Financial Analysis of Qantas Airways

This assignment requires a detailed financial analysis of Qantas Airways, examining its financial statements in accordance with the Australian Accounting Standards Board (AASB). It involves evaluating different elements of the financial pronouncements, analyzing key themes in financial reporting, and understanding the relationship between accounting methods and decision-making. The analysis should cover aspects like revenue and expenses, assets and liabilities, earnings per share growth, and compliance with AASB standards.

Running head: CONTEMPORARY ISSUES IN ACCOUNTING
Contemporary Issues in Accounting
University Name
Student Name
Authors’ Note

2
CONTEMPORARY ISSUES IN ACCOUNTING
Abstract
The present study evaluates the present-day issues in the area of accounting that indicates
towards exploration of diverse difficult notions of accounting along with well as stratagems
and comprehending a wide range of issues with special orientation to the functionalities of
Qantas Airways. Again, this study also aims to present an investigative perceptive of
efficiency of Qantas Airways to meet the obligations of the conceptual framework-CF of
Australian Accounting Standards Board. Thus, the study takes into account analysis of
specific objectives of the CF, criteria for identification of accounting items in financial
reports and examines fundamental along with enhancing characteristics of the strategy.

3
CONTEMPORARY ISSUES IN ACCOUNTING
Table of Contents
Introduction................................................................................................................................3
Analysis of satisfaction of the objectives of the conceptual framework....................................4
Examination as regards meeting recognition criteria in the financial report.............................5
Analysis of financial reports as regards relevance as well as faithful representation................7
Critical analysis of fundamental qualitative enhancing features of financial report..................7
Analytical evaluation of enhancing qualitative characteristic of financial report......................8
Conclusion................................................................................................................................10
References................................................................................................................................11

4
CONTEMPORARY ISSUES IN ACCOUNTING
Introduction
The present study presents a thorough illustration of diverse systems and methods of
accounting that can subsequently help in the process of, monitoring, examining, controlling
as well as directing business functions with special orientation to the operations of the
business concern Qantas Airways. In essence, Qantas Airways can be considered as the
largest airline of Australia when considered from the perspective of the fleet size,
international flights as well as worldwide destinations. Qantas Airways is the flag carrier of
Australia that necessarily possesses the overall share of approximately 65% of the domestic
market particularly in Australia and carries around 14.9% of passengers drifting both to and
fro from Australia.
Essentially, the current study intends to a present analytical findings of diverse notions of
dimensions that can help in pointing out the requirements of analysing the compliance
towards diverse regulations and objectives of conceptual framework, analysis of extent of
meeting the requirements of recognition criteria in the financial reports of Qantas, analysis of
fundamental qualitative and enhancing facets of financial reports.
Analysis of satisfaction of the objectives of the conceptual framework
The conceptual framework necessarily refers to the intentions along with the principles of
particularly general purpose financial reporting. As such, the conceptual framework is an
effective instrument that can help the board of the corporation in developing financial
standards based on themes and notions (Gelmini et al. 2015). Essentially, the conceptual
framework can help preparers of general purpose financial reports to design effective and at
once reliable stratagems of accounting whilst financial standard can approve the process of
adoption of specific accounting scheme.

5
CONTEMPORARY ISSUES IN ACCOUNTING
In essence, analysis of the financial declarations of Qantas Airways reflects conformation
with the regulations of “Australian Accounting Standards Board (AASB) - Conceptual
Framework (CF)”. This assists to gain comprehensive understanding regarding intent of
pecuniary statements, different qualitative uniqueness that subsequently institutes the efficacy
of financial pronouncements. Nonetheless, there are different elements of statements that can
help users to utilize the information to arrive at decisions regarding purchasing, selling or
holding equity, debt instruments and settling loans else wise credit (Harris and Roach 2013).
Thus, in this way the pecuniary statement meets the requirements and objectives of
particularly financial regulation. There are diverse items of financial declaration that consists
of assets as well as liabilities including both current and non-current. Thus, primary users of
the information of Qantas Airways can get to know about resources of the business concern
and evaluate prospects of the firm regarding upcoming flows of cash in the upcoming period.
This too assists in the process of evaluating efficacy as well as efficiency of management in
discharging responsibilities (McCombs 2017).
Examination as regards meeting recognition criteria in the financial report of Qantas
Airways
The evaluation of financial statements includes analysis of consolidated financial assertions
of particularly the firm Qantas Airways that essentially refers to general purpose financial
reports (GPFR). The GPFR of the firm are prepared in accordance to the directives of the
AASB and the “Corporation Act 2001”. Apart from this, the business concern prepares as
well as presents financial information in line with regulations of International Accounting
Standards Board (IASB) along with the International Financial Reporting Standards (IFRS)
(Deegan 2013).
Assets:

6
CONTEMPORARY ISSUES IN ACCOUNTING
The assets of Qantas Airways are reflected in terms of Australian dollars that is necessarily
the functional currency of the corporation. Nevertheless, the procedure of analysis of assets
mentioned in financial assertions reflect the fact that assets can be classified as “held for sale”
enumerated at low value of the recognized cost compared to the fair values after deduction of
the cost borne for sales. Detailed analysis of report also replicates that net defined
assets/resources of Qantas Airways is necessarily presented at the fair value of planned
assets only after the deduction of specific obligation at current value (Williams 2014). The
annual report for the financial year 2016 declares the asset worth $13445 million.
Liabilities:
As mentioned in the financial declaration of the firm Qantas Airways, the overall liabilities
are hereby presented to be worth $13445 million during FY2016. Particularly, the balance
sheet statement of Qantas Airways presents liabilities (counting both current as well as non-
current ones) that can be utilized for financing different functionalities and deals involved in
carrying out the operations of the firm. Analysis of financial assertions replicate the fact that
liability is presented at the historical cost and thereafter valued at the operational currency
that is necessarily reflected in terms of Australian Dollar (Goodwin et al. 2016). In addition
to this, net defined liability of the firm is measured at the fair value of specific plan liabilities
after deduction of current value of defined benefit requirements.
Equity: A detailed study of balance sheet replicates that the equity possessed by the
shareholders is presented to be $3260 m during FY 2016. As mentioned in the annual
assertions of Qantas, the derivatives mentioned therein are calculated at fair values by using
mainly the firm’s earnings and expenses. Thus, it can be mentioned that Qantas makes use of
different models particularly for measuring derivatives that necessarily have the need to
follow the process of calculation at fair value (Biondi and Lapsley 2014).

7
CONTEMPORARY ISSUES IN ACCOUNTING
Inventory: The financial position of Qantas Airways together with efficiency level if firm
can be gauged from the analysis of inventory. The inventory is registered to be $336 m
during FY 2016 up from $322 m in FY 2015. This enhancement in inventory can replicate
the lack of efficiency of the corporation to handle the inventory of the firm Qantas Airways to
control the inventory and might possibly decline the competitive position of the corporation
(Andon et al. 2015).
Accounts Receivable as well as Provisions for bad debt and provision for doubtful debt
As mentioned in the yearly consolidated report of the corporation, accounts receivables of
Qantas Airways are recorded to be $795 million in the financial year 2016. The receivables
counting both the current and non-current receivables declined to $929 million during FY
2016 from $1093 million during FY2015. Evaluation of Qantas Airway’s financial
pronouncements of corporation assists in comprehending non-current receivables. The
declaration hereby helps in analysing the information on declining receivables. The
receivables are necessarily recorded at fair values and enumerated at amortised cost using
interest method after deduction of outlays of the firm for impairments. There is an optimal
framework for capital simultaneously lessening the debt level and enhancing liquidity that
directed the way towards return enhancement (Ferguson et al. 2014).
Analysis of financial reports as regards relevance as well as faithful representation
The fundamental characteristics of effectual financial information contain relevance as well
as faithful representation of company’s pecuniary information.
As correctly mentioned by Yao et al. (2015), relevance of financial information refers to
pecuniary information that indicates towards variance in diverse decisions made by different

8
CONTEMPORARY ISSUES IN ACCOUNTING
users. Evaluation of pecuniary information in Qantas’s report can help in comprehending
variances in various economic decisions and this has both a predictive together with the
confirmatory value. Again, faithful representation replicates diverse economic events
expressed in specific numerical presentation along with supporting literature.
Critical analysis of fundamental qualitative enhancing features of financial report
The elementary qualitative characteristics of effectual financial information provided in the
financial assertion comprises of relevance as well as faithful representation of specific
pecuniary information.
Relevance: As rightly indicated by Laing and Perrin (2014), relevance of particularly
financial information can help in presenting variances in economic decisions of diverse users
if it has specific predictive value. Evaluation of financial information provided in the report
can also help in presenting a variance in the economic decisions and in addition to this the
same also has certain predictive value besides confirmatory value.
Faithful representation: Yao et al. (2015) assert that faithful representation also helps in
reflecting economic incidents expressed in literature and numbers. However, in order to be
effectual, pecuniary information necessarily has the need to be enough pertinent and at the
same time need to have faithful representation. Thorough analysis of financial
pronouncements of the corporation evidently states about consumer confidence, economic
fundamentals of Australia, worldwide growth facets and information on trading partners
together with the global forces. Apart from this, financial assertions of the corporation Qantas
Airways also concisely presets all the appropriate financial performance both in numbers as
well literature.

9
CONTEMPORARY ISSUES IN ACCOUNTING
Analytical evaluation of enhancing qualitative characteristic of financial report
Laing and Perrin (2014) mention that the enhancing qualitative enhancing characteristics of
financial report include comparability, understandability, timeliness as well as verifiability.
Comparability: As correctly mentioned by Andon et al. (2015), comparability refers to
specific information as regards a reporting entity that can necessarily assist diverse users to
detect and realize different similarities as well as dissimilarities among diverse accounting
items. In actual fact, the assessment of the functions as well as operations assists in
comparative assessment of financial information and evaluation of the entire set and
worldwide operating environment. Essentially, the figures for diverse metrics namely
operating margin, growth of the revenue, global capacity and many others for diverse time
period aid in information comparability.
Verifiability: Laing and Perrin (2014) assert that verifiability aids on presupposing users that
information replicates faithfully particular economic incidence that it purports to replicate.
Again, the financial information of the corporation inevitably abides by the directives of the
Corporation Act (2001) as well as the listing regulations stipulated under the ASX-
Australian Stock Exchange. Financial assertion of the corporation replicates the fact that
administration of the firm Qantas Airways has adopted the stratagem of presenting
disclosures that consequently can help financiers of the corporation to assess financial
condition of the firm. As such, the continuous disclosures pronounced by the firm in the
annual report can also aid in the process of augmentation of confidence among financiers by
maintaining transparency, reliability along with integrity of the corporation’s operations
together with the financial statement of Qantas Airways.
Timeliness: This indicates towards available information that needs to be accessible to
decision makers in time for influencing their decisions.

10
CONTEMPORARY ISSUES IN ACCOUNTING
Understandability: Evaluation of financial pronouncements helps in reflecting notes to
financial declarations and significant accounting policies that again can augment
understandability (Yao et al. 2015). The process of preparations together with presentation of
financial assertions of the corporation also follow particular conceptual framework of mainly
conceptual framework of AASB. Subsequently, this can help in acquiring clear understanding
regarding entire process of measurement of different accounting items in the financial
pronouncements. Investors can also examine effectiveness of corporation in utilizing the
report presented using standards of AASB. Maintenance of adherence to standards and
guiding principles can therefore help in enumeration, averting efforts to deliberate
misstatements and certify steadiness of financial information.
Conclusion
The above mentioned study helps in evaluating different items of financial pronouncements
of Qantas Airways and different themes of financial measurements. Apart from this, the
current study helps in understanding specific issues related to enumeration of pecuniary
declarations in terms of AASB. Moreover, this study also helps in gaining understanding
regarding nature of relation between system of measurement and provision of different
decisions.

11
CONTEMPORARY ISSUES IN ACCOUNTING
References
Andon, P., Baxter, J. and Chua, W.F., 2015. Accounting for stakeholders and making
accounting useful. Journal of Management Studies, 52(7), pp.986-1002.
Biondi, L. and Lapsley, I., 2014. Accounting, transparency and governance: the heritage
assets problem. Qualitative Research in Accounting & Management, 11(2), pp.146-164.
Deegan, C., 2013. Financial accounting theory. McGraw-Hill Education Australia.
Ferguson, A., Pündrich, G. and Raftery, A., 2014. Auditor industry specialization, service
bundling, and partner effects in a mining-dominated city. Auditing: A Journal of Practice &
Theory, 33(3), pp.153-180.
Gelmini, L., Bavagnoli, F., Comoli, M. and Riva, P., 2015. Waiting for Materiality in the
Context of Integrated Reporting: Theoretical Challenges and Preliminary Empirical Findings.
In Sustainability Disclosure: State of the Art and New Directions(pp. 135-163). Emerald
Group Publishing Limited.
Goodwin, J., Atilgan, Y., Simsir, S.A. and Ahmed, K., 2016. Investor reaction to accounting
misstatements under IFRS: Australian evidence.
Harris, J.M. and Roach, B., 2013. Environmental and natural resource economics: A
contemporary approach. ME Sharpe.
Henderson, S., Peirson, G., Herbohn, K. and Howieson, B., 2015. Issues in financial
accounting. Pearson Higher Education AU.
Laing, G.K. and Perrin, R.W., 2014. Deconstructing an accounting paradigm shift: AASB
116 non-current asset measurement models. International Journal of Critical
Accounting, 6(5-6), pp.509-519.

12
CONTEMPORARY ISSUES IN ACCOUNTING
McCombs, M., 2017. Contemporary public opinion: Issues and the news. Routledge.
Williams, J., 2014. Financial accounting. McGraw-Hill Higher Education.
Yao, D.F.T., Percy, M. and Hu, F., 2015. Journal of Contemporary Accounting &
Economics. Journal of Contemporary Accounting & Economics, 11, pp.31-45.

13
CONTEMPORARY ISSUES IN ACCOUNTING
Appendix
Performance Review

14
CONTEMPORARY ISSUES IN ACCOUNTING
Review of Operations
Earnings per Share Growth

15
CONTEMPORARY ISSUES IN ACCOUNTING
Comparative Figure On Revenue and Expenses

16
CONTEMPORARY ISSUES IN ACCOUNTING
Figures on assets and liabilities from the balance sheet statement of Qantas Airways

17
CONTEMPORARY ISSUES IN ACCOUNTING
Statement of Compliance
Basis of Preparation
Recognition

18
CONTEMPORARY ISSUES IN ACCOUNTING

19
CONTEMPORARY ISSUES IN ACCOUNTING