financial ratio analysis is the method of analysis which is utilized in obtaining quick signal of the organization’s financial performance in numerous key sections (Chen & Shimerda, (1981). The most common ratios used in analysing financial performanceof Qantas is the profitability ratios, efficiency, liquidity, capital structure and solvency ratios.Profitability ratios
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