Financial Analysis of Virgin Australian Airline

Aviation
Management

FINANCE 1
Contents
Introduction.................................................................................................................... 2
Financial Analysis............................................................................................................ 2
Opportunities.................................................................................................................. 5
Risks............................................................................................................................ 5
Conclusion..................................................................................................................... 6
Recommendations............................................................................................................ 6
References..................................................................................................................... 8

FINANCE 2
Introduction
Financial Analysis is a procedure of evaluating and summarizing the financial statements of the
company. It is important for the organization to examine or evaluate the financial statement in
order to assess the financial position. There are different techniques or methods to evaluate
financial position of the organization such as common size, trend analysis and ratio analysis,.
Ratio Analysis is the main technique to assess the financial position as it contains different ratios
such as profitability, efficiency, liquidity and the others ratio. In this report, the Virgin Airline of
Australia has been taken into consideration in order to assess the opportunity and risk for the
company. Virgin Australian Airline is commonly known as the Virgin Australia. It is one of the
largest airlines of Australia. It is the largest airline in terms of fleet size. The financial analysis
has been done by analyzing its annual report of the year 2017 and 2018.
Financial Analysis
2017 2018
Profitability
Ratio
Gross Profit
Margin Gross Profit 3597.3 3971
Net Sales 5047.3 5420.7
71% 73%
Profit Margin Net Profit -185.8 -653.3

FINANCE 3
Net Sales 5047.3 5420.7
-4% -12%
Return on Equity
Net income after preference
dividends -185.8 -653.3
Average common stock holder's
equity 1236 1334.4
-15% -49%
Return on Assets Net income -185.8 -653.3
Total assets 6355.8 6188.4
-3% -11%
(Source: Virgin Australian Group, 2018)
According to the above calculation of financial ratio of the company, it is observed that the
financial position of the organization is not strong as the company goes in loss. It has been
calculated that the company has ability to generate the profit by providing the services to
consumers. The profitability ratio contains the four ratios that is return on equity, gross profit
margin, return on assets and the profit margin. According to the gross profit margin, it has been
assessed that the percentage of gross profit margin has been increases in 2018 from the previous
year 2017. The ratio of the firm is 71% in 2017 and in 2018 it is 73% (Virgin Australian Group,
2018). The increased gross profit depicts that the net sales of the company but its operating