Financial Analysis Management and Enterprise : Assignment

Added on -2020-07-22

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Financial analysismanagement and enterprise
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................11. Comparison of financial performance and financial position ...........................................12. Cash flow ratios of Emirates from the period of 2012 to 2016 are enumerated below:.....8CONCLUSION..............................................................................................................................10REFERENCES..............................................................................................................................11
INTRODUCTIONFinancial analysis is considered as the analysis of company's financial statements in orderassess the viability, stability and profitability of their business operations, sub business orproject. It is performed by the professional who tends to develop the reports using the ratios thatwill make use of information taken from the financial statements and other important reports(Higgins, 2012). These important reports are usually presented to the top management by thefinance department as one of their basis for in making business decisions. Present reports isbased on comparison between financial performance and financial position two internationalAirlines i.e. Turkish Airlines and Lufthansa on the basis of last four financial information.Moreover, critical analysis of cash flow statements of Emirates Airlines is done on the basis oflast five years financial information. At last, conclusion will be drawn on the basis of findings ofresearch as a financial analyst of small investment bank.1. Comparison of financial performance and financial position Financial performance of enterprise is termed as measuring the outcomes of company'sbusiness policies and operations in the monetary terms. These outcomes have been reflected orshown in the organization's return on investments, assets return and values added etc. It is alsoconsidered as subjective measure of how well the organization will be able to use its assets fromits primary code of business and generate revenues (Titman, Keown and Martin, 2017).Financial position is analysed as the status of the assets, liabilities, and employers equity andtheir interrelationship of business enterprise as determined in the financial statements alsorefereed as financial condition. In present context, Turkish and Lufthansa are two internationalAirline having their business operations in Aviation industry at global scale. They are providingservices to the people in different countries. In this,, some important ratios have been calculatedwhich is used to measure the financial performance and analysis of financial position of both theenterprise in order to make comparison in their growth and profitability. Profitability Ratios1
These are mainly considered as class financial metrics which are utilized in order toaccess ability of Turkish and Lufthansa airlines of generating incomes as compared to expensesand other important relevant costs which is incurred during a specific period. This context thereare different type of ratios are calculated onFinancial Analysis Management and Enterprise thebasis four financial statements of Turkish and Lufthansa airlines.Gross profit ratio: It is also considered as important profitability ratio that interprets therelationship among the gross profit and total net revenue of sales. Most popular tool forevaluation of financial performance of the enterprise. The ratio has been calculated bydividing the profits figure by net sales. It is important for every business. It needs to bebased on sufficient in order to illustrate all the expenditures and provide relevantinformation of profitability. As per Brigham and Houston, (2012), Consistent rise in theGP ratio over the last year is considered as indication of continuous improvement infinancial performance. In the above table, it clears that GP ratio of Turkish airlines in2014 is decreased as compared to 2013 and again increased in 2015 by 20% and then in2016 it was again declined to 11.6% which clearly determines the decline in company'sfinancial performance. In comparison to this, GP ratio of Lufthansa is increasingconstantly from 2013 by 41.69 to the year 2016 by 45.96 %. Thus, it can be said thatthere is continuous improvement in financial performance of Lufthansa as compared toTurkish Airlines and it determined increase in financial position of Lufthansa in Aviationindustry.2Table 1: Profitability ratios

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