Financial Management Assignment 2022

Running head: FINANCIAL MANAGEMENT
Financial Management
Name of the Student:
Name of the University:
Author’s Note:

FINANCIAL MANAGEMENT1
Table of Contents
Introduction......................................................................................................................................2
Discussion and Analysis..................................................................................................................2
Weighted Average Cost of Capital..............................................................................................2
Ratio Analysis..............................................................................................................................4
Conclusion and Recommendations..................................................................................................5
References........................................................................................................................................6

FINANCIAL MANAGEMENT2
Introduction
The firm analysed is the Flight Centre is known as the largest retail travel agency that
operates in the Australian Region and is listed in the Australian Stock Exchange. The ticker
symbol of the stock is FLT. The Flight Centre Travel Group operates as one of dominant world’s
largest travel agency group, which is having operations in 23 countries and is also having a
corporate travel management which spans in 90 countries. The firm employs around 19,000
people that are directly connected with the firm. The WACC for the firm has been well
calculated with the help of cost of the various financing sources that the firm has deployed and
the respective weightage that the firm has placed for each of the financing sources (Ltd 2020).
Discussion and Analysis
Weighted Average Cost of Capital
The Weighted Average Cost of Capital for the Flight Centre Firm has been well
calculated with the help of the cost of equity and cost of debt that the firm has primarily involved
for the purpose of calculating the cost of capital. The cost of equity for the firm has been
calculated with the help of the Capital Asset Pricing Model whereby the formula that has been
applied is as follows:
Cost of Equity (Ke): Risk Free Rate (Rf)+ Beta*(Return on Market-Risk Free Rate).
Whereby;
Risk Free Rate r(f): 1.18% (Reserve Bank of Australia, 10 Year Bond Yield).
Return on Market R(m): 6.00% (Yahoo is now part of Verizon Media 2020)