Financial Report: Business Analysis and Valuation of Qantas Airways

This report provides a comprehensive business valuation and analysis of Qantas Airways, incorporating a corporate strategy overview, SWOT analysis, Porter's Five Forces analysis, and a detailed financial statement analysis. The assessment covers Qantas's competitive positioning, strengths, weaknesses, opportunities, and threats, alongside an examination of its accounting policies and financial performance between 2013 and 2018. Key financial metrics, including revenue, operating income, assets, liabilities, and stockholders' equity, are compared to identify trends and performance improvements. The report concludes with a recommendation for investors to hold Qantas shares based on the company's improved financial performance, market position, and debt payout ratio.

Business valuation and
analysis
Student’s Name

Introduction
In the report, following topics of Qantas
airways has been discussed:
• corporate strategy
• SWOT analysis
• five forces analysis
• financial statement analysis

Porter’s five forces model
Competitive rivalry Less at domestic market and
high at international market
Entry barriers Threat level is lower
Threat from substitute Threat level is lower
Bargaining power of buyers Threat level is high
Bargaining power of suppliers Threat level is high

SWOT Analysis
Strength Weakness
 Steady and consistent growth of the company in the
aviation industry
 Monopoly of Qantas airways in various destinations
 The transformation program of Qantas has improved
the position of the business
 Services of the company are superior in the industry
 Labour and union issues
 Lower profit margin at international level
 Too much special treatment to few specific
companies at international level
 Few issues in running the long distance flights
Opportunity Threat
 Advanced technology
 Business travel
 Joint venture with global firms
 Increment in the fuel prices
 High labour cost
 Management of cost
 Huge competition

Qantas’s corporate
strategy
• Corporate strategies are the rules and policies which
has been planned and implemented by the business
in order to achieve the specific goal of the business.
• Along with the changes into the Australian airline
flagship, the policies of Qantas airways have also
been changed. The new strategies have been
implemented by the business in order to improve the
performance of the business.
• The company has also diversified its market at
international market which has helped the company
to become the “long distance root airline” (Barney,
1992).

Accounting policies
In case of Qantas limited, following policies
must be closely looked by the accountant
and auditor to identify the position of the
business:
• Asset and liability recording
• Depreciation policy

Financial Analysis
QANTAS AIRWAYS LTD (QAN) INCOME STATEMENT
Fiscal year ends in June.
AUD in millions except
per share data. 2013-06 2018-06 Changes
Revenue 15577 16628 6.75%
Operating income -121 1777 -1568.60%
Net income available to
common shareholders 5 980 19500.00%
Diluted 0 0.56

Continued:
QANTAS AIRWAYS LTD (QAN) BALANCE SHEET
Fiscal year ends in June. AUD
in millions except per share
data. 2013-06 2018-06 Changes
Assets
Current assets
Total current assets 5245 3712 -29.23%
Total non-current assets 14955 14935 -0.13%
Total assets 20200 18647 -7.69%
Liabilities and stockholders'
equity
Total current liabilities 6370 7596 19.25%
Total non-current liabilities 7881 7095 -9.97%
Total liabilities 14251 14691 3.09%
Stockholders' equity
Total stockholders' equity 5949 3956 -33.50%
Total liabilities and
stockholders' equity 20200 18647 -7.69%

Differences and similarities
• The main similarities of the business are that it
is still dependent on the debt to raise the funds
at huge level.
• And the main difference in the financial
performance of the business is that the
company has reduced the resources level to
manage the business.
• Financial performance statement brief that
company has managed the operating expenses
which has helped the business to improve the
net profit level.

Recommendation
• To recommend, the financial performance of
Qantas airways has been improved at great
extant and currently, market position and
strategies of the company are also better.
• The investors are suggested to hold the shares of
the business to earn more return from the
business.
• As the debt payout ratio of the company is
higher and thus it would offer great return to the
investors periodically and near future the stock
price of the business would also be improved.

References:
• Annual report. 2013. Qantas airways. [online]. Available at:
https://www.qantas.com.au/infodetail/about/investors/qantas
-data-book-2013.pdf
[accessed 13/9/18].
• Annual report. 2018. Qantas airways. [online]. Available at:
http://investor.qantas.com/FormBuilder/_Resource/_module/
doLLG5ufYkCyEPjF1tpgyw/file/annual-reports/2018-Annual-
Report-ASX.pdf
[accessed 13/9/18].
• Barney, J. 1992. ‘Firm Resources and Sustained Competitive
Advantage’. Journal of Management, 17 (1) 1, p. 99.
• Dallas, H, 2011. “Strategic Management; competitiveness
and globalization”. Strategic management, Asia-Pacific 4 (1),
pp 434-440.