Financial Analysis Report: Thomas Cook Group PLC, Finance Analysis

This report presents a financial analysis of Thomas Cook Group PLC, focusing on its financial performance between 2016 and 2017. The analysis includes an interpretation of financial statements, specifically examining profitability, liquidity, and efficiency ratios. The report highlights key observations, such as the slight decrease in the net profit ratio and the steady return on assets. It also discusses the implications of the current and quick ratios, indicating potential challenges in meeting short-term obligations. Furthermore, the analysis covers the inventory turnover and debtors turnover ratios, providing insights into the company's operational efficiency and credit policies. The report concludes with the inclusion of EPS and dividend payout ratio information from 2017, reflecting the company's earnings and shareholder benefits. References to relevant academic sources are also provided.

Finance and Funding in the Travel and
Tourism Sector

Interpretation of financial statements covering ratios

Cont.

Cont.
• It can be interpreted from the above financial ratios of Thomas
Cook Group Plc that it has overall good financial health.
• This is evident from the fact that profitability ratios are good
enough.
• Starting with Net profit ratio was 15 % in the year 2016 but
was reduced by 1 % in next year.

Cont.
• This means that organisation has to control upon its
expenses and also requires implementing well-
structured strategies in order to inject net profit up to
high extent.
• This will help company to have enough profits at its
disposal.
• Furthermore, Return on Assets ratio is quite steady as
in both the years, it was 19 %.
• This implies that assets are being utilised in effective
manner to generate sales.

Cont.
• Liquidity ratios provide clarity whether firm will be able to
pay-off short-term liabilities within stipulated time or not.
• Current ratio of Thomas Cook Group Plc in 2016 was 0.57 but
it was reduced to 0.52 in 2017 financial year.
• The ideal ratio is 2 : 1 and it shows that firm has less current
ratio.
• It will have difficulty in paying short-term obligations.
• On the other hand, quick ratio was 0.52 in 2016 and 0.39 in
next year which implies that firm will face difficulty in paying
extreme short-term liabilities.

Cont.
• Efficiency ratios are quite useful as they clarify how efficient
company is in generating revenue.
• Inventory turnover ratio provides how quickly company is
using its inventory.
• It can be interpreted that ratio in 2016 was 159.73 in 2016 and
165.04 in next year.
• This implies ratio is increased and stock is not properly
utilised.
• Debtors turnover ratio is increased which means that credit
policies need to be effective so that payment can be recovered.

Cont.
• On the other hand, EPS is provided in 2017 while, no
earnings were garnered in 2016.
• Dividend payout ratio is provided in 2017 which
means that company has earned profits and
shareholders are benefited by it.

REFERENCES
Mellon, V. and Bramwell, B., 2016. Protected area policies and sustainable tourism:
Influences, relationships and co-evolution. Journal of Sustainable Tourism. 24(10).
pp.1369-1386.
Ndivo, R. M. and Manyara, G., 2016. Appraising the role of public sector in Kenya’s
competitiveness as a tourism investment destination: Hotel investors’
perspectives. Tourism and Hospitality Research, p.1467358416663818.

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