Financial Analysis Management & Enterprise - Assignment
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Added on 2020-11-12
Financial Analysis Management & Enterprise - Assignment
Added on 2020-11-12
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Financial AnalysisManagement & Enterprise– FAME
Table of ContentsINTRODUCTION...........................................................................................................................1(a): Critical analysis of the financial performance and financial position of the companies.......1Report of equity research on findings and conclusion.................................................................4(b): Critically analyse the annual cash flow statements of Emirates, over the Five-year period,2012 to 2016,...............................................................................................................................6CONCLUSION................................................................................................................................8REFERENCES................................................................................................................................9
INTRODUCTIONFinance is one of the crucial aspects for an organisation that can help in attaining overallplans that are set in the near future time. It is an important part without which no any projects canbe accomplished. The basic aim of every manager to increase the profitability of the companythat would be achieve through proper utilisation of financial resources of an organisation.Financial analysis is the essential process which would be used by the manager to evaluatebusinesses and other budgets that are related with entities to determine their performance as wellas future sustainability of the company (Brigham and Houston, 2012). This project is based onfinancial analysis of three airlines company such as “Turkish Airlines, Lufthansa and Emirates”.This will have used to compare with the financial performance and financial position of the firsttwo companies of the last four years. Apart from this, critical analysis of the annual cash flowstatements of “Emirates” from the five-year time period. (a): Critical analysis of the financial performance and financial position of the companiesOverview of the companyTURKISH AIRLINES was established in 1933 as a national flag carrier airline, sincethen its operations are continuously growing and as of now it has 304 destinations in Europe,Asia, Africa and the America which makes it largest carrier in the world. Turkish airline flies to122 countries which provides them highest destination to serve and it serves to largest passengergroup. Since then it is continuously growing and in 1980s a technical centre was opened inwhich both light and heavy flights was taken care to provide better service and to reduce airaccidents which creates a positive image and also better services attracts more consumers. Thiscontinuous growth in covering more and more destination and availability of direct flights todestination make Turkish airlines more popular (Baxter and et. al., 2013).Turkish Airlines was chosen as "Europe's Best Airline" for the fifth and "Best Airlinein Southern Europe" for the seventh consecutive time in year 2015.Financial performance of every organisation is always measured with its financialstatements such as its cash flow statement, profit and loss account, balance sheet.RATIO ANALYSIS OF TURKISH AIRLINES IN LAST FOUR YEARS (2013-2016)Formula 2016201520142013Overall Net profit / Total asset0.46%6.5%5.7%2.6%1
profitability ratio Liquidity ratioCurrent asset / current liabilities 0.80075600.812709810.7718494830.681755665Asset turnover ratio Net sales / Average total assets0.36698210.53505070.54193861870.5398556084Financial leverage ratio Total debt / Total equity2.63495182.38351922.48186664342.6481867145PROFITABILITY RATIO is used by investors to analyse earning capacity of thecompany. Profit is that part of revenue which is left with the company after making all expensesfrom its revenue, in overall profitability ratio of a company relation between its net profits tototal assets is evaluated which means how much a company is earning by investing in its totalassets. Turkish airlines earnings were continuously growing from its total assets from year 2013-2015 but there is a drastic fall in earnings in 2016 which makes investment in Turkish airlinesless attractive as less certainty of profits in future (Vernon and Aharoni, 2014).LIQUIDITY RATIO shows ability of company to pay its current liabilities from itscurrent assets. Liquidity ratio is an indicator that in current scenario company is able to pay itscurrent liberalities or not. A good current ratio shows more liquid position which also indicatesthat company is very efficient to manage its funds. Current assets must be twice of currentliabilities is considers to be ideal. Turkish airlines current ratio is continuously increasing from2013 but in the year 2016 there is a slight fall in this ratio which shows that funds are notmanaged properly or company is not able to pay its debt on time which makes investors littleinsecure about their investment.ASSET TURNOVER RATIO measures value of company’s sale or revenue incomparison to its average total assets. It is an indicator to measure company’s efficiency togenerate revenue. Revenue is something for which all hard work is done by company and acompany which generates more revenue or have continuously growth in revenue will attractmore investors. Turkish airlines in first two years there was increasing trend in asset turnoverratio but from year 2015 it is decreasing continuously which is a clear indicator that assets ofcompany are losing its efficiency to generate revenue on continuous basis and this makes it anon-revenue generating investment which no one will consider (Bromiley and et. al., 2015).2
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