Financial Analysis Management & Enterprise - FAME Table of Contents

Financial Analysis
Management & Enterprise
- FAME

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
A The financial performance Turkish Airlines & Lufthansa for last four years..............3
B Analysing the cash flow statement of Emirates for five years of analysis.......................13
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................17

INTRODUCTION
To identify the requirements of the firm the role of a financial analyst in determining the
current state of the business which is need to be improved and managed by strategic changes in
the operations. In the present report there have been analysis over the financial health of the three
aviation industries. The study over profitability, liquidity, efficiency over the Turkish airlines
and Lufthansa Airlines While the cash statement of Emirates will be analysed. Moreover, the
report will be useful in presenting the appropriate suggestion to have the increment in the
operational performance of entity.
A The financial performance Turkish Airlines & Lufthansa for last four years.
RATIO ANALYSIS:
Analysing of information contained in the financial statements of two identical
companies in percentage form is known as ratio analysis. Ratio analysis is used to evaluate a
company's performance based on profitability, solvency, inventory management, liquidity and
efficiency. Many investors before investing in a company evaluate its performance in contrast to
its competitors using various ratio analysis techniques. Current ratio, debt-equity ratio, ROI and
ROE are the ratios calculated by investors before investing their money in an organisation.
The financial performance of Turkish Airlines & Lufthansa over the last four years has
been calculated and various contrasting evaluation based on analysis of ratio is undertaken
(Gordon and et.al., 2017).
Profitability ratios:

How a company generates profits from its operations is depicted by calculating various
profitability ratios. The profitability ratios for the year 2013 – 2016 is given for both Turkish
Airlines & Lufthansa. Competition is high among the two airline industry and it had a direct
effect on the profitability of the companies as the Turkish Airlines has seen a growth of
passenger traffic in the year 2015 compared to 2013-2014 which again declined in the year 2016
whereas when compared to Lufthansa its profit ratio increased in the year 2016 as compared to
the years 2013, 2014 & 2015. The main reasons behind increasing profit figures in Lufthansa is
growing passenger traffic, the Lufthansa Cargo which provides logistics facility, LSG which is
leading provider of catering in flight and Lufthansa Technik which provides maintenance facility
to major aircraft's. All these cater to the growth of the Lufthansa industry as a whole. On the
other hand, the decrease in the profits the Turkish Airlines from 18.6 % in 2013 to 11.6% in
2016 has a major effect on the company and its employees. The reasons behind the decrease in
profit ratio is the various business activities undertaken by the company and large turnover over
the years has in turn affected the overall profitability of the Turkish Airlines (Altman and et.al.,
2017).
Despite of the various challenges faced by the company from its competitors the
Lufthansa has proved its position and marked a step in the Airlines Industry. The Net profit ratio
in 2013 was 1.00% which though decreased in 2014 to 0.2% has grown to 5.3 % and 5.6 % in
2015 and 2016 respectively, thereby marking its stagnant position above all. The Net profit ratio
of Turkish Airlines in contrast to Lufthansa has a negative result in 2016 which was high as 7.6%
and 10.2 % in 2014 and 2015. Such a drastic fall in the profitability of the Turkish Airlines is
due to the inappropriate service provided by the airline officials and the decrease in sales over
the years has resulted in such figures. The Net sales saw an increase from 2013 to 2015 as 9,826
to 10,522 which drastically decreased to 9,792 in the year 2016. Lufthansa however, has seen an
increase in sales over the period of four years from 2013-2016 as 30,028 30,011 32,056 31,660
respectively due to the quality services and functionality of operations. Lufthansa generates the
highest revenues over the period of 4 years as compared to the Turkish Airlines.