Financial Statement Analysis For Business

Running Head: Financial Statement Analysis For Business
1
Project Report: Running Head: Financial Statement Analysis For Business

Financial Statement Analysis For Business 2
Contents
Introduction.......................................................................................................................3
Valuation model................................................................................................................3
Methods of comparables...............................................................................................3
Dividend discount model..............................................................................................4
Discounted cash flow model.........................................................................................5
SWOT analysis.................................................................................................................5
Recommendation and Conclusion....................................................................................6
References.........................................................................................................................8
Appendix...........................................................................................................................9

Financial Statement Analysis For Business 3
Introduction:
Financial statement analysis is a process to evaluate the financial statement of an
organization in order to make better decision about the performance of the company. It
evaluates the overall financial health of the business. In the report, financial statement of
Qantas airways limited has been studied to measure the overall performance and the stock
position of the business. Various valuation model and the SWOT techniques have been
applied on the company to measure the investment position of the company.
Qantas airways limited are the flag carrier to Australia and it is largest airline in terms
of international flight, fleet size and international destination. It is operating the business
since 1921 in Australia market. Currently, the company is offering the services in 85
destinations.
Valuation model:
Valuation model is the business valuation method which focuses on the overall value
of a firm and its competitors to evaluate the financial worth of the business. This method is an
alternative to measure the intrinsic value of the company. In the report, following valuation
model has been applied on Qantas airways limited to measure the stock value of the
company.
Methods of comparables:
Methods of comparables are an approach which focus on the main financial figures of
the company and the financial data is compared with the financial performance of the
competitors company. In case if Qantas airways, the financial data of Qantas airway limited
has been compared with the Virgin Australia limited and Transurban holdings limited.
The method of comparables
Sales Earnings Book value Market value P/S P/E P/B
Qantas
Airways 15,680,000,000 0.46 3,537,000,000 12137150000 77.41% 14.24 343.15%
Transurban 2,732,000,000 0.12 4,495,000,000 431981882.6 15.81% 1.75 9.61%
Virgin
Australia 5,040,600,000 -0.03 1,567,700,000 1757316000 34.86% -7.33 112.10%
Average
multiple for
comparables Dell's number Dell valuation

Financial Statement Analysis For Business 4
Sales 0.25 15,680,000,000 3,972,932,459.49
Earnings 0.00 852380000
0.32
Book
value
0.61 3,537,000,000
2,152,360,825.70
Average valuation
2,041,764,428.51
Number of outstanding shares
1,853,000,000.0
Intrinsic value $
1.10
(Morningstar, 2018)
On the basis of the above table, it has been measured that the sales revenue, earnings
per share, market value etc of Qantas airways limited is higher than the Virgin Australia
limited and Transurban holdings limited. The price and sales ratio, price and earnings ratio,
price and book value ratio of the company has been discussed and it has been found that the
intrinsic value of the stock is $ 1.10 and the market price of the stock is $ 6.55 (Morningstar,
2018). On the basis of the study, it has been measured that the stock price of Qantas airways
limited is overvalued. .
The method is easier to calculate and communicate information to the market
participants. However, the comparison with the other companies is not useful to evaluate the
stock price of the company.
Dividend discount model:
Dividend discount model is among the business valuation methods which evaluates
the stock price of a business. It focuses on the theory that the stock price of a business is
worth the total of all the future dividend payment of the company. dividend discount model
study on Qantas airways limited is as follows:
Dividend growth rate
Year Dividend per share ($)
2013 0.050
2014 0.070
2015 0.100
2016 0.085
2017 0.070