Ryanair Financial Issues and Solutions
Added on 2020-06-04
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Management Accounting
Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1P1. Importance of different management accounting systems used by management of Ryanair.....................................................................................................................................................1P2. Methods or techniques of management accounting reporting..............................................4M1: Advantages of various accounting system..........................................................................6D1: Critically evaluate how management accounting system and management reporting isintegrated with each other...........................................................................................................6TASK 2............................................................................................................................................7P3 Calculation of cost by using marginal costing and absorption costing..................................7M2: Analysis of accounting tool.................................................................................................8D2: Financial report regarding interpretation of Data.................................................................8TASK 3............................................................................................................................................8P4 Advantages and Disadvantages of different types of planning tools which helps inbudgetary control........................................................................................................................8M3: Analysis of using different planning tools and their use in preparation and forecasting ofbudget in context of Ryanair airlines........................................................................................10D3: Evaluation of planning tools..............................................................................................10TASK 4..........................................................................................................................................11P5 Comparison of Ryanair with Easy Jet regarding use of different management accountingsystem to respond financial problems ......................................................................................11M4: Evaluation of financial issues............................................................................................12CONCLUSION..............................................................................................................................12REFERENCES..............................................................................................................................13.......................................................................................................................................................14
INTRODUCTIONIt is effective system which helps in management of different operations of organisationin well organised manner. With the help of this system understanding between differentdepartments is increased. Different accounting systems are important for every kind oforganisation whether small or large in nature. It helps in attainment of sustainability in theirbusiness performance and accomplishment of targets within stipulated period of time. Suchaccounts also helps in preparation of reports which provides the information to the internalparties of organisation. Such financial and non financial information contributes in enhancementof decision making power of management regarding effective operation of their day to dayoperations. There are large number of benefits which are achieved by organisation like strategic,performance and risk management. It also helps in planning, monitoring and controlling differentactivities of departments which helps in improvement of the performance of each and everyemployee. Ryanair is airline organisation which provides their services in Ireland and UK. Themanagement wants to implement different accounting systems regarding improvement ofperformance (Abdel-Kader, 2011).In the present report explain about, different management accounting systems,application of absorption and marginal costing in preparation of income statement, preparation ofcash budget for three months of January, February, March, advantages and disadvantages ofdifferent types of planning tools which are used for the purpose of budgetary control. Also,comparison between the Ryanair and Easy Jet regarding adaptation of management accountingsystems which helps to respond financial problems.TASK 1P1. Importance of different management accounting systems used by management of RyanairRyanair provides airline services between Ireland and UK. It was founded in 1985 byRyan family. The main aim of organisation is to provide the best services and attainsustainability in their business operations. At present, Ryanair is considered as full serviceconventional airline which has two different classes of seating. They are leasing three differenttypes of aircraft. It is observed that due to the application of the different approaches there isgrowth in the number of passenger volume but after that they have to bear losses in theirbusiness operations in 1990. The issues which are faced by airline organisation is turbulence in
operations, disposing of five chief executive officers and losses of IR £ 20 million. There arelarge number of options are carried out by the management of organisation to fight with situationand overcome from the losses. For this purpose, they restyle their operations to become the mostlow-fares, no-frills carrier on the basis of the model of South-west airlines which is one of thesuccessful airline organisation (Albu and Albu, 2012). Tony Ryan head of the Ryanair airline organisation decided to appoint fresh managementteam in organisation. The main aim of such team is to implement different accounting andreporting systems to reorganise their operations and take information based decision. Such teamis headed by Michael O'Leary. Appointment of such new management team turns around thefortune of company and in 1997, provides IPO on the Dublin stock exchange and NASDAQ.The main function of such new management team is to application of principles ofmanagement accounting to accomplish their targets. Management accountingManagement accounting is the concept which includes the preparation of accounts andreports which provides accurate and timely financial and statistical information which is used bythe manager to direct their day to day operations and short term decisions. The different reportswhich are prepared under this system provides the different information regarding cash, salesrevenue, accounts payable, accounts receivable, outstanding debts, raw material and inventory,variance analysis etc. Different management accounting systems which enhanced the decisionmaking of managers are job costing, inventory management, cost accounting, managerialaccounting, price optimisation system etc. The essential requirement of these accounting systemsis to manage the three major areas of organisation like strategic, performance and riskmanagement (Amidu, Effah and Abor, 2011). There is huge importance of all these systems forthe management of Ryanair regarding determination of the goals for each and every departmentof company, preparation of the budgets with help of budgetary system which contributes incomparison of actual performance of employees and finds out deviations.Different types of management accounting systemsMichael O' Leary is the head of the new management team decided to adopt differenttypes of account systems which provide the information regarding the performance of differentdepartments. It helps in planning about future actions which provides the direction to employees
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