Solution
Aarti J answered on
May 20 2020
Ratio Analysis
Course Name
Course Date
Student’s Name
RATIO ANALYSIS 1
Ratio Analysis
Part A:
Introduction
Ratio analysis are the financial analysis tools which helps in analysing different aspects of the company which includes the analysis of the profitability of the firm, liquidity of the firm, the company’s solvency ratios, efficiency ratios and market value ratios. With the help of ratio analysis, the company is able to compare its performance from the past as well as its competitors. In this project we have analysed different aspects of ratios of Qantas Airlines. (Brigham, E., & Houston, J, 2009)
Qantas is one of the biggest and the second oldest airlines of Australia which has emphasized on positioning for sustainability and growth. The company was founded in the year 1920 and since then the company has been growing and has expanded its reach to the domestic as well as international markets. It is one of the strongest
ands of Australia and is the world’s leading long distance airlines. The company has successfully built its reputation by emphasizing on safety, customer service, operational reliability, maintenance and engineering.
Trend Analysis
Qantas Airlines
Ratios
2014
2015
2016
2017
Return on assets
-15.16%
3.20%
6.01%
5.02%
Return on equity
-64.53%
17.67%
30.73%
25.09%
Return on invested capital
-25.24%
8.07%
13.87%
12.05%
Gross margin
49.83%
54.01%
58.11%
58.71%
Operating margin
-3.93%
9.32%
10.39%
9.94%
Net margin
-18.76%
3.59%
6.52%
5.43%
Interest coverage
-12.70
3.26
6.01
6.03
Cu
ent ratio
0.66
0.68
0.49
0.44
Quick ratio
0.58
0.52
0.39
0.36
Financial leverage
6.05
5.09
5.13
4.87
Debt / Equity
1.84
1.39
1.36
1.25
Debt / Asset
83.47%
80.36%
80.51%
79.46%
Trend Analysis
2015
2016
2017
Return on assets
121.11%
0.87813
-0.1647
Return on equity
127.38%
0.73911
-0.1835
Return on invested capital
131.97%
0.71871
-0.1312
Gross margin
-8.39%
0.07591
0.01033
Operating margin
337.15%
0.11481
-0.0433
Net margin
119.14%
0.81616
-0.1672
Interest coverage
125.67%
84.36%
0.33%
Quick ratio
-10.34%
-25.00%
-7.69%
Financial leverage
-15.87%
0.79%
-5.07%
Debt / Equity
-24.46%
-2.16%
-8.09%
Debt / Asset
-3.73%
0.19%
-1.30%
For the analysis, we can see that the company’s profitability has improved over the years, the company reported the net profit margin of 5.43% in the most recent years. (Learning. Drake, P , 2010) The company witnessed losses in the year 2014 and has the net profit margin of -18.76%.The company also has negative return on assets and return on equity because of the losses that the company incu
ed during the year. After 2014, the company emphasized on improving on its performances by emphasizing on its operations and improving its sales. With this the operations and the profitability of the company improved. The company had the net profit margin of -18.76%, 3.59%, 6.52% and 5.43% in the year 2014, 2015, 2016 and 2017 respectively. It shows that the company was able to improve on its profitability in 2015 by 119.14%, and 81.61% in 2016 while the net profit margin decreased by 16.72% in 2017. Over the years, the company’s return on equity has also improved. The company reported the return on equity at-64.53%, 17.67%, 30.73% and 25.09% over the years. The company’s return on equity increased in the year 2015 by 127.38%, while the company’s return on equity increased by 73.91% in the year 2016 and it decreased by 18.35% in the year 2017.
Looking at the capital structure ratios, we can see that over the years, the company has tried to improve its capital structure ratios. The company’s debt to asset ratios over the years 83.47%,...