Financial Ratios

Running Head: Financial Ratios
0
Financial Ratios
Report
Student Name
3/15/2019

Financial Ratios
1
Executive Summary
Financial analysis is a key to know more about company financial position and to take necessary
decision of investment. In this assignment a company is to be selected which is listed on main
board of any stock exchange within Asian region hence Singapore Airlines has been selected
which is listed in Singapore stock exchange. Singapore Airlines is amongst the well performed
companies in airline industry with strong financial position along with that company has good
brand image and investment strategies. In this report Singapore Airlines financial analysis is
been carried on with its competitor Air Asia and comparison is done on different aspects to better
know the position of Singapore Airlines in the market whether firm gives higher return on
investment to the shareholders or not. The study is based on comparison of Singapore Airlines
position in the industry with its competitor. All this is done using the various financial ratios
such as liquidity ratio, leverage ratio and cash flow statement of the company. On the basis of
study some major findings and recommendations are given followed by a brief conclusion.

Financial Ratios
2
Table of Contents
Executive Summary.........................................................................................................................1
Introduction......................................................................................................................................3
Financial Analysis...........................................................................................................................4
Financial Performance.................................................................................................................4
Liquidity analysis and cash conversion cycle..............................................................................8
Debt and Capital Structure Analysis............................................................................................9
Customer Profitability Analysis.................................................................................................10
Level of working capital............................................................................................................11
Findings.........................................................................................................................................12
Recommendations..........................................................................................................................12
Limitations.....................................................................................................................................13
Conclusion.....................................................................................................................................14
References......................................................................................................................................15

Financial Ratios
3
Introduction
Singapore Airlines Limited is founded in 1972 and owned by the government of Singapore with
its hub at Singapore Changi Airport. The airline showed revenue of $ 14869 million in 2017
from its major operations. Singapore Airlines have some subsidiaries related to repair and
overhaul and in 2017 these group includes 25 subsidiaries, 35 associates and two ventures by
Singapore Airlines. Operations of all these subsidiaries cover 40 countries at 135 destinations
(SingaporeAir, 2019).
Singapore Airlines is listed in Stock Exchange of Singapore as SGX: C6L. Singapore Airlines is
doing very well in the airline industry and ranked 4th amongst its top 10 competitors in term of
revenue. On an average the airline industry in Singapore earns 18.6 billion but from last three
quarters the revenue of Singapore Airlines is declining or decreased by 30%, in Q1 revenue was
$4.2B, in Q2 it was $3.8B and in Q3 it declined to $3B (Bloomberg, 2018). The company has
achieved sustainable competitive advantage and has consistently given high performance against
its competitors throughout its three and half decade history because of its incompatible
investment strategies and organization model (Heracleous & Wirtz, 2012).
The airlines sector in Asian region is growing rapidly, passengers traffic is increased by 10% in
last year. However, competition in this industry became high due to attractive market for the
investors. Singapore Airlines operates in high scale in Asia region due to that it has to face tough
competition mainly from Air Asia as they have market share of USD 8,229 as compare to USD
9,223 of Singapore Airlines (Raynes & Tsui, 2019). Other competitors for the Singapore Airlines
are Virgin America and Malaysian airlines.
The objectives of this study are to compare the performance of Singapore Airlines with its
biggest competitor Air Asia to set the benchmark for company. Other one is to know the area of
improvement that offer the most promising future potential and to analyze the stability and
profitability of airline for the long run for investors.