Financial Analysis of Virgin Atlantic

Virgin Atlantic
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Date

Table of Content
Executive Summary.........................................................................................................................3
Financial Analysis...........................................................................................................................4
Liquidity Ratio & Efficiency.......................................................................................................4
Current ratio.............................................................................................................................5
Quick ratio................................................................................................................................5
Cash ratio..................................................................................................................................5
Profitability ratios........................................................................................................................6
Gross margin profit..................................................................................................................6
Operating profit margin............................................................................................................6
Net profit margin......................................................................................................................6
Return on equity.......................................................................................................................7
Return on assets........................................................................................................................7
Long-term and Financial Stability...............................................................................................7
Debt to equity ratio...................................................................................................................7
Evaluation of Industry Sector..........................................................................................................7
SWOT Analysis...............................................................................................................................9
Virgin Atlantic Strengths.............................................................................................................9
Virgin Atlantic Weaknesses.........................................................................................................9
Virgin Atlantic Opportunities......................................................................................................9
Virgin Atlantic Threats..............................................................................................................10
Share Valuation.............................................................................................................................10
Financial and Non-Financial Factors.............................................................................................11
Asset based.................................................................................................................................11
Earnings based (including multiple of EBITDA method).........................................................11
Cash flow based.........................................................................................................................11
Dividend based...........................................................................................................................11
Suitable Governance Structure with referring to external auditor role..........................................12
Summary & Conclusion................................................................................................................12
References......................................................................................................................................13

Executive Summary
The objective of this report is to examine the financial performance of Virgin Atlantic which is
operating as the private airline company in Australia for the period of 5 years ranges from 2018
to 2022. This report also examines the industry sector in which Virgin Atlantic is operating along
with the performance of three listed companies which are Ryan Air, British Airways and Jet 2
PLC. This report also examines the internal analysis of the company by implementing the SWOT
analysis of the company in which the relative strengths, weaknesses, opportunities and threats of
the company has been examined along with the pre and post share valuation for IPO.
In this report, the financial and non-financial factors are also examined that could have potential
impact on the valuation of the company along with Suitable Governance Structure with referring
to external auditor role. Lastly, this report ends with the conclusion which highlights the
important findings of this report

Financial Analysis
Ratios 2018 2019 2020 2021 2022 %
Change
Industry
Change
Gross
profit
margin
9.00% 8.24% 8.00% 4.50% 2.00% -76% -70%
Operatin
g profit
margin
3.00% 2.75% 2.20% 3.80% 4.00% 33% 200.00%
Net
profit
margin
9.00% 8.24% 4.00% 5.50% 6.00% -33% -55%
ROE 5.00% 4.58% 3.00% 15.00% 28.00% 460% 1533%
ROA 99.00% 90.59% 42.00% 65.00% 79.00% -20% -21%
Current
ratio
70.00% 64.05% 33.00% 80.00% 85.00% 21% 23%
Quick
ratio
45.00% 41.18% 35.00% 52.00% 62.00% 38% 41%
EPS 569.00% 520.64% 550.00% 580.00% 5.00% -99% -100%
Dividend
pay
1450.00
%
1326.75
%
1187.00
%
1505.00
%
1518.00
%
5% 5%
Cash
ratio
31.00% 28.37% 15.00% 42.00% 49.00% 58% 65%
Debt to
equity
22.00% 20.13% 28.00% 35.00% 52.00% 136% 162%
Liquidity Ratio & Efficiency
Many different liquidity metrics may be used to calculate whether or not a farm has
enough liquid assets to pay its short-term financial commitments.