Financial Analysis Techniques

Added on - 22 Jul 2020

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Financial analysis
Table of ContentsEXECUTIVE SUMMARY:............................................................................................................1INTRODUCTION:..........................................................................................................................2TASK..............................................................................................................................................2A). Profitability ratios:................................................................................................................2B). Efficiency ratio:....................................................................................................................3C). Liquidity:...............................................................................................................................5D). Gearing ratios:.......................................................................................................................6E).................................................................................................................................................7F. Vertical analysis of Spice Jet:..............................................................................................10G:...............................................................................................................................................12CONCLUSION..............................................................................................................................12REFERENCES..............................................................................................................................13
EXECUTIVE SUMMARY:Financial analysis is the technique in which the various factors will be analysed so thatthe performance of the organisation can be evaluated. In this report all the ratios will becalculated by which various aspects will be covered. In this profitability, efficiency, gearing andother ratios will be calculated. The gross and net profit margin will be calculated by that theprofits will be analysed and it will be found that the company id performing in good manner ornot. Also the efficiency with which the work is undertaken will also be evaluated. The horizontaland vertical analysis will also be conducted in which comparative balance sheet and incomestatement will be made by taking an element as the base on the basis of which percentage will becalculated and evaluation will be made. This will help the company in improving its performancefurther by making new policies and strategies that will help in achieving the targets andobjectives.1
INTRODUCTION:The aviation industry is one of the most emerging industry in the developing countrieslike India. The aviation industry is increasing rapidly and for that the companies which areindulging in the industry, becomes more profitable and optimising the revenue with the help offunctioning operation effectively. India's aviation industry is on a high growth path, and Indiaaims to become the third largest aviation market by 2020 (Vogel, 2014). The aviation industry isbeing focused by the top industrial player in order to expand their business and also attain thevisions of the company. The key industrial players are focusing on manufacturing, tourismboards, airlines and international businesses to individual travellers and other business classperson. Any industrialist who is looking to expand their business in India, needs to make properplanning and strategies in order to gain the business. In India low cost carrier are used in order tolimit the cost so that everyone can take assistance for their own purpose. Many of the travel sitesare providing comparison among various aviation companies in terms of price, quality, and muchmore things (Carfì and Musolino, 2011). This will help the consumers to analyse the them so thatthey could able to exercise better services.TASKA). Profitability ratios:The profitability ratios reflect the performance of the companies and industry as well sothat the the financial analysts and the potential investor would get to know the performance andrespond accordingly. The Profitability ratios classify the financial metrics which areimplemented to evaluates the business ability to produce revenues in a better way and compareto its expenses and other costs incurred at the specified time (Sueyoshi and Goto, 2010). Thereare so many tools under which profitability can be assessed. These are gross profits margin, netprofits margin, return on assets margin, return on equity, return on sales and return oninvestment. These are made in details:Gross profit margin:Gross profit margin reflects the ratio between the sales and the grossprofits of the company. This reflects the revenues- COGS/ revenue (Almazari, 2012). This isused to compare the business with the competitors. Higher the gross profits margin reflects theefficiency of the company. Spice jet gross profit margin for the year 2015 and 2016 is 8.45% and26.65% respectively. This represents the gross margin for the whole year in terms of percentage.2
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