Finance Reporting and Accounting Management

Running Head: Finance Reporting and Accounting Management
Finance Reporting
and Accounting
Management

Finance Reporting and Accounting Management
Contents
1. Introduction........................................................................................................ 2
2. Financial Assessment and Comparison of British Airways and KLM Royal Dutch Airlines......3
I. Trend Analysis.................................................................................................. 3
II. Ratio Analysis.................................................................................................. 6
1. Profitability Ratios.......................................................................................... 6
2. Assets Efficiency Ratio.................................................................................... 7
3. Liquidity Ratio.............................................................................................. 8
4. Gearing Ratio................................................................................................ 8
5. Investment Ratio............................................................................................ 9
III. Industry Average.......................................................................................... 10
1. Available seat kilometres (ASK) mln.................................................................10
2. Revenue passenger kilometres (RPK) mln...........................................................11
3. Passenger load factor (%)...............................................................................11
3. Strategic Management Accounting and Cost Reduction Techniques.................................12
4. Conclusion........................................................................................................ 15
References........................................................................................................... 16
1

Finance Reporting and Accounting Management
1. Introduction
Aviation Industry plays a major role towards the growth of the economy both socially and
economically. It is not only one of the main modes of transportation but it is also a source of
employment of many people and contributes heavily to the GDP of the country (Goyal and
Negi, 2014). No, doubt the global financial crisis of 2008 had a great adverse impact on
almost all the sectors but it had a severe impact on the airlines industry. The companies like
British Airways and KLM Royal Dutch Airlines had also suffered because of the crisis whose
impact could still be felt by the companies.
British Airways and KLM Royal Dutch Airlines were the biggest companies in the whole
wide world in terms of its presence, profits, technological advance etc. There are many
efforts which were and still being made by both of the companies to provide “value for
money” to their customers and win their satisfaction by satisfying them with the innovative
services driven by technology.
2

Finance Reporting and Accounting Management
2. Financial Assessment and Comparison of British Airways and KLM Royal Dutch
Airlines
The financial assessment of British Airways and KLM Royal Dutch Airlines are being
carried out to study their performance after the financial crisis. Performance of both the
companies are analysed for the past three years i.e., 2016, 2017 and 2018 through trend
analysis, Industry average analysis and ratio analysis. This analysis would also facilitate us to
know about which company is performing better and could be preferred for the investment.
I. Trend Analysis
Table A: Net Profit and Revenues Trend of British Airways
Table B: Total Assets and Current Assets Trend of British Airways
3
2016 2017 2018
10500
11000
11500
12000
12500
13000
13500
Revenues
Revenues
Linear
(Revenues)
2016 2017 2018
0
500
1000
1500
2000
2500
Net Profit
Net Profit
Linear (Net
Profit)
2016 2017 2018
3800
4000
4200
4400
4600
Current Assets
Current Assets
Linear (Current
Assets)
2016 2017 2018
16300
16400
16500
16600
16700
16800
Total Assets
Total Assets
Linear (Total
Assets)