BUS0002: Data Analysis, Financial Reporting, and BA Performance Review

This report delves into data analysis, exploring the distinction between qualitative and quantitative data, along with trend analysis techniques like horizontal and vertical analysis. It defines data quality and its significance in financial statements, highlighting the importance of accuracy, relevance, and completeness. The report examines the role of financial statements in evaluating tax liabilities, mitigating errors, building trust, facilitating financial growth, and aiding future planning. Part two focuses on British Airways' performance, analyzing its aircraft fleet, calculating percentages, and creating visualizations. It discusses key financial ratios like Return on Capital Employed, Return on Equity, and the Current Ratio, providing insights into the airline's financial health and performance. The analysis includes calculations and interpretations of these ratios, offering a comprehensive overview of British Airways' financial standing.

Q1. Distinguish between the following words
Quantitative data and Qualitative data
Qualitative data is basically data collected by way of observing thus, it’s non-statistical
and cannot be used to make statistical calculations. It’s more subjective rather than objective.
Qualitative researchers therefore use natural methods, that try to interpret the existence of things
and why thing go the way they do. On the other hand, quantitate data uses statistical calculations
to make conclusions (S, 2019). It involves complex and advanced calculations for the researcher
to arrive at a decision. This data tries to explain the quantity and uses numbers to arrive in such
answers.
Horizontal and Vertical Analysis (under the subject of trend analysis)
Horizontal analysis is a method used to compare financial statements of a company, for
similar items like ratios in different years. The results under this method can be reported using
percentages or absoluteness. On the other hand, vertical analysis considers only one year to
arrive at their answers (Enyi, 2019). For example, everything on the financial statements can be
expressed as a percentage of the total assets.
Statistical and Big data
Big data is one that has a lot of contents that cannot fit in a single computer. This calls for
the parties having such data to ensure its safe and protected for the interest of the owners. Thus,
such data should be used only for the intended purposes. On the other hand, statistical data is
data collected with numerical numbers (www.statista.com, 2019). Such a data can be used by
management to make crucial decisions regarding a company.

Q2. Explain the term ‘data quality’. Discuss its importance in financial statements
Data quality
This can be defined as the ability of the data in question being able to serve the desired
need or outcome. Data quality can thus, be measured in a number of aspects among them:
accuracy, relevance, reliability and completeness. Quality data helps the concerned parties to be
in a position to make healthy decisions that are not biased or altered. On the other hand, data that
is poor can lead to financial losses when used to make decisions and should be avoided.
Importance of financial statements.
Different people use the financial statements for them to be in a position to make good
decisions. It’s therefore, important for the companies preparing these statements to be accurate
and transparent as much as possible (Oakhillbp.com, 2019). Discussed below are the
importances of these financial statements to different parties.
Evaluating tax liability
All business are supposed to pay taxes which are decided using the financial statements.
It’s therefore, necessary for firms to prepare financial statements in order to know their tax
liability to the government (Property tax incentives and city growth and development, n.d.). The
government in turn uses these taxes to provide essential goods and services that profit making
organization do not engage in. These services include: roads, water, and power among others.
Mitigating errors
When organizations prepare these statements they are able to identify the errors and areas
of weaknesses in their business. Thus, they help the firm’s seal areas that make them to make

losses. In addition, the management is able to identify where the company is failing and
recommend amendments. When these errors and weaknesses are dealt with the company ends up
making profits. On the other hand, accuracy and competency should be exercised while
preparing these financials so as to clearly show the areas that require review.
Building trust
Customers are concerned on the growth of their company thus, they expect and want to
see their organization growing. A growing company creates opportunities to the community and
gets involved in development projects that help the surrounding communities. When customers
develop trust in a company or product they end up buying more goods and services from them.
Therefore, a trusted company is able to attract more customers and investors who help the
company grow.
Financial growth
The banking sector looks at the financial statements for them to offer loans to companies.
It’s therefore important to always prepare accurate statements as they indicate the ability of the
company being able to pay the loans borrowed (Mardani, 2019). The finances borrowed should
be used to grow the company hence, the management should consult widely before making the
decision to borrow. On the other hand, firms should ensure they always set targets for growth
since, it gives them the desire and appetite to meet the same.
Although, lenders considers these financial indicators it’s also important for them to
support upcoming companies that have plans and commitments to service their loans. This will
lead to economic growth that benefits many people.

Making future plans
The management uses the financial statement numbers to help them plan on the future
plans that the company should undertake. More so, the company is able to plan their spending
which helps them to be a going concern. Without proper planning, the company cannot be able to
allocate available resources to the most deserving projects. On the other hand, the figures can
help a company to eliminate a product or service that needs a lot of money to produce and not
offering returns to the company. Financial statements can therefore, act like a marking scheme to
a business to compare the planned things with actual results.
Benefit to the employees
Employees wants to be associated with a company that is making profits since it pays
their staff well in return. Such companies that make profits have good working conditions and
undertake career development programs to their workers. Thus, these statements help the job
seekers and present employees to make critical decisions regarding employment.
Benefit to the creditors
Creditors are the people and businesses that a firms has some unmet financial obligations
to. These people are concerned with the financial statements to know whether the business will
be in a position to meet their dues. This helps them to make decisions on whether to continue
working with the company or not.
Benefit to the public
The public is concerned with the performance of the companies in their economy since,
businesses are corporate entities. Hence, firms have a basic duty of being socially responsible to

the communities where it exists. On the contrary, professionals like lawyers, teachers, and
accountants use the financial statements to make informed judgments regarding the company in
question. More so, professionally have the right and duty to help people to make informed
judgments which they use to invest or withdraw their investments from a company.
Part two
Q1a. Which aircraft type had the largest fleet (number of aircraft) as at December 2017?
Boeing 777-200 which had 41 fleets. A fleet can be defined as the number of vehicles or
airplanes operating under one name. Thus, Boeing 777-200 had the largest number of fleets with
its name.
Qb. Which aircraft manufacturer had the biggest representation in the British Airways fleet as at
December 2017?
Airbus A320 has the biggest representing since, it has fixed assets amounting to 40 in number
and 27 that operate in lease. This is the highest number which is closely followed by Boeing 777-
200. As at the end of 2017 Airbus A320 had the most trips showing it was the most preferred.
Qc. What percentage does the figure in (b) represent of the overall total in 2017?
Percentage is calculated by the number of fleets divided by the number of total operations * by
100. Thus its 67/293=0.2287 to make it into percentage =0.2287*100= 22.87%
Qd. Produce a fully-labelled pie chart showing the 3 aircraft manufacturers’ percentages of
the total fleet in December 2017
Boeing total fleets =130 Embraer E170=21
Airbus A320=142

Percentage to this = totals of single airplane/ total number of airlines ie 130/293=0.44=44%
21/100=0.07=7% and 142/293=0.48=48%
A pie chart for the above data would look like the following
7
48
44
Sales
1st Qtr 2nd Qtr 3rd Qtr
This pie chart has been clearly labelled to show the percentages of different airline.
Boeing Airline has 44% and has the second most number of fleets in the economy. This airline
thus, plays a vital role in the transportation industry (De, 2016). The largest airline in BA is
A320 airline which represents 48% percent of the total fleets that exists. This shows that this
airline has the most fleets and makes many trips as compared to the others in the same industry.
On the other hand, the last airline with the least fleets being Embraer which needs to be
improved so as to become competitive like the others. Some of the methods that the airline can
use is by improving their services to ensure that their customers are satisfied. More so, the
company can extend its marketing strategies to ensure it touches everyone and that the target
groups in the industries are marketed to.

Qe. Use a suitable graph or chart to show the total number of each aircraft type in the
British Airways fleet as at December 2017
Aircraft type Totals
2017
Percentage=
(n/293) *100
Airbus A318 1 0.34%
Airbus A319 44 15%
Airbus A320 67 22.80%
Airbus A321 18 6.10%
Airbus A380 12 4%
Boeing 747-400 36 12.30%
Boeing 757-200 3 1%
Boeing 767-300 8 2.70%
Boeing 777-200 46 15.70%
Boeing 777-300 12 4.10%
Boeing 787-8 9 3.10%
Boeing 787-9 16 5.50%
Embraer E170 6 2%
Embraer E190 15 5.10%
Letter n represents a type of an aircraft in the above excel sheet. The above data has in turn been
used to prepare the below graph.

Airbus A318
Airbus A319
Airbus A320
Airbus A321
Airbus A380
Boeing 747-400
Boeing 757-200
Boeing 767-300
Boeing 777-200
Boeing 777-300
Boeing 787-8
Boeing 787-9
Embraer E170
Embraer E190
0
10
20
30
40
50
60
70
Aircraft percentages
Total Pecent= (n/293) *100
The y axis of the graph represents the percentage of the different aircrafts while, the x
axis shows the types of aircrafts owned by BA Company (Keller, 2014). According to this graph,
Airbus A320 has the highest number of aircrafts as it’s displayed by the graph while, Airbus
A318 has the least.
Q2. Discuss the performance of British Airways Group using the following ratios: Return
on Capital Employed, Return on Equity, and the Current Ratio.
Ratio analysis importance.
They locate weaknesses
Although the company may be good on the outside, ratios help to identify the weaknesses
that are not visible (Siddique, 2019). Through such a processes the management is able to make
decisions to help them grow and prevent such errors from occurring.

Compares performances
Ratios are used to compare companies in the same sector which, helps investors to make
the best investment decisions. In the British Airlines Company the management can be able to
make the decisions on which airline to allocate more resources than the other depending on its
performance.
Return on Capital Employed
This is a ratio that is used to calculate how the company is able to make profits from the
invested amount of capital. Thus, investors are able to know the amount of profits that the
company makes in dollars (Casielles, 2019). Through this they can be able to make decisions on
whether to continue investing or not. The following formula is used to calculate the return of
capital employed (ROCE).
ROCE=EBIT/Capital employed where EBIT is Earning before interest and tax. Capital
employed is given by the total assets less current liabilities.
=1744/(16678-5468)=1744/11210
Thus ROCE=0.155.
Q2 (b).Return on Equity
This ratio measures a business ability to make profit from the shareholders investments.
The ratio is able to identify how much a common stock can generate in terms of return to an
investor. The formula is as given below.
Return on equity ratio= net income/shareholders equity.
=1964/5974=0.3287

Q2(c). Current Ratio.
This ratio measures a firm’s ability to be able to settle their short term dues. As the name
suggests it’s referred to as a current ratio since, it uses the current assets and current liabilities to
express the company’s ability, unlike other ratios that use past data. More so, this ratio can
identify if the company will be able to survive in the future (My Accounting Course, 2019).
Current ratio (CR)=current assets/current liabilities.
CR=2796/5468
CR=0.5113
From this answer it shows that the total liabilities exceeds the total assets in the year
under review. On the contrary, if such a ratio is greater than one, it indicates that such a company
is able to meet its obligations without any pressure.
Q3. Risk factors in the British Airlines Company
Competition
British American Airlines, operates in a competitive world since there are other
competitors who offers the same service. Basically, customers want to get their value for money
and expects to get the best services. BA has put in a lot of resources to ensure customers safety
and better services are offered so as to attract more customers. In addition, the company has
introduced competitive products like, buy on board catering that most customers love (Tai,
2012). This places BA on the competitive edge to be able to compete with others.

Fuel price changes
Globally, fuel prices are not regulated well and keeps changing without notice which
places the travel companies at risk (Fuelprices.net, 2019). If proper management of resources is
not well planned it can result to shut down or delay in operations. More so, BA should have
storage methods to help the company continue operating when there is shortage in the market.
It’s the duty of the management to consider buying low consuming airplanes to help reduce their
travelling cost to make it affordable to the low income earners.
Foreign currency risk
BA being an international company with many destinations around the world, faces the
risk of changes in the value of the different currencies that their customer pay to obtain their
services. Different currencies are controlled by different forces that are beyond human being
power thus, they are not predictable nor can they be fixed at a constant rate.
Although this is not something that can be controlled, the management should hire
experts to explain business trends to help them plan for the future (Fujiki, 2013). Furthermore,
they should charge prices that caters for these risks. This helps BA not to be affected by the risks
when they arise.
Bad climatic conditions
Since airplanes travel on air, they experience changes in weather which is not
controllable and can lead to accidents. Air travel accidents are deadly and should be avoided at
all costs (Auray, Eyquem and Jouneau-Sion, 2014). Thus, preventive measures should be put in
place to deal with such circumstances. BA should have experts that are able to explain the
changes in weather and subordinate staff that help in case there is any danger. Additionally,

travel during bad weathers should be terminated to avoid taking risks. On the other hand, the
company should have insurance covers to help them pay for accidents that might occur.
Digital disruption
BA may face a lot of challenge trying to cope with new innovations and inventions from
upcoming business or competitors who are able to use the latest technologies in production. This
calls for the company to adopt new technologies in the market to remain competitive with others.
Government rules and regulations
The government may either encourage or discourage business activities with the rules
they put in place (Incentives for Organ Donation: Proposed Standards for an Internationally
Acceptable System, 2011). On the contrary incentives to the firms offers a conducive
environment to the involved parties to carry out their businesses effectively.
Q4. Use the data and the graph provided to comment on the British Airlines revenue.
BA Company has had an upward trajectory revenue which has been increasing over the
years. This indicates that the company is making profits and is bound to expand its services to
other countries. This has been due to the excellent services that BA customers get and the good
customers satisfaction offered by the employees.
Mean in such a bar graph is calculated by summation of the totals divided by the number
of years. Additionally, a mean is use to show the behavior or characteristic of a certain data.
Hence it displays the average tendency of such a data.
Mean=(11421+11719+11333+11398+12226)/5years. Thus, 58097/5=11619.4 is the
mean. This figure is not far from the highest levels that the company has reached which shows