Financial Analysis Report: Qantas Company's Performance Evaluation

This report provides a comprehensive financial analysis of the Qantas Company, evaluating its performance through horizontal, vertical, and ratio analyses of its financial statements. The analysis covers the income statement, balance sheet, and key financial ratios to assess profitability, liquidity, efficiency, and solvency. A SWOT analysis is included to identify the company's strengths, weaknesses, opportunities, and threats, followed by an examination of the competitive landscape and external environmental factors impacting Qantas. The report concludes with recommendations for improving financial performance and overall business strategy. The findings indicate a decrease in overall revenue and profitability, with increased operating expenses. The report also delves into ethical considerations and offers insights for potential investors, highlighting the company's market position and financial health.

Running head: Financial analysis of the Qantas Company
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Financial analysis of the Qantas Company management

Financial analysis of the Qantas Company 1
Executive summary
With the changes in time, each and every organization needs to make effective
changes in the busienss. It is observed that in this report, financial analysis of the company
has been taken by using the ratio analysis, horizontal analysis, vertical analysis of the annual
financial data of Qantas Company. After that SWOT analysis and external environmental
analysis of company has been taken into consideration. The main output of this report is to
find out the profitability and efficiency of the Qantas Company. The main finding is that
company has increased its turnover and market share.

Financial analysis of the Qantas Company 2
Table of Contents
Executive summary....................................................................................................................1
Introduction................................................................................................................................2
Financial analysis of the Qantas Company................................................................................2
Horizontal analysis of the Income Statement.............................................................................2
Horizontal analysis of the balance Sheet...................................................................................3
Vertical analysis of the Income statement.................................................................................6
Vertical analysis of the Balance Sheet.......................................................................................6
Ratio analysis of the Qantas Company......................................................................................8
SWOT analysis.........................................................................................................................10
Competitor’s analysis...............................................................................................................12
Ethical considerations..............................................................................................................13
External Environment analysis................................................................................................13
Recommendation......................................................................................................................14
Conclusion................................................................................................................................14
References................................................................................................................................15

Financial analysis of the Qantas Company 3

Financial analysis of the Qantas Company 4
Introduction
This report emphasizes upon the financial analysis of company and depicts the results
of the financial performance of company. The horizontal analysis, vertical analysis has been
used to evaluate the annual financial data of Qantas Company to identify whether company
has been performing well or not in the market. In this report, Qantas Company has been
chosen for this report. The first section of this report will cover horizontal analysis, vertical
analysis and ratio analysis to evaluate the financial performance of company. After that,
SWOT analysis section has been used to identify the strength, weakness, opportunity and
threats of the company. The Competitor analysis has also been used to evaluate the financial
and business performance of other rivals in the same industry. The ethical consideration has
also been used to identify whether Qantas has been working efficiently to increase the
sustainable future of organization. The external environmental analysis has also been used to
evaluate the threats and opportunity available to company in market. This analysis will reveal
the possible outcomes and effective work function of the competitors and Qantas Company.
In the end, the possible recommendation has been given for the better and effective
functioning of the Company. This recommendations will divulges the advice to investors
whether they should invest their capital in Qantas company or not Qantas, (2017
Financial analysis of the Qantas Company
This financial analysis has been done by using the ratio analysis, horizontal analysis and
vertical analysis tools (Flannery, 2016).
The Horizontal analysis
This analysis is used to evaluate the changes in the amounts of corresponding financial
statement items over a period of time. It is useful tool to analyze the financial trend of the
company (Ehiedu, 2014).
Horizontal analysis of the Income Statement
(Qantas Company's INCOME STATEMENT Horizontal analysis
Fiscal year ends in February 2017 2016
Increase or
Decrease
($ in Million) Amount Amount Amount Precent
Revenue 16,057 $ -143 -1%

Financial analysis of the Qantas Company 5
16,200.00
Cost of revenue 14,687
$
14,557.00
Gross profit
$
4,010.00 -4,010 -100%
Operating expenses
$
- 0 #DIV/0!
Salary and wages 4,033
$
4,033.00 0 0%
Fuel 3,039
$
3,250.00 -211 -6%
Aircraft operating variable
$
3,436.00
$
3,250.00 186 6%
Depreciation and amortization
$
1,382.00
$
1,224.00
Non-cancellable aircraft operating
lease rentals
$
356.00
$
461.00 -105 -23%
Interest Expense
$
46.00
$
65.00 -19 -29%
Total operating expenses
$
12,292.00
$
12,283.00 9 0%
Operating income 853
$
1,029.00 -176 -17%
Earnings per share
$
46.40
$
49.40 -3 -6%
Net income from continuing
operations
$
30,07,190.00
$
80,447.00
29,26,74
3 3638%
Interpretation
After evaluating the data by using the horizontal analysis, it is inferred that company has
decreased its overall revenue and profitability. It is evaluated that company has increased its
operating expense which has ultimately resulted to the negative results throughout the time
(Baños-Caballero, García-Teruel & Martínez-Solano, 2014).
Horizontal analysis of the balance Sheet
Revenue received in advance
$
3,685.00
$
3,525.00
$
160.00 5%
Interest-bearing liabilities $ $ $ 3%

Financial analysis of the Qantas Company 6
433.00 421.00 12.00
Other financial liabilities
$
69.00
$
203.00
$ -
134.00 -66%
Provisions
$
444.00
$
252.00
$
192.00 76%
Total Current Liabilities
$
6,698.00
$
6,387.00
$
311.00 5%
Non-current liabilities
Revenue received in advance 1,424 1,521
$ -
97.00 -6%
Interest-bearing liabilities
$
4,405.00
$
4,421.00
$ -
16.00 0%
Other financial liabilities
$
56.00
$
61.00
$
-5.00 -8%
Provisions
$
353.00
$
-
$
353.00
#DIV/
0!
Deferred tax liabilities
Total liabilities
$
19,634.00
$
18,777.00
$
857.00 5%

Financial analysis of the Qantas Company 7
Stockholders' equity
$
-
issued capital 3,259
$
3,625.00
$ -
366.00
Total stockholders' equity
$
3,540.00
$
3,255.00
$
285.00 9%
Total liabilities and
stockholders' equity
$
23,174.00
$
22,032.00
$
1,142.00 5%
Interpretation
After evaluating the data by using the horizontal analysis of the balance sheet, it is inferred
that company has increased the overall investment in the current assets and non-current
assets. The total assets of company have decreased by 1% which reflects the negative
outcomes to the society. In addition to this, company has also damaged its work functions
which have resulted to negative results to its organization. Qantas has destructed its financial
performance due to less return on capital employed and increased blockage of funds (White,
Sondh, and Fried, 2015).

Financial analysis of the Qantas Company 8
Vertical analysis of the Income statement
Qantas Company 's INCOME STATEMENT Vertical analysis
Fiscal year ends in February 2017 2016
($ in Million) Amount
% of Net
sales Amount
% of Net
sales
Revenue 16,057
$
1.00 16,200 1.000
Cost of revenue 14,687
$
1.00 14,557 1.000
Gross profit
$
4,010.00
Operating expenses
Salary and wages 4,033
$
0.25 4,033 24.90%
Fuel 3,039
$
0.19
$
3,250.00 20.06%
Aircraft operating variable
$
3,436.00
$
0.21
$
3,250.00 20.06%
Depreciation and amortization
$
1,382.00
$
0.09
$
1,224.00 7.56%
Non-cancellable aircraft operating
lease rentals
$
356.00
$
0.02
$
461.00 3.17%
Interest Expense
$
46.00
$
0.00
$
65.00 0.40%
Total operating expenses
$
12,292.00
$
0.77
$
12,283.00 75.82%
Operating income 853
$
0.05 1,029 6.35%
Earnings per share
$
46.40
$
49.40
Basic
Interpretation
The vertical analysis is used to analysis the entity by evaluating the three major assets
categories such as accounts, assets and liabilities in balance sheet. It is evaluated that the
company has increased its operating income as compared to last year data. In addition to this,
the operating expenses have also increased which will eventually reduce the overall earning
of company (Qantas, 2017).

Financial analysis of the Qantas Company 9
Vertical analysis of the Balance Sheet
(Qantas Company's BALANCE SHEET Vertical analysis
Particular 2017
% of Total
Assets 2016
% of Total
Assets
Assets
Current assets
Cash and cash equivalents
$
1,775.00 9%
$
1,980.00 10%
Receivable
$
784.00 4%
$
795.00 4%
Assets
$
100.00 0%
$
209.00 1%
Inventories
$
351.00 2%
$
336.00 2%
Assets held for sales
$
12.00 0%
$
17.00 0%
Other current assets
$
97.00 0%
$
101.00 1%
Total current assets
$
3,119.00 15%
$
3,438.00 17%

Financial analysis of the Qantas Company 10
Non-current assets
Receivables
$
123.00 1%
$
134.00 1%
Other financial assets
$
43.00 0%
$
46.00 0%
Total assets
$
214.00 1%
$
197.00 1%
Property, plant and
equipment
$
12,253.00 60%
$
11,670.00 58%
Intangible assets
$
1,025.00 5%
$
909.00 5%
Deferred tax assets
$
39.00
Others
$
444.00 2.18%
$
252.00 1.25%
Total assets
$
20,340.00 100.00%
$
20,123.00 100.00%
Liabilities and
stockholders' equity 0.00% 0.00%
Liabilities 0.00% 0.00%

Financial analysis of the Qantas Company 11
Current liabilities 0.00% 0.00%
Payables
$
2,067.00 10.16%
$
1,986.00 9.87%
Revenue received in
advance
$
3,685.00 18.12%
$
3,525.00 17.52%
Interest-bearing liabilities
$
433.00 2.13%
$
421.00 2.09%
Other financial liabilities
$
69.00 0.34%
$
203.00 1.01%
Provisions
$
444.00 2.18%
$
252.00 1.25%
$
6,698.00 32.93%
$
6,387.00 31.74%
Non-current liabilities
Revenue received in
advance 1,424 665.42% 1,521 772.08%
Interest-bearing liabilities
$
4,405.00 35.95%
$
4,421.00 37.88%
Other financial liabilitie
$
56.00 5.46%
$
61.00 6.71%