Ratio Analysis Assignment PDF

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Running head:RATIO ANALYSISRatio AnalysisName of the StudentName of the UniversityAuthor Note
RATIO ANALYSIS1Market based RatioThe market based ratios are used for the assessment of the current price if the sharesof a public limited comoany.The ratio helps to find out whether the company shares areoverpriced or underpriced (ANTREAS 2017). The ratio analysis are generally done by theinvestors for a better decision making. For the purpose of the analysis two airline companieshas been chosen namely Qantas Airways Ltd and Virgin Australia Holdings Ltd. Both thecompanies are listed in the Australian Stock Exchange (ASX). The market ratio analysis willbe for the last five financial year that is from 2013 to 2017.The market basedMarket based ratios are also included as the entities are listedcompanies. They are calculated by,Earnings per ordinary share or EPOSPrice / Earnings or P/EDividend Yield or DYDividend Payout or DPThe formula for calculation of the above ratios are as follows:EPOS=Profit after income tax-preference dividends/weighted average number ofordinary shares issuedP/E ratio=Market price per ordinary shares/earning per ordinary shareDY=Annual dividend per ordinary share/market price per ordinary shareDP=Total dividends per ordinary share/ earning per ordinary shares
RATIO ANALYSIS2Market based ratios for Qantas Airways Ltd for the year 2013-2017QantasEPS beforetaxEPS aftertaxDPSadj.priceearningsDividendyieldDividend pay-out20132.930.22013.68002014-128.53-128.505.7200201525.3625.409.8600201649.449.474.592.4811.39201745.98461410.352.4525.3Source: Table reproduced from Morningstar Data Analysis Premium (2018)Market based ratios for Virgin Australia Holdings Ltd for the year 2013-2017VirginAustraliaEPS beforetaxEPS aftertaxDPSadj.priceearningsDividendyieldDividend pay-out2013-3.72-4.10-13.84002014-12.26-11.40-16.04002015-3.15-3.20430002016-7.39-7.403.49002017-2.76-2.8076.1900Source: Table reproduced from Morningstar Data Analysis Premium (2018)In case of Qantas the EPS ratio is much higher except the year 2014 which was -128.53, other than that the EPS ratio in case of Virgin Australia Holding run in negative.When it comes to the price earning was more in case of Quantas and is constant but in case ofvirgin Australia it ran in negative and rose drastically from the year 2015 and then remainedpositive. Both the company had a zero dividend yield and dividend payout until 2015 when incase of Quantas it rose and remained positive.Working capital ManagementThe working capital represents the surety that the firm is able to continue itsoperations and has enough funds to meet its long term and short term obligations(Agha2014). According to the annual report of the two Airline companiesQantas Airways Ltd andVirgin Australia Holdings Ltd have a substantial performance in the management of the
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