FINANCIAL ANALYSIS

Financial Analysis

Table of Contents

Executive Summary2

Introduction3

Company Overview3

Virgin Australia Airlines3

QANTAS Airways4

Ratio Analysis6

Profitability ratios6

Efficiency Ratios9

Financial Stability Ratios11

Share Ratios13

Conclusion and Recommendation14

References15

Executive Summary

This report here deals with the overall business analysis of Virgin Australia Airline and QANTAS Airlines, with the help of their financial ratios. We will be analyzing their profitability, efficiency, financial and share ratios which would enable us to come up with our recommendation in the light of this research.

Financial Analysis

Introduction

The financial analysis is basically to study a company financially by relying on its books and on economic and financial information about the company or its industry. The analysis which is carried out is very useful in accessing the overall financial health of the company, to check that whether it is sound or not, or to analyze the capital structure of the company. It can also be used to analyze the management and profitability of the company, along with its development Prospects.

The financial study is based on recent financial information that is in the business accounting. This is to "speak" the numbers and understand the reality that lurks around them. These reflect the situation of the company at some point. After conducting a rigorous analysis of accounting records and information obtained from various sources, it becomes possible to make an overall judgment on the company's performance. In this report, we will be analyzing the ratios of QANTAS Airlines and Virgin Australia Airlines, however before that; we will briefly look into the company overview of these two airlines

Company Overview

Virgin Australia Airlines

In the 2010 financial year, their core short-haul business achieved a very solid $128 million underlying earnings before interest and tax expense. After taking into account the establishment costs of V Australia's first full year of business and the trying operating conditions, the group net profit before tax result of $34.3 million provides grounds for cautious optimism. Although they should recognize that volatility is still evident in the global economy. This result is a testament to the fundamental resilience of the business and also to the high standards of service maintained by Virgin Blue's staff. Their service levels have underpinned strong customer satisfaction and loyalty. Their balance sheet is well capitalized with a net cash holding of more than $800 million at 30 June, providing them with ample ability to support the exciting plans of their new CEO. The focus is on enhancing the Group's product offering, building a global network, and aiming to grow their share of the corporate and government market. To this end they are upgrading the network to increase capacity on critical routes, rationalizing less profitable ones and introducing wide-body services on the transcontinental routes. This positioning of the Group will also enhance the benefits of improved market conditions, the very early signs of which may be emerging this year. On 1 September, they welcomed Ms Sam Mostyn to their Board and look forward to her contribution as the company progresses through the next exciting phase of its development. In closing, I want to take this opportunity to ...