Financial Analysis of Qantas Airlines

Running Head: FINANCIAL ANALYSIS 1
FINANCIAL ANALYSIS

Running Head: FINANCIAL ANALYSIS
Table of Contents
Introduction................................................................................................................................3
Company Analysis.....................................................................................................................3
Ratio Analysis............................................................................................................................3
Profitability Ratios..................................................................................................................3
Liquidity Ratios......................................................................................................................3
Solvency Ratios......................................................................................................................3
Gearing Ratios........................................................................................................................3
Merger and Acquisition..............................................................................................................4
Would you like to invest in the company...................................................................................4
Conclusion..................................................................................................................................4
References..................................................................................................................................5

Running Head: FINANCIAL ANALYSIS
Introduction
Qantas is one of the Airlines, and the most renowned carrier of the Australia that aims
to cater the services to the customers. It is considered to be one of the largest airlines by the
fleet size, international flights and the international destinations. The company founded in the
year 1920, it literally began to cater the international passenger flights in May 1935. The
Qantas typically known as Queensland and Northern Territory Aerial Services and is also
known as Flying Kangaroo (Australian Government, 2018).
The major location that the airline is based in the Sydney suburb of Mascot, and it’s
typically adjacent to the Sydney airport. Excluding all of the subsidiaries the fleet size is of
130 and at maximum 85 locations has been covered by the Qantas. Jet star Airways is also
owned by Qantas and operates the both the domestic and the international services. The
loyalty of the Qantas continues to grow within the introduction of the Dreamliner in order to
replace efficient 747s. In the opinion of the CEO, the discipline allowed then to keep
rewarding the investors and the shareholders during the financial year 2018 in the form of the
dividends and the buybacks.
Company Analysis
The Qantas Company reported a record of the underlying profit of $1604 million for
the 12 months ending the year 2018. The current financial statements of the company depict
the increase in the revenue from $853 to $980. This indicates the company is performing on
the positive note however; the scenario shall not be taken so lightly. The number of the
aircrafts that has been used this year is 313 that are willing to provide the services to the
customers. Nevertheless from the economic outlook the economic contribution associated
with the operations, the Qantas group plays a crucial role in creating the overall tourism to

Running Head: FINANCIAL ANALYSIS
and around Australia. The total amount of the tourism that has been recorded by the company
was $10.7 billion whereas the same has been increased by 6% in the current year 2018 (TCS
consultancy, 2017).
Ratio Analysis
Ratio analysis is a tool that is used by the company, to analyse the financial health of
the company. The financial health of the company is determined with the factors such as
parameters such as efficiency, liquidity, profitability and the solvency ratios. These ratios are
the real measures that are used to assess the overall performance of the business are
determined and discussed below along with the comparisons for the two years (Qantas,
2018).
Profitability Ratios
The profitability ratios of the business can be assessed with the help of the, the
numerous ratios to determine the profitability such as return on total assets, return on equity,
net profit margin, gross profit margin, Earnings per share, price earnings ratio, net interest
income as well as the dividends per share of the company.
The return on equity of the company is 33.99% in the year 2018, whereas the same
has been increased from the previous year from 25.84%. The investors are getting the
progressive returns in terms of the return of the equity as it tends to be more and beyond the
industry benchmark (Qantas, 2018).
Particulars 2018 2017 Industry average
Return on assets 5.46% 5.07% 4.69%
Return on equity 33.99% 25.84% 19.21%
Net profit margin 5.74% 5.31% 6.59%
Gross profit margin 61.05% 74.88% 27.09%
Net Interest Income 25.10% 27.63% 25.00%
Expense ratio/Cost to Income ratio 90.78% 91.47% 93.20%