Semester 2 Accounting Report: Qantas vs OZ Spirit Financial Analysis

This report provides a comprehensive analysis of Qantas and OZ Spirit, focusing on key aspects relevant to investment decisions. It begins with an executive summary outlining the report's structure and key findings. The report then delves into corporate governance, defining the concept and identifying the roles and responsibilities within Qantas. It examines Qantas's environmental sustainability initiatives, detailing their commitments, targets, and performance. The report calculates and analyzes various accounting ratios for both Qantas and OZ Spirit, using data from their annual reports to assess profitability, efficiency, capital structure, and market performance. The report also discusses the rounding off of numbers in financial statements. Furthermore, it explores sources of short-term finance and the benefits of offering goods and services on credit. The report concludes by comparing the two companies based on their financial performance and offering recommendations for potential investors. Finally, it touches upon micro-credentials for managing money.

Running head: ACCOUNTING IN ORGANISATION AND SOCIETY
Accounting in Organisation and Society
Name of the Student
Name of the University
Author’s Note

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Executive Summary
This current report has focused on the process of accounting which includes the effective
management in the company. This study includes the evaluation of accounting ratio along with
identifying the environmental sustainability and financial stability of the companies. The
corporate governance of the company is mentioned in the annual report which are involved for
maintaining the sustainable environment. The role of corporate governance is also included in
the study along with identifying the environmental sustainability of the business. The sources of
short term finance along with benefits of offering goods and services on credit are also included
in the study. It also highlights the micro credential of managing money after the analysis of the
financial statement.

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Table of Contents
Introduction......................................................................................................................................3
Corporate governance along with roles and responsible factors.....................................................3
Identifying and explaining environmental sustainability of Qantas limited along with its
importance and social performance.................................................................................................3
Ratio calculation for Qantas limited................................................................................................4
Considering the financial reports and rounding off the numbers....................................................6
Sources of short term finance and benefits for offering goods and services on credit....................6
Examining the ratio on basis of different organisation....................................................................7
Micro credential on managing money.............................................................................................8
Conclusion.......................................................................................................................................8
References......................................................................................................................................10

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Introduction
Accounting in organisation and society is vital as it points out the effective analysis of the
source that are useful for both organisation and the society. Corporate governance is included
with the company which assist in operation and control on the overall process. In this study,
Qantas limited have been considered for which the environment sustainability to be considered
along with calculating the financial ratio from the annual report. The responsible factors for the
corporate governance of Qantas is included in the study along with affecting the stakeholders of
the company. Different types of accounting ratio have been calculated for Qantas limited and
these are to be analysed with OZ Spirit limited.
Corporate governance along with roles and responsible factors
Corporate governance is the set of rules and regulation which are included in the business
for better operation and control on the overall process. The internal factors as well as the external
factors are affected by the stakeholder of the company along with pointing out the government
rules and the management of the business (McCahery, Sautner and Starks 2016). The role of
corporate governance points out the prudent management that help in delivering the success of
the company. An organisation is responsible for corporate governance which points out their
accountability, responsibility as well as transparency of the company (Armstrong et al. 2015).
This particular ASX listed Company comprises the board of executive directors which consist of
appropriate balance of skills and knowledge for performing the responsibilities.

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Identifying and explaining environmental sustainability of Qantas limited along with its
importance and social performance
The environment sustainability of Qantas consist of their aim which is to lead their
committed airline for the process of environmental sustainability. The key global indices have
the evidences in their actions that would deliver the results for their overall cost of actions
(Edmans 2014). The enhancing of the environmental performance with their principles points
their management systems along with practices. The company is committed to environmental
sustainability for enhancing the environmental performance by the high standards. The directors
of the company implements the adequate system which are mainly responsible maintaining the
environmental performance (Jizi 2014). Certain core elements are associated with environmental
sustainability which includes the ensuring of compliances and licenses.
Ratio calculation for Qantas limited
The following accounting ratios are required to be calculated for Qantas limited and the
information are to be derived from the annual report of the company for the year 2017 and 2018.
Profitability analysis points out the profit margin ratio, return on asset and return on equity
(Chan, Watson and Woodliff 2014). Asset efficiency of the company points out the asset
turnover ratio Capital structure of the company help in pointing out the debt ratio which points
out their total amount of debt. Market performance of Qantas limited highlights the earnings per
share and dividend per share. Working capital of the company includes the debtors’ days and
liquidity of the company (Beatty and Liao 2014). The following table shows the ratio calculation
of Qantas limited and the financial information have been derived from the annual report which
have been disclosed by the company.

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Figure 1: Accounting ratios of Qantas limited
(Source: Created by Author)

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Figure 2: Accounting ratios of OZ Spirit limited
(Source: Created by Author)
The above figures points out the accounting ratios of both of the companies which have
been calculated for the financial year 2017 and 2018. Both of the organisation is to be
differentiated by their evaluated accounting ratios that have already been evaluated by the firms.
Considering the financial reports and rounding off the numbers
The financial report that have been disclosed by the company mainly help in evaluating
the accounting ratio and they are rounded off to the nearest decimal as to pointing out the
correctness of the evaluation (Lovell 2014). Rounding off is associated with financial reports as
the officials of the company are required to be present the figures to the management along with
evaluating certain figures for better acceptance. Moreover, the presentation of figures is assisted
by rounding off as it provides support for better understanding. All the financial statement that
are prepared in the annual report of the company are rounded off as of better understanding and
helpful in further calculations.
Sources of short term finance and benefits for offering goods and services on credit
Short term finance are the amount of money that are funded by the company for their
normal operation and it might be derived from different type of sources (Barth 2015). Different
types of short term finances are there through which the company can collect their short term
finances such as trade credit, bank credit during loans and advances, advances from customers
and others. The benefits of offering goods and services on credits is to gain customers and
knowing about the company. It helps in encouraging large number of people for showing the
stability of the company. Standing up against the competition is another benefits that is provided

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by offering goods and services on credit. Therefore, these are some of the benefits that are
acquired by the company for providing goods and services on credit.
Examining the ratio on basis of different organization
Accounting ratio have been calculated in the above part and the both of the organisation
have disclosed their annual report and ratio calculations. The profitability and asset efficiency of
both of the company are quite good which might help the company for meeting their targets
(Glover 2014). The potential investors can be recommended for investing on the company which
has greater rate of liquidity. The accounting ratios for both of the companies’ points out the
profitability of the company which points out that OZ Spirit limited consist of more profitability
than Qantas limited due to their total amount of net profit which have earned in the financial
year. The ROA as well as the Return on equity is also more than Qantas limited which points out
the total amount of assets that are held by the company (Francis et al. 2015). It also represents
that total amount of equity is more in Qantas limited than OZ Spirits limited in the financial
years 2018 and 2017. Asset efficiency of both of the companies are measured by assets turnover
ratio which are evaluated around 0.95 times for Qantas limited and around 0.70 times for OZ
Spirit limited.
Capital structure of the companies have been evaluated with the help of debt ratio which
are evaluated around 79 % for Qantas limited and around 85 % for OZ Spirit limited. In addition
to this, the market performance ratio consist of earnings per share and dividend per share which
are associated with the company. Working capital for both of the companies have been evaluated
which includes the debtors’ days and liquidity of both of the company. Debtors’ days is number
of days that are required for recovering the money from the debtors (De Waegenaere, Sansing
and Wielhouwer 2015). Qantas limited requires around 18 days for recovering the money from

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the debtors and OZ Spirits limited required around 9 days to 12 days for recovering the money
the debtors. Therefore, it can be recommended to the potential investors that to invest in the
business which consist of more liquidity as they have the ability to pay off the debts to the
creditors. Certain conclusion can be made from the above report that the ratios of both
companies are quite a bit different from each other and these are due to the financial information.
Micro credential on managing money
Micro credentials mainly helps the company for managing their money which highlights
the financial report. Different types of budget is to be prepared for identifying the expenditure of
the company along with certain strategies that would help in reducing the overall cost. The
fundamental financial skills helps in managing the valuable assets for growth in their business
along with increasing the position in the targeted market (Callen 2015). The micro credential
helps in understanding the principle of business money that are associated with the business
along with managing the funds which have been collected. These skills help in making good
financial strategy and brings the business to its goals and objectives.
Conclusion
From the above study, it can be concluded that the process of accounting for the company
is beneficial for their industry analysis which provides assisting in the business operation. It
includes the accounting ratios that are required to be calculated for identifying the efficiency as
well as the functionality of the business organisations. The role of corporate governance points
out the prudent management that help in delivering the success of the company. The
performances of the company have been identified by the accounting ratio which consist of
different aspects of financial information. Moreover, the directors of the company implements
the adequate system which are mainly responsible maintaining the environmental performance.

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In addition to this, rounded off number generally takes place in the financial reports so as to
disclose them in an easier way to the user of financial reports.

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References
Armstrong, C.S., Blouin, J.L., Jagolinzer, A.D. and Larcker, D.F., 2015. Corporate governance,
incentives, and tax avoidance. Journal of Accounting and Economics, 60(1), pp.1-17.
Barth, M.E., 2015. Financial accounting research, practice, and financial
accountability. Abacus, 51(4), pp.499-510.
Beatty, A. and Liao, S., 2014. Financial accounting in the banking industry: A review of the
empirical literature. Journal of Accounting and Economics, 58(2-3), pp.339-383.
Callen, J.L., 2015. A selective critical review of financial accounting research. Critical
Perspectives on Accounting, 26, pp.157-167.
Chan, M.C., Watson, J. and Woodliff, D., 2014. Corporate governance quality and CSR
disclosures. Journal of Business Ethics, 125(1), pp.59-73.
De Waegenaere, A., Sansing, R. and Wielhouwer, J.L., 2015. Financial accounting effects of tax
aggressiveness: Contracting and measurement. Contemporary Accounting Research, 32(1),
pp.223-242.
Edmans, A., 2014. Blockholders and corporate governance. Annu. Rev. Financ. Econ., 6(1),
pp.23-50.
Francis, B., Hasan, I., Park, J.C. and Wu, Q., 2015. Gender differences in financial reporting
decision making: Evidence from accounting conservatism. Contemporary Accounting
Research, 32(3), pp.1285-1318.
Glover, J., 2014. Have academic accountants and financial accounting standard setters traded
places?. Accounting, Economics and Law Account. Econ. Law, 4(1), pp.17-26.

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Jizi, M.I., Salama, A., Dixon, R. and Stratling, R., 2014. Corporate governance and corporate
social responsibility disclosure: Evidence from the US banking sector. Journal of business
ethics, 125(4), pp.601-615.
Lovell, H., 2014. Climate change, markets and standards: the case of financial
accounting. Economy and Society, 43(2), pp.260-284.
McCahery, J.A., Sautner, Z. and Starks, L.T., 2016. Behind the scenes: The corporate
governance preferences of institutional investors. The Journal of Finance, 71(6), pp.2905-2932.