Essays on Case Study On Quantas Airways Financial Statement Case Study

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AbstractQuantas Airways is a multibillion firm which operates 4700 flights each week to 72 destinations in Australia and in the World. It is ranked as a leader in the airline industrial in domestic on-time performance by January 2009. Financial analysis is a compact, focused report which helps management’s critical decision making by lending itself to analyzing a company’s profitability, solvency as well as financial stability. It helps the management to make different decisions on segregating priority businesses, present funding acquirements, mergers and acquisition activities. Financial analysis of quantum airways revealed that, the company is not financially stable.

This was found out by interpretation of the financial ratios. This results in the need to improve the financial status of the company which the HR department play a major role. Organizational OverviewQuantas Airways is a multibillion firm which operates 4700 flights each week to 72 destinations in Australia and in the World (Quantas Airways, 2010). It is ranked as a leader in the airline industrial in domestic on-time performance by January 2009. It has got customers both domestic and international. The company is differentiated from its competitors by its act of diversifying the premium and low fare Airlines of Quantas and Jetstar of whom with both domestic and international network.

Quantas Airline business demographic is best understood by the company’s customer base. Quantas international customer base is 55% while Quantas domestic make up 27% of the total customer base. Jetstars has both domestic and international customers each being 9% of the total customer base (Quantas Airways, 2010). Financial Performance IndicatorsAccording to Pandey (2001) financial analysis is a compact, focused report which helps management’s critical decision making by lending itself to analyzing a company’s profitability, solvency as well as financial stability.

It helps the management to make different decisions on segregating priority businesses, present funding acquirements, mergers and acquisition activities (Pandey, 2001). Pandey explains that a ratio is used as a benchmark for evaluating the financial position and performance of a firm. Gitman and McDaniel (2008) defines ratio analysis is the calculation and interpretation of financial ratios using data taken from firm’s financial statements in order to assess its conditions and performance. Gitman and McDaniel explain that they highlight potential problems but do not prove that they exist.

They help managers monitor firm’s performance from period to period to understand operations better and identify trouble spots. Mohammed (2008) note that the level and historical trends of these ratios can be used to make inferences about a company's financial condition, its operations and attractiveness as an investment. In its context a financial ratio can give a financial analyst an excellent picture of a company's situation and the trends that are developing. Financial ratios can be divided into liquidity, activity, debt, profitability, and market ratios depending on the type of information they provide.

Liquidity, activity, and debt ratios primarily measure risk. Profitability ratios measure return. Market ratios capture both risk and return (Stickney, Brown & Wahlen, 2007). Revsine et al. (2005), state that the liquidity of a firm is measured by its ability to satisfy its short-term obligations as they come due. It refers also to the solvency of the firm's overall financial position and the ease with which it can pay its obligation as they fall due.

These ratios are viewed as good leading indicators of cash flow problems. The two basic measures of liquidity are the current ratio and the quick (acid-test) ratio.

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