Financial Analysis Management & Enterprise TABLE OF CONTENTS INTRODUCTION 1 1. Critically evaluate financial performance of companies 1 2. Cash flow ratios of organisation 11

Financial Analysis
Management & Enterprise

TABLE OF CONTENTS
INTRODUCTION ..........................................................................................................................1
1. Critically evaluate financial performance of companies....................................................1
2. Cash flow ratios of organisation ......................................................................................11
CONCLUSION .............................................................................................................................13
REFERENCES:.............................................................................................................................15

INTRODUCTION
Organisation financial statements and ratios shows that how they are managing cash flow
within each department. Financial ratios are calculated every year to analyse business efficiency
in terms of finance (Olson,. and Wu, 2017) Also, firm financial position is determined by its
statements. It helps management in developing financial strategies and taking effective decisions.
Financial ratios are of five categories such as liquidity, profitability, solvency, efficiency and
investment. It is beneficial for stakeholders to analyse financial health of company in effective
way. Also, it helps customers to find out whether company is having a stable growth or not.
They are calculated each year so that measures can be taken to maintain balance between them.
A good financial statement shows better growth and development of organisation. In this report
financial analyses has been made between two airline companies. There profits and sales are
taken in order to analyse both companies ratios (Titman, Keown, and Martin,2017). Furthermore,
their cash flows ratios are calculated and comparison is been made to find out their performance.
1. Critically evaluate financial performance of companies
Formal Report
To: Head of Equity Research
Date: 22 March 2018
The main aim of this report is to find out performance of two big aviation companies
competing each other in the market. Financial ratios have been calculated and compared to
critically evaluate performance of both organisations.
Financial ratios play important role in assessing performance of organisation so that
management can be benefited by it. Moreover, computation of ratios are required for evaluating
performance of firm by various stakeholders so that they may be able to take better and
effective decisions in the best possible way. Financial ratios serve stakeholders to analyse
financial health of company in effective way. In relation to this, these ratios are calculated with
the help of various financial statements such as income statement, cash flow statement and
balance sheet of organisation in effectual manner.
Financial statements are required and without such statements, ratios cannot be
computed for any organisation. Financial ratios are of five categories such as liquidity,
profitability, solvency, efficiency and investment. These all categories are quite important for
1

assessing performance of organisation and stakeholders can be provided with financial health
with much ease. These ratios guide them to take effective, better and accurate decisions in the
best possible manner. Financial ratios are based on past data which is provided by financial
statements.
In relation to this, ratios are calculated for two big airline companies such as Lufthansa
Organisation and Turkish Airlines operating worldwide. Lufthansa Organisation is one of the
largest company headquartered in Germany and satisfy customers quite effectively. On the
other hand, Turkish Airlines is another big company headquartered in Turkey and has large
customer base. Financial ratios are computed for both of organisations to critically evaluate and
contrast their performance in the best possible way. This will help to identify better performing
company having high profitability, liquidity, solvency, efficiency position in effectual way
(Haskins and Haskins, 2017).
2