Qantas Airways Limited - Financial Analysis Name

Qantas Airways Limited – Financial Analysis
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Table of Contents
About Qantas.........................................................................................................................................3
Introduction...........................................................................................................................................3
Ratio Analysis.......................................................................................................................................3
Operating/ Activity Ratios:................................................................................................................4
Assets Turnover Ratio:..................................................................................................................4
Unearned Income to Total Revenue:..............................................................................................4
Liquidity Ratios:................................................................................................................................4
Current Ratio:................................................................................................................................4
Cash Flow Ratio:...........................................................................................................................5
Capital Structure:...............................................................................................................................5
Debt-Equity Ratio:.........................................................................................................................5
Interest Coverage Ratio:................................................................................................................5
Debt Service Coverage Ratio:........................................................................................................6
Cash Flow Analysis:..............................................................................................................................6
Cash flow from Operating Activities:................................................................................................6
Cash Flow from Investing Activities:................................................................................................6
Cash Flow from Financing Activities:...............................................................................................7
An Overview on Financial Performance and Position:..........................................................................7
Recommendations:................................................................................................................................8
Pros:...................................................................................................................................................8
Improvements:...................................................................................................................................8
Strategic Analysis of Qantas:.................................................................................................................9
References...........................................................................................................................................11

About Qantas
Australia’s largest domestic and international airline, Qantas Airways restricted was
supported in 1920 within the outback of Australian state. Qantas is one the foremost booming
airlines company within the world with its robust whole image, well-tried safety records,
operational dependableness and high client satisfaction rate each in Australia and within the
international stage (Zhang, et al., 2018).
The Qantas Group's main endeavor is that the transportation of passengers by means that of 2
complementary airline brands - Qantas and JetStar. It conjointly operates subsidiary
businesses together with Qantas fright, Qantas link, Qantas company and Qantas loyalty. The
airline operates largely in Australia, New island, Asia and now could be increasing its
services wide to the USA and alternative long-haul destinations like GB, city and Santiago.
Globally, Qantas employs over thirty,000 folks with regarding ninety-three per cent of them
based mostly among Australia. As at Gregorian calendar month 2017, Qantas holds associate
calculable thirty-nine.1% of the market share within the domestic market and nineteen.8% of
the market share within the International market (Qantas Airways restricted, 2017).
Introduction
Financial Analysis refers to a set of methodologies utilised by an analyst to create a perception about a
firm regarding its stability, solvency, liquidity and profitability which enables the investors to make
decisions regarding an investment in the venture[ CITATION Inv \l 16393 ].
For the completion of this assignment the report is divided into several segments based on the nature
of financial metric used which are Ratio Analysis, Cash Flow Analysis and Overall financial
performance & position; followed by recommendations.
Ratio Analysis
A ratio is a numerical relationship between two variables[CITATION Dra \l 16393 ]. Ratio analysis is
an integral part of financial statement analysis which is generally deployed to acquire swift
understanding on an entity’s performance and position[ CITATION Bus \l 16393 ]. For the purpose of
evaluating Qantas, the ratios are segregated amongst several categories namely, Operating Ratios,
Liquidity Ratios and Capital Structure.

Operating/ Activity Ratios:
The two ratios taken herewith are Assets Turnover Ratio and Unearned income to total revenues ratio
for the purpose of evaluating the management’s operating efficiency. Reasons for selecting the
aforementioned ratios are discussed along with the verdict in the ratios.
Assets Turnover Ratio:
Assets Turnover Ratio is a relationship between the revenues and average total assets. The reason for
choosing this metric is the notion that in Aviation industry, any company’s assets side is dominated
by planes (the carriers) which are eventually responsible for generating the majority chunk of its
revenue[ CITATION JBM \l 16393 ]. Therefore, it is a quick indicator to make an approximation as to
how the assets are performing in terms of generating revenues. For Qantas, the Assets turnover ratio
has been increasing steadily over the past four years. In absolute terms, the ratio has increased from
0.908 times in FY 2015 and is currently pegged at 0.951 times in FY 2018[ CITATION Qan18 \l
16393 ].
Unearned Income to Total Revenue:
This ratio is generally not regarded as a pervasive ratio for activity-based understanding, however, in
case of Aviation industry it becomes a mandate because of the nature of the industry as the tickets are
booked prior to the delivery of the service. In over case of Qantas, the said metric has been fluctuating
and has shown variations of plunging deepest to ~21.76% in FY 2016 and subsequently mounting in
FY 2017 at ~23.32%. Furthermore, the metric has settled at 23.09% in FY 2018[ CITATION Qan18 \l
16393 ].
FY 2018 FY 2017 FY 2016 FY 20150.880
0.890
0.900
0.910
0.920
0.930
0.940
0.950
0.960
20.50%
21.00%
21.50%
22.00%
22.50%
23.00%
23.50%
0.951 0.947 0.946
0.908
23.09%
23.32%
21.76%
22.66%
Operating / Activity Ratios
Assets Turnover Ratio Unearned income to total revenues