Financial statement analysis of british airways and emirates - Free Essay Example

Sample details Pages: 7 Words: 2128 Downloads: 2 Date added: 2017/06/26 Category Finance Essay Type Argumentative essay Did you like this example? British Airways plc (BA) is the flag carrier airline of the United Kingdom. BA has its headquarters in Waterside near its main hub at London Heathrow Airport and based on fleet size, international flights and international destinations is the largest airline in the UK. Its second hub is London Gatwick Airport. British Airways has discontinued all direct overseas flights from UK airports other than Heathrow, Gatwick and London City Airport. BAs UK passengers originating at non-London airports must now connect via London or use other airlines with direct services. The British Airways Board was established in 1971 to control the two nationalized airline corporations, BOAC and BEA, and two much smaller regional airlines, Cambrian Airways from Cardiff and Northeast Airlines from Newcastle upon Tyne. On 31 March 1974 all four companies were dissolved to form British Airways (BA). After almost 13 years as a nationalized company, British Airways was privatized in February 1987 as part of the privatization plan by the Conservative Government of the time. The carrier soon expanded with the acquisition of British Caledonian (BCAL) in 1987 and Gatwick-based carrier Dan-Air in 1992. Don’t waste time! Our writers will create an original "Financial statement analysis of british airways and emirates" essay for you Create order Despite being a primarily Boeing customer, British Airways placed a major order for Airbus aircraft in August 1998 with the purchase of 59 Airbus A320 family aircraft. In 2007, the carrier placed its next major order, marking the start of its long-haul fleet replacement, ordering 12 Airbus A380s and 24 Boeing 787s. The centre piece of the airlines long-haul fleet is the Boeing 747-400; with 57 examples in service, British Airways is the largest operator of the type in the world. The formation of Richard Bransons Virgin Atlantic Airways in 1984 began a tense relationship with BA. In 1993, the fierce rivalry led to British Airways apologizing unreservedly for a dirty tricks campaign against Virgin leading to them paying damages and legal costs after one of the most bitter and protracted libel actions in aviation history. Until 2008, British Airways was the largest airline based in the UK in terms of passenger numbers. The airline carried 34.6 million passengers in 2008 but rival UK low-cost carrier easy Jet carried 44.5 million passengers in the same year, taking the title from British Airways. On 12 November 2009, British Airways confirmed that it had reached a preliminary agreement to merge with Iberia. The merger between the two carriers will create the worlds third-largest airline in terms of annual revenue and the second largest airline group in Europe. The merger was confirmed on 8 April 2010, and it is expected to be completed by the end of the year. On 14 July 2010, the European Commission gave the two carriers permission to merge and also agreed to allow American Airlines to co-operate with the merged entity on transatlantic routes to the United States of America. (Wikipedia, 2010) C:Documents and SettingsMidhunDesktopEmirates_Logo1.jpg Emirates Airline is the largest major airline in the Middle East. It is the national airline of Dubai, United Arab Emirates and operates over 2400 passenger flights per week, from its hub at Dubai International Airport Terminal 3, to 108 destinations in 60 countries across 6 continents. The company also operates four of the worlds longest non-stop commercial flights from Dubai to Los Angeles, San Francisco, So Paulo and Houston, with all except San Francisco on the Boeing 777-200LR. The flight to San Francisco is currently served by a Boeing 777-300ER. Emirates is a subsidiary of The Emirates Group, which has over 50,000 employees, and is wholly-owned by the Government of Dubai directly under the Investment Corporation of Dubai. Cargo activities are undertaken by the Emirates Groups Emirates SkyCargo division. During the mid-1980s, Gulf Air began to cut back its services to Dubai. As a result Emirates was conceived in March 1985 with backing from Dubais royal family, whos Dubai Royal Air Wing provided two of the airlines first aircraft. It was required to operate independent of government subsidies, apart from $10 million in start-up capital. The airline became headed by Ahmed bin Saeed Al Maktoum, the airlines present chairman. In the years following its founding, the airline expanded both its fleet and its destinations. In October 2008, Emirates moved all operations at Dubai International Airport to Terminal 3, a new terminal exclusively dedicated to Emirates to sustain its rapid expansion and growth plans. Emirates operate a mixed fleet of Airbus and Boeing wide-body aircraft and are one of only nine airlines to operate an all wide-body aircraft fleet. The centerpiece of the airlines fleet is the Boeing 777. Emirates also have orders for 90 Airbus A380s with 11 of them already in service and became the second operator of the Airbus A380-800 after Singapore Airlines when their first aircraft was delivered on 28 July 2008. Emirates have won numerous awards and are an industry bellwether for aircraft purchases, purchasing over 130 aircraft in 2007 alone. The airline ranks amongst the top 10 carriers worldwide in terms of revenue, passenger kilometers, and has become the largest airline in the Middle East in terms of revenue, fleet size, and passengers carried as of 2007. In 2010 the airline was the sixth-largest airline in the world in terms of international passengers carried and largest in the world in terms of scheduled international passenger-kilometers flown. The airline was also the seventh largest in terms of scheduled freight tone kilometers flown. Emirates have built up a strong brand name as a trendsetter in the aviation industry, particularly in terms of service excellence, coupled with consistent profitability. In 2010, Emirates was voted the eighth best airline in the world by research consultancy firm Skytrax. (Wikipedia, 2010) Particulars Emirates (2009-2010) British Airways (2009-2010) Increase or Decrease Percentage (%) Non Current Assets Property, plant and equipment 33753 6633 27120 80.34841347 Intangible Assets 927 190 737 79.50377562 Investments in subsidiaries 461 2368 -1907 -413.6659436 Available for sale financial Assets 21 -21 0 Advance lease rentals 233 93 140 60.08583691 Loans and other receivables 1432 483 949 66.27094972 Derivative financial instruments 64 27 37 57.8125 Current Assets ÂÂ   ÂÂ   Inventories 1084 97 987 91.05166052 Trade receivables 7008 468 6540 93.32191781 Held to maturity financial assets 376 -376 0 Derivative financial instruments 74 74 0 0 Short term bank deposits 1176 908 268 22.78911565 Cash and cash equivalents 9335 756 8579 91.90144617 Equity and Liabilities Capital 801 288 513 64.04494382 Other Reserves -321 273 -594 185.046729 Share Premium 19794 937 18857 95.2662423 Non Current Liabilities Interest bearing long term borrowing 16753 3698 13055 77.92634155 Provisions 364 720 -356 -97.8021978 Deferred income tax liability 4 720 -716 -17900 Current Liabilities Trade and other payables 21 141 -120 -571.4285714 Derivative financial instruments 467 5 462 98.92933619 Deferred revenue 1483 200 1283 86.51382333 Deferred credit 460 194 266 57.82608696 Trade and other payables 15475 5256 10219 66.0355412 Income tax liabilities 19 5 14 73.68421053 Borrowing and lease liabilities 2852 257 2595 90.9887798 Derivative financial instruments 12 13 -1 -8.333333333 CURRENT RATIO Current Ratio = Current Assets / Current Liabilities Particulars Emirates British Airways Current Assets 18677 2674 Current Liabilities 18520 3740 Current Ratio 1.1:1 0.7:1 GRAPH SHOWING CURRENT RATIO FOR THE YEAR 2009-2010 INTERPRETATION: Current Ratio of both Emirates and British Airways is not ideal. For both the companies, the current assets position should be improved and it should be ideally two times its current liabilities. This situation will be very uncomfortable for the creditors. Both Emirates and British Airways must improve the current ratio to maintain a balance between liquidity and profitability. 2. QUICK RATIO Quick Ratio = Quick Assets / Quick Liabilities Particulars Quick Assets Quick Liabilities Quick Ratio Emirates 17593 18520 0.9:1 British Airways 2576 3740 0.7:1 GRAPH SHOWING QUICK RATIO FOR THE YEAR 2009-2010 INTERPRETATION: Quick ratio for both Emirates and British Airways just fall short of the standard ratio, i.e. 1:1. Both the companies must improve its liquidity which will satisfy its creditors. 3. ABSOLUTE LIQUID RATIO Absolute Liquid Ratio = Absolute Liquid Assets / Current Liabilities Particulars Absolute Liquid Assets Current Liabilities Absolute Liquid Ratio Emirates 10511 18520 0.6:1 British Airways 1714 3740 0.5:1 GRAPH SHOWING ABSOLUTE LIQUID RATIO FOR THE YEAR 2009-2010 INTERPRETATION: The standard Absolute Liquid Ratio is 1:2 or 0.5:1. The Absolute Liquid Ratio for Emirates is 0.6:1 and that of British Airways is 0.5:1. This is considered to be quite satisfactory and up to the norm. This shows the short term financial position is just not satisfactory in term of absolute liquid assets. 4. NET PROFIT/LOSS RATIO Net Profit/Loss Ratio =Net Profit or loss / Net sales*100 Particulars Net Profit/Loss Net Sales Net Profit/Loss Ratio (%) Emirates 3538 42477 8.33 British Airways (425) 7994 (5.31) GRAPH SHOWING NET PROFIT/LOSS RATIO FOR THE YEAR 2009-2010 INTERPRETATION: Net Profit/Loss Ratio shows the operational efficiency of the business. The Net Profit Ratio of Emirates is 8.33% showing a better performance when compared to British Airways which incurred a loss indicating the managerial inefficiency and excessive selling and distribution expenses. 5. RETURN ON INVESTMENT(ROI) RATIO Return on Investment Ratio = (Net Profit before interest and tax / capital employed)*100 Particulars Net Profit before interest and tax Capital Employed (Net Fixed Asset + Working Capital) ROI Ratio Emirates 3565 34837 10.23 % British Airways -231 6107 -0.03 % GRAPH SHOWING RETURN ON INVESTMENT RATIO FOR THE YEAR 2009-2010 INTERPRETATION: This ratio measures the operational efficiency and borrowing policy of the enterprise. The ROI of Emirates (10.23%) shows that the capital employed is used quite efficiently and indicates the earning capacity of the net assets of the business is satisfactory whereas ROI of British Airways is very much below par incurring a loss at 0.03% indicating the ineffective use of capital employed. 6. WORKING CAPITAL TURNOVER RATIO Working Capital Turnover Ratio = Net sales /Working Capital Particulars Net Sales Working Capital Working Capital Turnover Ratio (times) Emirates 42477 157 270.55 British Airways 7994 -1066 0.20 GRAPH SHOWING WORKING CAPITAL TURNOVER RATIO FOR THE YEAR 2009-2010 INTERPRETATION: This ratio shows the number of times the working capital results in sales. It reflects the efficiency in the utilization of working capital. The Working Capital Turnover Ratio of Emirates is very abnormal showing that 270.55 times working capital results in sales. Excessive ratio shows overtrading which indicates the weakness of enterprise. But the Working Capital Turnover Ratio of British Airways is 7.50 times showing a satisfactory situation which reflects its efficiency in the utilization of working capital. 7. PROPRIETORY RATIO Proprietory Ratio = Net Worth/Total Assets PARTICULARS NET WORTH TOTAL ASSETS PROPRIETORY RATIO (times) Emirates 17475 55547 0.31 British Airways 2113 10677 0.20 GRAPH SHOWING PROPRIETORY RATIO FOR THE YEAR 2009-2010 INTERPRETATION: It indicates the relationship between proprietors funds and total assets. It shows the general financial position of the company. 50 % or 0.5 times is said to be satisfactory proprietory ratio for the creditors. But in the case of Emirates, the proprietory ratio is 0.31 and for British Airways it is 0.20 times which are below the norm, indicating that their loans are not secured which is a sign of risk for creditors. 8. CURRENT ASSETS TURNOVER RATIO Current Assets Turnover Ratio = Net sales /Current Assets Particulars Net Sales Current Assets Current Assets Turnover Ratio (times) Emirates 42477 18677 2.27 British Airways 7994 2674 2.99 GRAPH SHOWING CURRENT ASSET TURNOVER RATIO FOR THE YEAR 2009-2010 INTERPRETATION: This ratio establishes the relationship between Current Assets and Net Sales. The Current Asset Turnover Ratio of Emirates is 2.27 and of British Airways is 2.99 times which is quite satisfactory reflecting the efficiency in the utilization of Working Capital. 9. FIXED ASSETS TURNOVER RATIO Fixed Assets Turnover Ratio = Net sales /Fixed Assets Particulars Net Sales Fixed Assets Fixed Assets Turnover Ratio (times) Emirates 42477 34680 1.22 British Airways 7994 7173 1.11 GRAPH SHOWING FIXED ASSET TURNOVER RATIO FOR THE YEAR 2009-2010 INTERPRETATION: The effective utilization of fixed assets will result in increased production and reduced cost. It also ensures whether investment in assets have been judicious or not. In the case of both Emirates and British Airways having a Fixed Assets Turnover Ratio of 1.22 and 1.11 is not very satisfactory. It indicates that the firms have not been able to utilize its fixed assets judiciously. SUMMARY AND FINDINGS After the detailed analysis of the financial statements of Emirates and British Airways for the period from 2009-2010 by financial analysis, it is found that The decision with regarding to working capital is arrived at by taking into consideration number of factors like nature of business, manufacturing cycle, and credit policy and collection procedure. It is evidentiary through the financial analysis that the current ratio of both Emirates and British Airways is not in favor of both the companies. It is still not beyond the ideal ratio stating that the short term financial position of these companies is not very sound. It has been found out that in the financial year 2009-2010, British Airways has incurred loss probably due to managerial inefficiency and excessive selling and distribution expenses. The company has significant burden of depreciation and amortization which is a major driver of these losses. The shareholders funds for both the companies have been raised for the year 2010. CONCLUSION Finance is of vital importance for every organizations success. Finance is the life blood of the business. Working Capital management is regarded as an important subject of financial management. Working capital management is an integral part of over all corporate management. The twin objectives of the working capital management are profitability and liquidity. Working capital management establishes the best possible trade off between the profitability of net current assets employed and the ability to pay current liabilities as they fall due. From the data analysis, it is found that the performance of Emirates is satisfactory due to the internal and external factors. From the various techniques it is found that the companys management is quite effective when compared o British Airways. From the above analysis, it is clear that Emirates is an effective fast growing high profit seeking company whereas British Airways is undergoing a difficult financial period.

No Child Left Behind Essay - 797 Words

On January 8 2002 President George W. Bush signed No Child Left Behind(NCLB). It’s basic reading and math, annual test of those skills, it ignored history, civics, literature, science, arts, and geography. It was basically no curriculum, measurements and data does not fix the schools. Constant test preparation sometimes generated high test scores but it had nothing to do with education. According to The Death and Life Of The Great American School System, the author Diane Ravitch states, â€Å"test should not follow the curriculum. They should not replace it or precede it. Students need a coherent foundation of knowledge and skills that grows stronger each year†¦ a well educated person in the twenty- first century should have the opportunity to†¦show more content†¦Accelerated programs and classes remain less accessible for black and Latino students — and their inability to tap these resources can lead to the further stratification of classes by race†(Yin). The fact is kids black school funding and because they lack school funding they are faced with numerous amounts of problems. Interviewing Pastor Kevin Allen he explains, the inequalities that exist today are the underfunded schools, not enough of teachers, not enough school books or library books, and theres no technology. He states â€Å" it limits the furtherance of kids education and it makes them feel they don’t need to finish school†. Greed is the reason the state does little to help or intervene. Teachers need to motivate kids in class daily and parents need to make sure their kids are doing what they need to do in order to succeed in life. For kids to learn they have to: be in healthy environments, teachers have to be willing to teach, effective discipline, effective curriculum, and diversity(no segregation). The is the people who are running education they are politicians, the media, and white communities. Money is the biggest concerns as well as resou rces. 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With this system in place, it ensures that no child enrolled is neglected from this system. The No Child Left Behind law is a disadvantage to our public-school system. Even though this act wasRead MoreNo Child Left Behind Essay1378 Words   |  6 Pages Since its inception in 2001, the No Child Left Behind Act (NCLB) has only made the divide in quality of education greater, and was ultimately detrimental to the American Education System. When President George Bush first proposed the NCLB, his intention was to level the playing field and provide an equally excellent education for every American student, what happened though, could not have been further from George Bush’s intentions. The whole basis of the NCLB is funding for performance, meaning

The three theories of Meaning Essay Example For Students

The three theories of Meaning Essay Through language we can acquire knowledge, and to each person words mean different things. If words don’t have a meaning, it will be difficult for us to communicate information between each other. So what distinguishes meaningful words from meaningless ones? To some meanings are to be found in dictionaries, while others believe they are to be found in the world, but words are meaningful when you understand them and you are able to associate them with mental images. There are three different theories of what distinguishes meaningful words from meaningless one. The first theory is the definition theory. It states that meaningful words can be found in dictionaries. The problem with that idea is that it is difficult to come up with a good definition of a word. And if a word is not found in a dictionary, does that mean it is meaningless? Another problem with the definition theory is that most definitions are imprecise, vague, and only explain words by using other words. For example it is really difficult to know the meaning of the word â€Å"love† in a dictionary, but it is easy to find and understand the meaning of the word â€Å"rectangle†. Dictionaries help point us in the right direction, but they do not give us the precise meaning of a word. The denotation theory says that what distinguishes a meaningful word from a meaningless one is that the former stands for something while the latter does not, and that meanings are found in the world. The problem is that some words, such as â€Å"love† or â€Å"wisdom†, are too abstract and they do not stand for something tangible. But words that represent something in real life are easy such as â€Å"Bahrain† are easy to define. Although it is more useful than the dictionary theory, the denotation theory is still not the best way to distinguish meaningful words. The most useful theory out of the three is the image theory. It states that the meaning of a word is the mental image it stands for, and when you have the appropriate concept in your mind then it is meaningful. How meaningful the word is depends mostly on the context it is used in, and this theory is the only one that acknowledges this, because mental images change depending on how the word is used. Some words such as â€Å"chikawow-wow† cannot be found in the dictionary nor stand for something in the world, but they are still meaningful when they are used in the right context. And because my friends and I have had the same experience with this word, it means something to us and we associate it with a similar mental image. The limitation with this theory is that if meanings are in the mind, different people will have different images for the same word. But then again, having different images does not make the word meaningless. You cannot explain to a person the meaning of love or other abstract words by using the dictionary theory or the denotation theory, but you could do it using the image theory by associating it with the concept of love. To some, a word can mean many different things, while to others the same word may not mean anything at all, so is this word meaningful or meaningless? The answer is neither no or yes, because it depends on whether the word stands for a mental image. It also depends on the context in which the word is used. For example â€Å"I ate a funny song†, although the word â€Å"ate† is meaningful, in this particular context it does not make any sense and therefore is meaningless. In conclusion, although the image theory is the most useful in distinguishing meaningful words from meaningless words, it still has its limitations. Therefore a combination of the theories is required because we cannot depend on only one of them.

Mr. Max Kelad Essays - Films, Trio, , Term Papers

Mr. Max Kelad MR. KNOW- ALL The story takes place just after the war on a liner that is on it's way from Sanfrancisko to Yokohama. From the very first lines of the story we can see that the narrator doesn't like the main hero of the story - Max Kelad that can be proved by the following quotation: When I was told the name of my companion my heart sank. It suggested closed portholes and the night air rigidly excluded. We can see that the narrator of the story likes Englishmen very much and that's way he says that he wouldn't be so unhappy about his fellow mate if his name would be Smith or Braun. By this we can understand that Maugham is a patriot - he likes only his countrymen. But the narrator makes a mistake thinking that Max Kelad is not an Englishman - indeed he is. As we get to know Mr. Max Kelad we find out that he is boastful because as soon as he met the storyteller and gave him a drink he told him that he can get everything. Max Kelad said : If you have any friends on board, you tell them you've got a pal who's got all the liquier in the world. Max Kelad is also very talkative and familiar that can be proved by the fact that he didn't say Mr. before the narrator's name. But Mr. Max Kelad didn't do it because he was impolite, but because he wanted the storyteller to fell comfortably. A question has probably come up to you why does the name of the story is Mr. Know-all?. This nick name contrived the men which were on the liner. It is because Mr. Max Kelad knew everything. He knew how to do tricks with cards, when the storyteller wanted to go downstairs, he said that everything was ready. The quotation says : he conducted the auctions, collected money for prizes at the sports, and arranged the funny dress ball. He was everywhere and always. From this we may think that he was an energetic man, but it never came up to Mr. Kelad's mind that he disturbed anybody. He was convinced that everybody is happy to meet him. * From this we can come to a conclusion that Mr. Kelad was in very high thoughts about himself. The quotation says : You might have kicked him downstairs and slammed the door in his face without the suspicion dawning on him that he was not a welcome visitor. But even then he couldn't understand that you didn't want to see him. As the story goes on, the author introduces us with another characters - Mr. Ramsay and his wife. Between Mr. Rampsay and Mr. Kelada forms up an external conflict because Mr. Kelada considers the pearls around Mr. Rampsay's wife's neck real, but Mr. Rampsay artificial and they decide to bet. Next follows a story element - complication because as sonn as Mr. Know-all looks at the neckles he sees that it is real , but as soon as he looks at Mrs. Rampsay he says the opposite. And in such a way the author hooks our curosity because we want to find out why did Mr. Kelada does so. He was about to speak. Suddenly he caught sight of Mrs. Rampsay's face. It was so white that she looked as though she were about to faint. She was staring at him with wide and terrified eyes. Mr. Kelada was making over himself. So far Mr. Know-all had shown himself as a bad character but in the end we see that he has changed because he escaped Mrs. Rampsay by saying that the pearls were artificial. The thing that would have happened if Mr. Kelada hadn't helped Mrs. Rampsay is explained in the following sentence said by Mr. Know-All : If I had a pretty wife I shouldn't let her spend a year in NY! From this sentence we can see that Mr. Kelada was a real Mr. Known-All, because he knew how to act in situations like that. The main idea - you can't get to know a person in a short time period, not from the first impression, you