Investment Analysis: Financial Report of Qantas Airways Limited

This report provides a financial and economic interpretation of Qantas Airways Limited, evaluating its investment potential based on its 2017 annual report. The analysis reveals a decrease in turnover and net profit margin compared to 2016, attributed to industry-wide challenges and reduced passenger numbers. While the cash flow position improved, the current ratio indicates potential short-term debt repayment issues. Earnings per share and dividends per share also declined. Despite these challenges, the report suggests that long-term investment may be viable, considering the company's experienced management and potential for future improvement in the aviation industry. The report also touches upon the company's business strategy, target market, remuneration trends, and organizational structure, comparing it with competitor Virgin Australia. The analysis concludes with a recommendation for long-term investment to mitigate risk, highlighting the importance of considering industry factors and the company's strategic initiatives for future growth.

Running Head: Financial and economical interpretation
1
Financial and economical interpretation and communication

Financial and economical interpretation 2
Executive summary:
Investors are always requisite to evaluate the financial statement, financial information and
non financial position of an organization to measure the overall performance and position. It becomes
important to them to measure overall position of the company so that the better investment decision
could be made. This report has been prepared on Qantas airways to measure the investment level of
the company. It is an airline company which offers its services at domestic and international level.
The main purpose of the report is to measure the investment level of the company. For evaluating the
investment level, financial and non financial information of the company has been evaluated and
measured (Our Business, 2018).
Analysis:
“Qantas airways” is operating its business from 1920 in the Australian market. The financial
statement and the financial policies of the company explain about huge changes into the overall
performance of the company. On the basis of the annual report (2017) of Qantas Limited, it has been
found that the income statement explains about lower turnover from last year. The balance sheet and
cash flow position explain that the performance and the cash position have been improved by the
company through following the new financial policies.
Annual report (2017) brief the net profitability margin level of the company has been lowered
from 2016 due to less turnover of the company. The net profit margin level of the company is 5.43%
only. Further, the study has been done on current liquid ratio of the company and it has been
measured that the short term debt capability of the company has been lowered. The company’s current
ratio is just 0.44 which explains that the company could repay only 0.44 current debt of the company.
The cash flow statement further adds about better level of cash in 2017 from 2016. It explains
that the company has managed to generate and manage cash worth $ 1336 million. The changes into
the operating, income and financial activities have ultimately affected the cash position of the
company. Further, the earnings per share and dividend per share of the company has been measured to
identify the level of the market position of the company. The earnings per share of the company have
also been lowered due to the less profits and the dividend per share has also been lowered by the
company due to less turnover and profitability level.
Current Financial information of Qantas Limited
Net profit
Current
liquidity ratio Cash position EPS
Dividend per
cent
2016 2017 2016 2017 2016 2017 2016 2017 2016 2017
$
million
$
million
6.52% 5.43% 0.49 0.44 1201 1336 0.49 0.46
3.
898
3.
227
(Morningstar, 2018)
Interpretation:
On the basis of the evaluation on annual report (2017), it has been recognized that the total
turnover of the company has been lowered and the expenses margin of the company has been
increased from last year which have impacted on the overall performance of the company. The
analysis report explains that the overall position of the company is average. These changes have
occurred due to the industry position. The position of aviation industry of Australia has been lowered
and which have impacted on the performance and position of Qantas limited. The study on the annual
report explains that the revenue amount has been lowered due to few passengers in 2017.
The financial analysis explains that the overall financial performance of the company has
been lowered but it has taken place due to the lower position of the industry and the lees passengers in
last year. According to the Australia on net (2018), the overall position would be improved in 2018.
The sales, net profit, financial position and market position of the company have been improved.

Financial and economical interpretation 3
The core business of the company is offering the airline, transport etc services to the
customers. The company is offering its services on 85 destinations (Reuters, 2018). It further explains
that the overall financial results of the company have been lowered because of changes into the
industrial position. The aviation industry of the company explains that the current growth rate of the
industry is lower and it explains that the changes have impacted on the entire performance of the
company. The current business strategy of the company explains that the policies of the company are
bit strong to manage all the external issues for a while.
The target market of the company is 85 destinations where the company is using better
marketing campaign (Morningstar, 2018). The management team of the company is enough
experience and the qualified to manage the financial performance. The forecasting process explains
that it would make it easier for the company to improve the performance. The remuneration trends of
company explain that the remuneration of the company has been increased. The Alan Joyce is the
chief executive officer who is getting highest remuneration (Annual report, 2017).
The competitive company, Virgin Australia’s annual report (2017) describe that the
remuneration of Qantas limited is higher than the Virgin Australia. The current management and
organizational structure of the company is quite competitive. The company is following the cross
functional organizational structure to manage the performance and the activities of the company. The
structure and the management team of the company say that the new policies and strategies would
help the company to manage the overall performance again (Morningstar, 2018). Lastly, the non
financial performance of the company includes that the no extra benefits are added into the basic
salary of the employees.
Conclusion and recommendation:
The analysis and interpretation report of Qantas limited explains that the overall position of
the company has been lowered from the last year. The main reason behind the lower financial position
and performance of the company is industry factors and abnormal changes. On the basis of the annual
report (2017) of the company, it is suggested to the investors of the company to invest for the long
term debt of the company. It would reduce the overall risk of the investors. The short term investment
in the company would be much riskier and the return would also be lower.
References:
Annual report. 2017. Qantas airways limited. (Online). Available at:
http://investor.qantas.com/FormBuilder/_Resource/_module/AH_NGR9NxUaXc0W8Qv3Kfg/docs/
QantasAnnualReport2017.pdf (Accessed 5/6/2018).
Annual report. 2017. Virgin Australia Holdings limited. (Online). Available at:
https://www.virginaustralia.com/cs/groups/internetcontent/@wc/documents/webcontent/~edisp/2017-
annual-report.pdf (Accessed 5/6/2018).
Australia on net. Aviation industry. (Online). Available at: http://www.australiaonnet.com/economy-
business/industries/aviation.html (Accessed 5/6/2018).
Morningstar. 2018. Competitors. (Online). Available at:
http://financials.morningstar.com/competitors/industry-peer.action?
t=QUBSF&region=usa&culture=en-US (Accessed 5/6/2018).
Our company. 2018. Qantas airways limited. (Online). Available
at:https://www.qantas.com/travel/airlines/company/global/en (Accessed 5/6/2018).
Reuters. 2018. Qantas airways limited. (Online). Available at:
https://www.reuters.com/finance/stocks/overview/QAN.AX (Accessed 5/6/2018).