Difference between Qualitative and Quantitative Data, Horizontal and Vertical Analysis, Data Quality and Performance Evaluation of British Airways Group

This article explains the difference between qualitative and quantitative data, horizontal and vertical analysis, data quality and performance evaluation of British Airways Group. It also covers the factors of risk which may detrimentally upset British Airways Group's market position and revenue.

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31 August 2024
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1.
a) Difference between qualitative data and quantitative data
The term Qualitative data
This refers to a type of data that approximates, characterizes and includes techniques designs
and estimates that do not give discrete arithmetical data
Types of qualitative data include
i. Binomial data –this refers to qualitative data which put items in one of the two
absolutely conjoint categories, example right or wrong
ii. Nominal data – this refer to qualitative data that put items in one of the two named
categories that do not have inferred or original value
iii. Ordinal data – refers to qualitative data that assign items to categories that do have
some type of inferred or original rank or value
Examples include tastes, textures, smells, attractiveness, and color
Whereas,
Quantitative data
This refers to a data type that is quantifiable and which entails designs, methods, and
estimates that give discrete arithmetical data (Lewin, 2015, pp.215-225.)
Types of quantitative data include
i. Continuous data- this refers to data that can be distributed, apportioned and given to
smaller levels. To mention one can measure the width of a field into more accurate
measures such as into centimetres, meters, and kilometres
ii. Discrete data -these are counts that cannot be accurately quantifiable or made more
precise with indivisible entities. For instance, you cannot have 1.4 adults
Examples are humidity, temperature, prices, area, and volume
b) Difference between horizontal analysis and vertical analysis
Horizontal analysis
Trend analysis also referred to as horizontal analysis which is a financial statement analysis
method that depicts fluctuations in the numbers relating to financial statement units or objects
over a given span of time (Lakada, Lapian, and Tumiwa, 2017. 2012-2016, pg53).
An example of horizontal analysis for instance when comparing sale in the year 2017 and
2018 shows how to prepare horizontal analysis between the two years
The horizontal analysis is extremely effective in understanding the performance of an
organization in a period. The financial statements of an organization shows the financial state
of the organization as well as its performance during a period. Horizontal analysis contains
data about an organization in stepwise format. It helps in analysing the financial state and
performance of the organization during a period without going into any comparative analysis.
Vertical analysis

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This refers to a financial statement analysis technique that expresses each amount on a
financial statement as a percentage of another given amount (Rahman, 2019.)
For example, vertical analysis can be used in analysis of the balance sheet to result in every
amount in the balance sheet expressed as a percentage of the total assets.
The vertical analysis on the other hand is extremely useful for comparative analysis of
financial statements of an organization. Vertical analysis is useful in comparing the
performance of an organization in the current period with its performance in preceding year
or two or more preceding years. Vertical balance sheet containing information about assets
and liabilities of an organization again will be easier to compare due to the comparative data
provided in such statement.
Statistical data
This refers to a branch of mathematics that deals with numerical data collection, organization,
analysis and interpretation (Agrawal, and Gopal, 2018, pp. 93-99).
Statistics as a scientific discipline is fundamental in facilitating quantifiable and accurate
information is extracted from big data
Whereas
Big data
This refers to the process of obtaining and interpreting complex data types in terms of
variation and volume, in other situations the speed at which they should be assembled
(Sagiroglu, and Sinanc, 2019, pp. 42-47).
2. Meaning of data quality.
Data quality this refers to an intricate way of measuring data properties from different
perspectives as a function of its ability to be conveniently processed and interpreted for other
applications such as data warehouse, database or data analytics system (Jarke, Jeusfeld,
Quix, and Vassiliadis, 2019. pp.229-253).
Importance of data quality in the financial statements
Financial statements refer to written reports produced by an organization’s management that
convey the business operations, the financial position and the financial performance of an
organization for a given accounting period
i. It enhances improved and informed decision making
Improved data quality leads to better and informed decision making across the company. A
thorough analysis of the financial statements for example balance sheet enables the financial
manager to know the value of the existing assets if they afford more and in severe
depreciation if assets can be disposed of
ii. Increased transparency of the financial statements

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Improved data quality will help to ensure that even the least details in the statement of
financial position can make a great impact on the organization. This can be made possible for
instance by providing figure like profit earned before tax, profit retained after tax and
depreciation of assets which are able to inform the financial manager a lot
iii. Mitigation of errors
High and improved data quality is able to mitigate errors by ensuring accurate and detailed
financial statements which are important to avoid and cut on costly mistakes. If an error has
occurred reconciliation procedures are able to find them
iv. Trust building and confidence in the financial statements
Most importantly an improved data quality is able to result in an accurate financial statement
that induces trust in the business. Investors and creditors need to know that the business is
doing well before putting in their funds this can be made possible if the balance is showing
profit rather than losses
v. Better payment cycles
Ultimately, high data quality can lead to improved payment cycles as it optimizes on the
accounts payable and accounts receivable cycles, which help to ensure accurate financial
statements on the outgoing payments such as dividends to shareholders
vi. Evaluation of tax liability
High data quality will enable the company to reduce its tax burden through the loopholes that
exist in tax laws because when the company makes high profit the corporate tax rates is
equally high, therefore tax evaluation is necessary
vii. Better strategic planning and forecasting
High data quality in the financial statements is able to create opportunities for educated and
informed strategic management planning and forecasting through the cash flow statements
and trading accounts
viii. Competitive advantage
If a business is using high data quality than the competitors, then they gain competitive
advantage since data is the most valuable resource in today’s businesses
Assessment of two
1.
a. Below is the ascertainment of the aircraft manufacturer with the greatest
number of the fleet from the year 2017 data report
Boeing, with a fleet number of eight with airbus having six and Embraer having a fleet
number of 2. Therefore, Boeing having the largest fleet
b. Determining the aircraft manufacturer with the biggest or largest fleet depiction
from the given data for the year ended 2017
Using addition to determine the total of each aircraft manufacturer to find British air
fleet with the largest presentation
Ultimately, adding the number of the fleet under each of the three aircraft
Airbus total= 1+44+67+18+12= 142

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Boeing total = 36+3+8+46+12+9+16= 130
Embraer total = 6+15 =21
Airbus fleet has the biggest representation with 142 fleet
c. Calculated below is the percentage of the aircraft with the biggest representation
from the solutions in b) above expressed as a fraction of the total in 2017
The percentage of Airbus fleet is determined by expressing the value that is 142 then
dividing it by the total number of fleets from all the three manufacturers multiplied by
one hundred percent
The total number of the fleet is 293
Airbus with 142 represents 142 * 100 =48%
293
The airbus, therefore, has a percentage of 48%
d. Below is a well-described pie chart representing the percentages of each type of
the three aircraft manufacturers for the year ended December 2017
Aircraft manufacturers
Number of
fleets
Airbus 142
Boeing 130
Embraer 21
Total 293
Source: Student's own pie chart from excel

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e. Below is graph representing an absolute number of each aircraft kind in the
British Airways fleet for the year ended December 2017
Source: Student's own pie chart from excel
Different Airbus model proportion in the total Airbus is shown below in the graph:
As can be seen from the above graph that with passing of time new models of Airbus
have been added to the fleet of the airline. However, it is quite surprising to see that
there has been not even a single Airbus 350 model available with the airline despite
its huge popularity.
2. The performance of British Airways Group using the following ratios: return on
capital employed, return on equity and the current ratio. (using the given annual
report to source the necessary information)
Return on capital employed
ROC Return on capital employed refers to a financial ratio that
estimates and computes a business’ profitability and the

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effectiveness with which its funds are utilized (Firer, and
Mitchell Williams, 2013. Pp.348-360).
Implications There is a high return on the capital employed which will
result in the inefficient performance of the British Airways
Group’s
Data Total on the balance sheet fixed asset subtract total off the
balance the sheet operating lease which generates more profit
(212-181=131)
Observation Ultimately, British Airways Group’s performance is good and
can generate profits which indicate the ability of the Airways
to generate more returns from sales and prompt investments
Using return on capital employed in British Airways to
determine its performance which is good and favourable to its
operation by having a comparative measure of performance in
the different aircraft manufacturers to enhance efficiency
Return on capital employed indicates the percentage return in
the form of net profit on capital investment in the shares
Return on equity
ROE Return on equity is the measure of an
organization’s skill to generate income
from the shareholder's equity at disposal
(Arditti, 2017. pp.19-36).
Implication for the organization The British Airways Group has a high
return on equity hence its ability to
generate cash internally which in turn
improves its performance
Observations Net income divided by equity of the
shareholders (82/131) *100 which
shows an improvement in the
performance in the British Airways
Group

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Return on net worth indicates a
percentage return on the equity or net
worth of shareholders
Current ratios
Current ratio The current ratio of the above-stated
operation refers to the capacity of the
organization to reimburse its lasting
debt Leader (Module, 2014).
Implication for the organization British Airways Company has a current
ratio of one which is (82/81) to mean
the company is just able to cover all its
short-term obligations hence a good
production of the group
Factors of risk which may detrimentally upset British Airways Group’s market position
and revenue referring to the information from the stated annual report and
supplementary applicable material sources
Risk refers to the potential events expected or unexpected to have an adverse effect on the
business’ earnings or capital
The following factors of risk may be adversely disrupted and upset British Airways Group’s
market position and revenue
1) Competitive risk
This entails the potentiality of non-performance that one’s competition will have added
advantages that will prevent the organization from meeting its objectives with regards to the
set targets.
For instance, when the competitors deliver services at an affordable cost or have an improved
quality product
2) Compliance risk
This involves the chance that the organization will fail to adhere to the laws and regulations
resulting in outflow of funds to meet legal fees
This could result in a capital outflow when the organization as a whole or part of the fails to
comply and work under the provided laws and regulations
3) Economical risk

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This refers to the potential loss resulting from the factors and conditions within the economy
will reduce the sales as a result of its earnings or increase the costs incurred
During adverse economic conditions, the operations of the business may be majorly affected
since the factors affecting the economy would, in turn, affect the business
4) Operational risk
This refers to the potential risk of failure associated with less and inappropriate or failed
internal procedures, labor, systems or outside events connected with the everyday functioning
of the business
The chance of failure to have adequate and proper internal control processes would determine
and have an impact on the efficiency of the organization in terms of its operation
5) Legal risk
This involves the chance of failures resulting from new directives that may shatter the
organization's activities necessitating the organization to suffer capital outflow to levies and
liabilities due to legal discourse
The company should be able to operate in accordance with every legal law and regulations
set to enable effectiveness and efficiency to reduce the chances of legal risk associated with
ignorance
6) Program risk
The chance of failure associated with a given business program or projects
The chance of loss arising from this risk may affect the business adversely which may prompt
the business to develop a program risk management
7) Strategy risk
This refers to the chance of failures associated with several courses of action taken by the
organization
8) Risk of reputation
The possibility of failure associated with the risk of damage to the organization image or
public standing resulting from dubious actions, conventions or events which are discerned as
fraudulent, uncivilized or unskillful
9) Country risk
This is the potential to loss resulting from particular constrains within the economy in which
the business undertakes its workings such as political episodes and occurrence that could
adversely affect its day to day operations
10) Risk of projects
This is the chance of risk associated with investments and from the management of such
projects
It is an unknown event that when occurs has an adverse effect on more than one project.
11) Innovation risk

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This refers to the possibility of loss that is associated with the innovative sections of the
company that could necessitate the organization to embrace risk management procedures to
fast ahead and relatively control elevated risk operations
12) Exchange rate risk
The potential that inconsistency in the foreign exchange rates could affect the price put on an
organisation’s undertakings and assets. Most universal and international businesses have
greater exposure to a variety of currencies that may contribute to inconsistency in the
financial reports such as operating profit margins
13) Risk on credit
This refers to the possibility of loss resulting from a debtor’s failure to meet his or her
payment obligations in accordance with the agreed term which is mostly associated with
accounts receivable risk
14) Risk of interest rates
This is risk associated with fluctuating interest rates that could distort the organization’s
operation, for example in case, interest rates increase the amount of capital incurred would in
turn rise affecting the company’s profitability
15) Risk of taxation
This is the probability that new tax laws and adjustments will be implemented resulting in
higher tax than expected
The organization should, therefore, be on watch to keep up with the changing tax laws and
interpretations made. This could help mitigate the chance of failure result
16) Resource risk
It is the chance of failure and loss connected to the inability of the business to attain its
objectives and set targets due to lack of resources The business resource include labor which
entails the people working in the organization to enable the organization to meet its
operational needs, resources which are the stock, capital, and assets within the organization
which is used in its day to day operation and finances which are the sources of income to the
organization.
This can result from the organization’s inability to secure important resources, labor and
finances needed for effective and efficient operation.
17) Process risk
This is the potential of failures associated with an intense process. The procedures often aim
at controlling possible failures and losses, as mitigating risks is the fundamental business
procedures yielding reductions and high revenue
It exists when the process that supports the business activity lacks both efficiency and
effectiveness leading to financial loss, customer loss and reputational loss.
18) Seasonal risk
The chance of a business having low revenue associated with a concentration in a single
season production

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During off-peak, the capital inflow would be greatly reduced as a result of single-season
production by the company
The seasonal risk may prompt the company to come up with risk management and control to
mitigate the adverse effects of seasonal risk
19) Political risk
The chance of failure associated with political events and consequences to delay and affect
the organization operations
During unfavorable political conditions, the operations of the organization in terms of sales
and returns may be majorly affected by cases like violence and riots within the country.
References
Agrawal, A. and Gopal, K., 2013. Principles of Statistics and Reporting of Data.
In Biomonitoring of Water and Wastewater (pp. 93-99). Springer, India.
Arditti, F.D., 2017. Risk and the required return on equity. The Journal of Finance, 22(1),
pp.19-36.
Firer, S. and Mitchell Williams, S., 2013. Intellectual capital and traditional measures of
corporate performance. Journal of intellectual capital, 4(3), pp.348-360.
Jarke, M., Jeusfeld, M.A., Quix, C. and Vassiliadis, P., 2019. Architecture and quality in data
warehouses: An extended repository approach. Information Systems, 24(3), pp.229-253.
Lakada, M.N., Lapian, S.J. and Tumiwa, J.R., 2017. ANALYZING THE FINANCIAL
STATEMENT USING HORIZONTAL–VERTICAL ANALYSIS TO EVALUATING THE
COMPANY FINANCIAL PERFORMANCE PERIOD 2012-2016 (Case Study at PT.
Unilever Indonesia Tbk). Jurnal EMBA: Jurnal Riset Ekonomi, Manajemen, Bisnis dan
Akuntansi, 5(3).
Leader, M.M., Module: Financial Analysis & Management Module Code: MD003404
Module Leader: Dr. D Acquaye Student ID: 1361534 Assignment Submission Date:
24/10/2014.
Lewin, C., 2015. Elementary quantitative methods. Research methods in the social sciences,
pp.215-225.
Miles, M.B., Huberman, A.M., Huberman, M.A., and Huberman, M., 2014. Qualitative data
analysis: An expanded sourcebook. sage.
Rahman, M., 2019. Financial performance analysis was of Janata bank limited.