Financial Analysis of Qantas Airways

BUSINESS FINANCE
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Executive Summary
This report highlights the factor and importance of business furnace. The report aims to evaluate
all of the financial categories available to analyze the flow of resources along with income of a
business enterprise. The company has its shares listed under Australian Stock Exchange, which
indicates that the market value of the company is quite strong and impressive. The resultant
values of the various financial ratio calculations prove the potentiality of the company for
growth. Various financial ratios such as profitability ratio, operating efficiency ratio, debt-equity
ratio, has been calculated to determine the worth of the company for the investors. The various
financial evaluations are performed to create a detailed report in order to guide an aspiring
investor to invest in Qantas and earn profit from it in the near future.
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Table of Contents
I Introduction...................................................................................................................................4
II Financial Analysis of the Company.............................................................................................4
2.1. Company’s Description.........................................................................................................4
2.2 Calculation and evaluation of Operating efficiency ratios and profitability ratios of Qantas
Airways........................................................................................................................................4
2.3 Comparison and analysis of share price movements with graphical representations............7
2.4 Calculating cost of equity......................................................................................................9
2.5 Identifying capital structure.................................................................................................10
2.6. Consulting Report...............................................................................................................11
1. Title....................................................................................................................................11
2. Introduction........................................................................................................................11
3. Financial position and performance...................................................................................12
4. Conclusion..........................................................................................................................12
5. Recommendation................................................................................................................13
IV. Conclusion...............................................................................................................................13
Reference list.................................................................................................................................14
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I Introduction
Every business irrespective of its size and stature needs a credible access to a source of capital in
order to keep the business running. Multiple obligations, mostly short term in nature are met by
infusions of capital from various sources. There are various forms of financing and a diverse
quantifiable amount of options available when peeking at the types of financing. Debt and equity
financing are a couple of the most commonly used financing types. Mezzanine capital is another
form of financing that combines the best possible features of debt as well as equity financing.
This report would perform the financial analysis of Qantas airways one of the most commonly
used airway travel option in Australia. Qantas is the largest airline in Australia in when evaluated
in terms of the size of the fleet. Various financial factors such as movement of the share price
along with the ratios of operating efficiency and the capital structure of the organization would
be critically evaluated throughout the report.
II Financial Analysis of the Company
2.1. Company’s Description
Qantas airways have the largest fleet size compared to any other Australian airlines, with a total
fleet size of 131. There are 8 subsidiaries of the organization, and the airways travel to 85
destinations both domestically and internationally. Its headquarters are in Sydney Australia and it
employees 26,150 employees. The fiscal year of 2018 for Qantas was financially blessed as the
company made a net profit of $1.6 billion from the previous year, before calculation of tax. This
profit margin is the highest in the history of the airlines. It reported a $1.39 billion before tax
statutory profit with a statutory earning of 56 cents per share. The operating cash flow was
estimated at a staggering worth of $3.41 billion. $1 billion was paid back to various shareholders
in the form of buy backs that were on market share and in the form of dividends. The total free
flow of cash was estimated at $1.44 billion, that is $1.1 billion greater than 2017. The total
expenditure on capital had increased from $1.5 billion in 2017 to $1.9 billion in 2018. The total
passengers that they had carried in 2018 was estimated at 55,273, in 2017 it was 53,659. The
overall business performance of Qantas was positively deviating from 2017 performance by a
wide margin.
2.2 Calculation and evaluation of Operating efficiency ratios and profitability ratios of
Qantas Airways
Financial ratios of Qantas Airlines
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