Business Valuation and Analysis of Qantas Ltd - B01BAVA320 Report

This report provides a comprehensive analysis of Qantas Ltd, examining its business valuation and financial performance. It begins with a company background, highlighting its history and mission. The report then applies Porter's Five Forces model to assess the competitive environment, considering factors such as buyer and supplier power, threats of substitutes and new entrants, and industry competition. The analysis extends to Qantas's business strategy, focusing on its cost leadership approach. Furthermore, the report delves into the quality of accounting information, discussing accounting policies, estimates, and disclosures. Key accounting policies, including revenue recognition and property, plant, and equipment valuation, are examined. The report concludes by summarizing the financial analysis and the business's overall strategy, emphasizing the importance of accounting quality and strategic alignment for sustainable success. The report aims to enhance understanding of financial analysis, strategic management, and accounting practices within the aviation industry.

Business Valuation and Analysis

Introduction
• The business of Qantas ltd is considered for the analysis
and the background and history of the company would be
presented.
• The analysis would also include the quality of information
which is included in the financial statements of the
business. In addition to this, the analysis also shows the
application of Porter’s Five force model.

Company Background
• Qantas Ltd is considered to be
one of the largest operator within
the Australia Transport Industry.
• Queensland and Northern
Territory Aerial Services Ltd was
set up in 1920 and the company
initially provided demonstration
flights and joy rides.
• The company started overseas
flight in 1935 and since then is
offering generic products and
services to the customers.

Company Background (Continuation)
• The company at this point started to increase its
involvement in the airline sector and started using all
means to become market leaders in the aviation sector.
• It was also during this time that the domestic market also
developed significantly which resulted in more involvement
of the business to enhyance the sales of the business.

Mission of the Company
• The mission statement of
the business is to enhance
the value of the business
and also provide the best
quality of services to the
customers.
• The mission statement of
the business also aims to
reduce the costs of the
business and enhance the
profitability of the business.

Porter’s Five Force Model
• Bargaining Power of Buyers: The
bargaining power of the buyers would be
high both in case of domestic and
international flights. It is for this reason
that the company follows a low cost
model in managing the operations of the
business.
• Bargaining power of Suppliers: The
business has two major suppliers who
are aircraft manufactures and fuel
supplier. The prices of oil and
manufacturer are quite and therefore,
the bargaining power of the supplier is
also a major factor which affects the
operations of the business.

Porter’s Five Force Model (Continued)
• Threats of Substitute Products: In most of the cases,
people choose airline travel due to quick approach. However,
there are still substitutes such trains. Therefore the threat of
substitute is high.
• Threat of New Entrance: Qantas ltd is engaged in the
business of aviation sector and is considered to be a global
leader. The threat of New entrance in the market is negligible.
• Industry Competitors: The competition in the market is quite
intense and the same affects the operations of the business
and therefore the level of competition is high in the market.

Strategy of the Business
• The strategy of the business is to enhance the value of the
business and ensure that the customers are satisfied with
the services which is offered to them.
• The business follows low cost model for enhancing the sales
revenue of the business and therefore also for increasing
the profits.
• The analysis of the business conditions shows that the
business follows Cost Leadership model for enhancing the
operations of the business and also gaining a competitive
edge over its competitors.

Cost Leadership Strategy
• The management of the company follows cost leadership
strategy in terms of generic strategy of the business so that
the management of the company is able to attract more
customers and enhance the revenue which is generated by
the business.
• The business plans to become the lowest price charging
airlines in Australia for enhancing the value of the business.

Accounting Quality Analysis
• The accounting process which is followed by the
management of Qantas Ltd is consistent with the
accounting process which is followed by all companies.
• The financial performance of the business depends on the
nature and operations of the business. The company
follows the net profit estimate to be the most important
component of the business and the management of the
company always tries to enhance the profitability of the
business.