Financial Analysis of British Airways: Evaluating Performance and Risk Factors

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Table of Contents

INTRODUCTION
Financial analysis is the practice of evaluating the processes, projects, budgets and the
other financial related transactions for determining the suitability and the performance of the
business. Specifically, financial analysis is been used for assessing that an entity is solvent,
profitable, liquid and stable in warranting its monetary investment. Application of the statistical
tools such as median and mean helps in knowing the average value of the revenues over the
years and in interpreting the growing level of the revenues over the period. The present report is
based on British Airways, operating as the second leading Airline company in United Kingdom
on the basis of fleet size and in carrying the passengers. Furthermore. The study throws deeper
insights into the horizontal and the vertical analysis with showing an evaluation of the
performance by applying ratio analysis. Moreover the report states various risk factors that
affects market position and the revenue of the company.
ASSESSMENT 1
Qualitative and quantitative data
The data can be collected in numerical terms or in terms of facts and theoretical data i.e.
in quantitative or qualitative manner (Holton and Walsh, 2016). Both kinds of data have separate
characteristics and therefore, can be differentiated on the basis of certain points.
Qualitative Data Quantitative Data
This kind of data is used to describe
qualities of the intended object or its
characteristics and is usually
collected form methods such as
interviews or questionnaires and can
be descriptive in nature. It is
generally interpreted and analysed by
categorising the facts that have been
collected in a thematic manner and
then subsequently, conclusions are
drawn accordingly in the
The data collected is in quantifiable
or measurable terms and addresses
the how many or what aspect of a
particular problem. Such data is also
gathered using different instruments
such as rating scales or questionnaires
and in order to analyse or interpret the
data, tools like SPSS, Statistical
analysis software etc. are used so that
the conclusions can also be drawn in
quantifiable terms.

Horizontal and vertical analysis
These are two separate methods of analysing the financial statements and under each of
them the tactic used for conducting the analysis is different.
Horizontal Analysis Vertical Analysis
Under this type of analysis, the
comparison is made between
financial statements by comparing the
item of current financial statement
with that of the base year figure. This
is used to depict the growth or
decline in the trends of that particular
item over a period of time (Huang,
Yen and Whittaker, 2016). This kid
of analysis is usually done on an intra
firms basis i.e. within a company.
Vertical Analysis helps in
determining the value of a particular
item in a proportional measure i.e.
each statement is depicted in the
manner of percentage of the total
value which is derived from the
respective section. It helps in
creating a forecast by ascertaining
what would be there percentage of
holding in a single accounting year.
These are done in both intra firms
and inter firms i.e. within the
company as well as between two
companies.
Statistical and big data
Statistics is a methodology through which data can be analysed and Big data is also a data
analysis technique yet they differentiate on some basic levels:
Statistical Analysis Big Data Analysis
Statistical analysis is used to try to
find the relation between a diverse set
of data that is collected and then
interpret basic inferences form such
interrelation that is derived. The tools
that are used in the statistical analysis
are correlations, regression
coefficient, deviations, variances etc.
and these depict that what
Big data is usually done when
analysing the data volume sets
that are immense and in a raw
unstructured form that is collected
from an extremely diverse sources
(Franke and et.al., 2016). This
data that is collected in such a
manner is then interpreted and
categorised in a proper manner