Sydney Airport Financial Analysis
Added on 2020-04-07
29 Pages5027 Words87 Views
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Auditing1AuditingNameCourse Professor Institution affiliation Date
Auditing2Executive summaryAuditing is one of the processes that ensure that a company gets proper feedback apart from its internalmetrics. When auditing a firm, various shortcomings are identified in the process, which was otherwise not noticeable while comparing the company's internal measures. This paper will address the various issues considered during an audit by focusing on nature of the entity, the industry in which it operates, the entities objective and performance measurement as well as management and governance. Finally, the paper will provide a conclusion the funnels the important points cited on the paper.
Auditing3Table of ContentsIntroduction.................................................................................................................................................5Nature of the entity.....................................................................................................................................5Business operations.................................................................................................................................5Investment and investment activates......................................................................................................5Financing and financing activities............................................................................................................6Financial reporting activities....................................................................................................................6Industry, Regulatory, and External Factors..................................................................................................7Industry size.............................................................................................................................................7Industry growth.......................................................................................................................................8Industry supply chain...............................................................................................................................8Major players...........................................................................................................................................8Market share and industry players..........................................................................................................9Critical success factors.............................................................................................................................9Major threats...........................................................................................................................................9The legal environment...............................................................................................................................10External environmental factors.................................................................................................................10The pest analysis....................................................................................................................................10SWOT ANALYSIS.....................................................................................................................................12Porters five forces analysis....................................................................................................................13Objectives, strategies and Assessing business risks...................................................................................14Industry developments..........................................................................................................................14New products and service.....................................................................................................................15Expansion of business............................................................................................................................15New accounting requirements..............................................................................................................15Regulatory requirements.......................................................................................................................15Current and prospective financing requirements..................................................................................16The use of information technology........................................................................................................16Effects of strategy implementation.......................................................................................................16Analytical procedure and entity performance...........................................................................................17Current ratio..........................................................................................................................................17Debt equity ratio...................................................................................................................................17Return on equity....................................................................................................................................18
Auditing4Profit margin ratio.................................................................................................................................18External factors affecting the entity......................................................................................................19Management and governance...................................................................................................................20Communication and enforcement of integrity......................................................................................20Commitment to competence................................................................................................................20Participation by those charged with governance..................................................................................20Management philosophy and operating style.......................................................................................20Organization structure...........................................................................................................................21Assignment of authority and responsibility...........................................................................................21Human resource and practices..............................................................................................................21Conclusion.................................................................................................................................................21References.................................................................................................................................................22Appendix: 1, Financial statements.............................................................................................................25
Auditing5IntroductionThe paper focused on the case of Sydney airport, which is a listed company in Australia. The company began its operations in 1933 with three runways. Sydney airport is located approximately 8 kilometers from the city center, and 10 kilometers from the major tourist attraction sites. Nature of the entityBusiness operationsSydney airport is a primary airport and an international getaway company based in Australia. The company contributes $ 30.8 billion annually to the national economy through its economic activity. The contribution is approximately 6.4% of the New South Wales economy, which offers306,700 direct and indirect jobs(Michael, 2017). The business is located 8km from the city center and 10 km from major tourist attractions. The business consists of three runway networks,that is, main north-south runway (4.0km), parallel north-south runway (2.4km) and east-west runway (2.5 km). Also, there are 102 international terminal stores and 116 domestic terminal stores. Check-in service desks are 234 for terminal 1, 68 for terminal 2 and 85 for terminal three. The net cash flow from business activities has increased due to increased revenues and the offset of airport operating expenses(William, 2017).
Auditing6Investment and investment activatesSydney airport assumes a disciplined approach while investing. The company earns a return on aeronautical and commercial infrastructure capital investments. Sydney airport investment activities involved the issuing of $ 900 million US144A/RegS bond to reinforce capital management approach. The amount raised from the issue was used in repaying drawn bank facilities. The net cash flow used in investing activities in 2016 are shown as ongoing investments while investments done in 2015 include the T3 transaction worth $535.0. The company has made investments in the terminus and airport precinct to target new business opportunities. Moreover, it has invested in the property and car business and lease sites, hotel sites, freight facilities, airline offices and airline lounges(Dickson, 2017).Financing and financing activitiesThe company has realized a revenue growth of 11% which is equivalent to $ 1.364.6. Earnings before interest and tax had a growth of 8.2% (1.085.7 million). The security-holder distribution growth is at 21% translating to 31.0 cents per stapled security. Also, the company has issued $900 million bonds at the rate of 4.9% which is fully hedged against currency exposure for ten years results that exceed treasury objectives. The aeronautical revenue has had a growth of 5.6% with 3.8% domestic while 8.9% international. Retail revenue stand at 12.2%, property and car revenue has a growth of 15%. Moreover, parking and transport revenue have grown by 3.6%(AUGovernment, 2017).Financial reporting activitiesSydney airport observes the following practices concerning the financial reporting.
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