Corporate Governance and Environmental Sustainability of Qantas Ltd

This report provides an in-depth analysis of corporate governance and environmental sustainability practices within Qantas Ltd. It begins with an executive summary and introduction, followed by a detailed examination of corporate governance principles and their impact on business operations. The report then focuses on Qantas Ltd's environmental sustainability initiatives, highlighting their efforts in minimizing the environmental impact of their operations, such as the adoption of GPS techniques and investment in fuel-efficient fleets. A key component of the report involves a comprehensive ratio analysis comparing Qantas Ltd's financial performance with that of OZ Spirit Ltd, interpreting key metrics such as profitability, asset efficiency, and capital structure. The report also explores sources of short-term finance and the benefits of offering credit. The analysis includes a discussion on rounding off figures in financial statements and concludes with a summary of the findings and references.

Accounting

EXECUTIVE SUMMARY
The present report is about corporate governance and its benefits to the company in making growth
and profits. With the help of systematic rules and provisions, every business can perform in
effective manner which aids to its brand image. In this report, sustainability aspect of Qantas Ltd
has been discussed which shows that company has made efforts in minimizing its business
operations impact on environment by undertaking number of initiatives such as adoption of GPS
techniques, smart tracking etc.

Table of Contents
EXECUTIVE SUMMARY..................................................................................................................2
INTRODUCTION................................................................................................................................4
MAIN BODY.......................................................................................................................................4
1. Corporate Governance.................................................................................................................4
2. Environment sustainability report of Qantas Ltd.........................................................................4
3. Ratio analysis...............................................................................................................................5
4. Rounding off................................................................................................................................6
5. Sources of short term finance along with benefits of credit offering..........................................7
6. INTERPRETATION....................................................................................................................7
CONCLUSION....................................................................................................................................8
REFERENCES.....................................................................................................................................9

INTRODUCTION
The term accounting is concerned with the process of recording, analysing and summarizing of
financial transaction related to a particular time period. It helps company in gaining in depth
information about its financial position. The present report is related with corporate governance and
its related aspects in business. Furthermore, focus will be made on explaining environmental
sustainability measures of Qantas Group. Comparison will be made among financials of Qantas
Group and OZ Spirit Ltd along with proper interpretation. Also, report will shed light on defining
short term finance sources along with benefit of providing goods and services on credit basis. At
last, explanation related to micro-credential will be done.
MAIN BODY
1. Corporate Governance
It is defined as a system depicting rules, regulations, norms, processes which helps every
business organisation in performing their controlling, managing and directing business operations.
Corporate governance is related with framework of rules, standards and systems on the basis of
which the board members ensures proper accountability, transparency, fairness in maintaining
company's relationship with its stakeholders. It is responsibility of the company's board to lay down
effective business strategies and plans in line with business aims and objectives for smooth and
efficient performance.
By focusing on corporate governance function, it helps company in reducing its cost of
capital by identifying unproductive business areas and elimination of the same for increasing
overall business efficiency (Christensen, Nikolaev and Wittenberg ‐ Moerman, 2016). It further
assists company in improving its reputation and brand image as focus will be made on adoption of
strict rules and regulations which will reduces chances of fraud and conflicts among employees.
Thus, it mitigates risk of potential loss in form of penalties, fines on company.
2. Environment sustainability report of Qantas Ltd.
The sustainability report defines the impact which company has made on the economic,
social as well as on the environment because of its business operations and activities it is engaged
in. It is responsibility of every company to publish about their business operations impact on
environment in a report form. With the help of sustainability report, Qantas Ltd has been able to
communicate its stakeholder as well as investors about their sustainable business performance and

operational activities as undertaken by them (Prentice, 2016). Also, it assists company in providing
information to its stakeholders regarding to sustainable and economical business procedures
undertaken by it and whether it is having positive or negative impact. Qantas Ltd has made
emphasises on using GPS based navigation technique i.e. Smart tracking for making improvement
in its operational efficiency. Also, by investing in more fuel efficient fleet such as Airbus 380,
Boeing 787 it has become part of Sustainable Aviation Fuel industry in Australia. Furthermore,
initiatives has been made by the company related to reduction in Aircraft weight, electricity
consumption and waste to land fill. It has been ensured on part of the company to achieve electricity
as well as water targets by formulating sound plans and strategies.
Also, it has taken initiatives such as building of Australia's largest commercial tri generation
project (having speciality of cooling, heating and electricity) in Sydney (Gullett, Kilgore and
Geddie, 2018). Such project makes use of natural gas to generate more efficiently thereby lowering
of carbon energy for company's own headquarters, jet base as well as domestic terminals. It has also
constructed two power plants with the help of GridX to reduce Carbon emissions every year.
3. Ratio analysis
1. Qantas Ltd
Ratios 2018 2017
Profitability Analysis
Profit Margin 8.96% 8.53%
Return on Assets
(ROA) 8.55% 8.08%
Return on Equity 26.14% 25.09%
Asset Efficiency
Asset Turnover 0.96 0.95
Capital Structure
Debt ratio 78.77% 79.44%
Market Performance
Earnings per share 0.56 cents 0.46 cents
Dividend per share 15 cents 14 cents
Working capital
Debtors Days 18 days 18 days

Liquidity 0.49 times 0.44 times
2. OZ Spirit Ltd
Ratios 2018 2017
Profitability Analysis
Profit Margin 8.10% 7.45%
Return on Assets
(ROA) 7.50% 7.33%
Return on Equity 21.50% 22.70%
Asset Efficiency
Asset Turnover 0.70 times 0.67 times
Capital Structure
Debt ratio 83.50% 85.60%
Market Performance
Earnings per share 0.45 cents 0.41 cents
Dividend per share 6 cents 5 cents
Working capital
Debtors Days 9 days 12 days
Liquidity 0.91 times 1.10 times
4. Rounding off.
The main aim of rounding off the figures while preparation of financials includes following:
1. To make proper interpretation of data provided.
2. Comparison can be made easily among two or more financial year (Gabric, 2018).
3. It helps many users and stakeholders in their decision making processes related to
investment purpose.

5. Sources of short term finance along with benefits of credit offering.
It is additional amount of money which every business organisation needs for conducting its
business operations of short term nature i.e. for a maximum period of one year. It includes sources
such as bank overdrafts, bank loans, trade credit etc. The main aim of procuring of short term
finance is to get financial assistance at affordable and cheaper cost with increasing return in form of
earning per share to its shareholders.
The core benefits of providing of goods and services on credit basis are as follows:
1. For gaining competitive advantages in the market, offering of own goods and services at
credit is one of the best mechanisms (Maynard, 2017).
2. By giving credit services, it helps the company in increasing its sales margin up to a large
extent. Also, it assists company in increasing its productivity as well as profitability index.
3. With the help of credit offerings, it helps company in building of customer base thereby
making customer more loyal and satisfied with services rendered.
6. INTERPRETATION
From the above table it can be interpreted that -
1. Profitability Ratio – It measures overall efficiency of business depicting about its ability of
converting its business operations into profit easily with the help of available business
resources (Wong and Joshi, 2015). Company's profitability can be calculated with the help
of Profit margin, Return on Assets, Return on Equity etc.
In case of Qantas Ltd and OZ Ltd it has been assessed that its overall profitability level has
increased in year 2018 as compared to 2017 which shows that company is performing in better
manner.
2. Asset Efficiency Ratio – It defines efficiency of company in making use of its business
assets in generating sales volumes.
Qantas Ltd has made negligible changes in its asset turnover level whereas in case of OZ ltd
emphasis has been made in making effective use of available assets i.e. 0.67 to 0.70 times in year
2018.
3. Capital structure Ratio – It helps company in measuring its long term stability. This ratio
defines contribution made by owners and lenders to the business as debt amount.
The debt ratio of Qantas Ltd has improved from 2017 to 2018 i.e. 79.44% to 78.77% which shows

that company is having strong capital structure. In case of OZ Ltd its debt ratio has also declined
from 85.60% to 83.50% which is good for company.
4. Market performance Ratio – A ratio which helps company in measuring its overall
performance level in terms of profitability as well as productivity (Mansourian Nezamabad,
Sheikhi and Mahjoub, 2016).
In case of Qantas Ltd and OZ Ltd, both the companies are providing more profit to its shareholders
in form of Earning and dividend per share in 2018 as compared to 2017 which means that
companies are making high profits.
5. Working capital Ratio – It depicts about ability of company in making payment of current
obligations as falling due on part of the company with current assets available.
In case of Qantas Ltd, there is increase in liquidity ratio which means that company is holding too
much cash amount which is not good as it can be invested in other business areas. Debtors days is
same for both the year which means company is performing good. OZ Ltd liquidity ratio is
decreasing which means company can face problem at the time of meeting obligations when arises
because of lack of funds. Debtors days is declining as well which is having more delinquent
customers.
CONCLUSION
From the above file it can be concluded that by having sound accounting policies, every
business organisation can prepare its financials properly. Qantas Ltd has made initiatives in
reducing economic as well as environmental impact in relation of electricity consumption, waste
material to a large extent. Also, it has been able to reduce its carbon emissions and thus increases it
overall profitability.

REFERENCES
Books and Journals
Christensen, H. B., Nikolaev, V. V. and Wittenberg ‐ Moerman, R., 2016. Accounting information in
financial contracting: The incomplete contract theory perspective. Journal of Accounting
Research. 54(2). pp.397-435.
Gabric, D., 2018. Determination of Accounting Manipulations in the Financial Statements Using
Accrual Based Investment Ratios. Economic Review: Journal of Economics and Business.
16(1). pp.71-81.
Gullett, N. S., Kilgore, R. W. and Geddie, M. F., 2018. Use of Financial Ratios to Measure the
Quality of Earnings. Academy of Accounting and Financial Studies Journal.
Li, Y. and Wang, Y., 2017. Machine Learning Methods of Bankruptcy Prediction Using Accounting
Ratios. Open Journal of Business and Management. 6(01). p.1.
Mansourian Nezamabad, R., Sheikhi, K. and Mahjoub, M. R., 2016. Effects of Accounting
Financial Ratios on Capital Adequacy Ratio in the Banking Network. The Economic Research.
16(3). pp.47-66.
Maynard, J., 2017. Financial accounting, reporting, and analysis. Oxford University Press.
Prentice, C. R., 2016. Why so many measures of nonprofit financial performance? Analyzing and
improving the use of financial measures in nonprofit research. Nonprofit and Voluntary Sector
Quarterly. 45(4). pp.715-740.
Wong, K. and Joshi, M., 2015. The impact of lease capitalisation on financial statements and key
ratios: Evidence from Australia. Australasian Accounting, Business and Finance Journal. 9(3).
pp.27-44.
Zaman, S., 2016. Can accounting ratios determine change in market share price? Spotlight on the
Dhaka Stock Exchange Listed Private Commercial Banks of Bangladesh. PROCEEDINGS:
Advances in International Interdisciplinary Business and Economics Volume 6.
Online
Qantas Annual report. 2018. [Online]. Available
through:<https://investor.qantas.com/FormBuilder/_Resource/_module/
doLLG5ufYkCyEPjF1tpgyw/file/annual-reports/2018-Annual-Report-ASX.pdf>.
Qantas sustainability report. 2019. [Online]. Available through:
<https://www.qantas.com/infodetail/about/environment/our-commitment-to-environmental-
sustainability.pdf>.