ACC3015: Accounting and Finance for Managers |Ryan Air

Added on -2020-02-18

| ACC3015| 27 pages| 4104 words| 205 views

Trusted by 2+ million users,
1000+ happy students everyday

Showing pages 1 to 6 of 27 pages

ACCOUNTING FINANCIAL ANALYSIS REPORT
1SECTION AQuestion 1 (a)10 FINANCIAL RATIOS1.Current RatioCurrent Ratio is a financial ratio which measures the liquidity performance of the company. This ratio explains the company’s stability to meet the short-term obligations that are coming due will be paid (Morning Star, 2017). 20152014201300.511.522.5Current RatioRyan AirFlybeBritish AirwaysCurrent ratio 201520142013Ryan Air1.721.511.97Flybe1.21.410.77British Airways0.60.650.63Company Ryan AirFlybeBritish AirwaysRank123
2Analysis: It is seen from the above ratio that Ryan Air’s current ratio of 2015, 2014 and 2013 is higher than Flybe and British Airways which signifies that the company is more liquid in terms of current assets other than two companies. The current ratio of Flybe is higher than British Airways which seems that liquidity performance of the Flybe is better than British Airways and lastly British Airway’s current ratio is lowest among the other two companies which clearly determines that its liquidity performance is not satisfactory in all the previous years as compared to other companies.2.Profit Margin Profit Margin ratio is profitability ratio which determines the ratio of net incomefrom its net revenues from its business operations (Morning Star, 2017).201520142013-10-50510152025Profit margin (%)Ryan AirFlybeBritish AirwaysProfit Margin201520142013Ryan Air (%)17.3811.7413.33Flybe (%)-3.781.38-6.69British Airways (%)23.197.332.63
3Company Ryan AirFlybeBritish AirwaysRank132Analysis: It is seen from the above ratio that Ryan Air’s Profit margin ratio of 2015, 2014 and 2013 is higher than Flybe and British Airways which signifies that its profitability position is very sound. The British Airways profit margin is also positive in all the three previous years and which shows that the company is earning profits and therefore the performance is sound but while analysing the performance of Flybe it is seen that profitability performance is poor as the company has suffered net losses in 2015 and 2013 which clearly shows that Flybe has lack in controlling the expenses. 3. Return on EquityReturn on Equity determines the returns of the company earned from the investments of the shareholders (Morning Star, 2017). 201520142013-100-80-60-40-20020406080ROE (%)Ryan AirFlybeBritish Airways
4Return on Equity201520142013Ryan Air (%)21.4815.9117.4Flybe (%)-25.54.12-87.73British Airways (%)54.5533.4311.45Company Ryan AirFlybeBritish AirwaysRank231Analysis: Above table of ratio suggests that British Airway’s ROE of 2015, 2014 and 2013 is higher than Flybe and Ryan Air which signifies that company’s is effectively using its investments for producing growth of earnings. The Ryan Air has also earned from the investments amount which is also a positive sign for the company whereas Flybe is not able to generate earnings for their shareholders which is unsatisfactory.4.Return on capital EmployedROCE is a financial ratio which describes the effectiveness of the company to generate earnings from the engaged capital. ROCE is also termed as Return on Invested capital (ROIC) (Morning Star, 2017).201520142013-30-20-10010203040ROCE (%)Ryan AirFlybeBritish Airways
5Return on Capital Employed201520142013Ryan Air (%)10.649.279.51Flybe (%)-11.282.93-20.09British Airways (%)35.2810.646.27Company Ryan AirFlybeBritish AirwaysRank231Analysis: Considering the above table of ratio it is perceived that British Airway’s ROE of 2015, 2014 and 2013 is higher than Flybe and Ryan Air which signifies that Company’s capital usage is satisfactory. The Ryan Air is also using its capital for the business efficiently whereas considering Flybe’s performance it is seen that the company is not able to used capital for their business operations effectively and thus it slowly decreases the earnings which are available for the shareholders. 5.Interestcover ratioThis ratio is calculated to determine the company’s efficiency to pay interest expenses on the remaining debt on regular basis (Morning Star, 2017).201520142013-20-15-10-505101520Interest Cover ratioRyan AirFlybeBritish Airways

Found this document preview useful?

You are reading a preview
Upload your documents to download
or
Become a Desklib member to get accesss

Premium

$45

Q&A Library Access

Chat support

12

Document Unlocks

4

Answer Unlocks

Students who viewed this