Qantas Airlines Performance Analysis Essays - Finance, Economy

Qantas Airlines Performance Analysis Essays - Finance, Economy Qantas Airlines Performance Analysis Name: ID: Module: Instructor: Number of Words: Date of Submission: Executive Summary Having residual claim to the net assets of a company in liquidation, equity holders, both potential and existing, have a substantial stake in the financial performance of a company. But the fiercely competitive business landscape, with higher mobility of finance and knowhow, has made the decision making task before investment difficult. The global financial crisis (GFC) in the last decade is a clear message to all concerned that short term financial performance cannot give true picture of long term potential of a firm. Getting a true view of a firm's long term health necessitates an overall analysis of the firm's operations and performance which includes investigations as to how the firm values interest of other stakeholders and how far it has been able to meet their expectations. Hence the potential and existing stock holders need to evaluate the attractiveness of a firm as investment destination on the basis of the firm's long term financial and non-financial performance as regards all the stakeholders' interest. TABLE OF CONTENTS Introduction4 Stakeholders Value Analysis4 Share Price History12 Share Price Return13 Return and Volatility of Qantas Stock Price15 Current Valuation of the Equity of Qantas 17 Evaluation of the company's Investment Projects 19 Dividend Policy and Capital Structure of Qantas 19 Overall cost of capital20 Concluding Remarks 21 References 23 Introduction A business is a conglomeration of activities performed by persons, group of persons, and institutions. The performance of the business affects the interest of all the stakeholders, namely the stock holders, the employees, the suppliers, the government agencies, and the community at large. Evaluation and decision as regards attractiveness of a company for investments can be made by existing and potential stockholders, bankers, and suppliers of raw materials and utilities on the basis of analysis of financial figures disclosed by the company in its annual reports. A more comprehensive report card of the firm can be done through stakeholders' analysis directed to the assessment of overall corporate health of the firm. This instant report is a case study consisting of a systematic and structured analysis and assessment of the long-term attractiveness of Qantas Airlines, an Australian airline industry listed in Australian Stock Exchange (ASX), as an investment destination. Qantas 2018 Stakeholders Value Analysis Stakeholders' value is a management philosophy and maximization of it tends to get momentum in acceptance as a valid objective of business among business management fraternity. Short term financial success may not sustain in the long run, and other non-financial parameters are needed to be measured to derive a more inclusive picture depicting overall health of the company. Stakeholders, by their actions, deeply influence operations and performance of a firm, and also have certain expectations from the firm. Analysis of the extent to which such expectations are met is known as stakeholders' value analysis, and the final assessment is called Balanced Scorecard of performance of the firm which shows its current profitability and long term sustainability in the competitive landscape. Qantas Airlines is the Australia's biggest domestic and international airlines with a strong brand value, and one of the leading airlines company in the global aviation sector. In this section Stakeholders A nalysis and balanced scorecard of Qantas Airlines are done. The widely accepted benchmarks for aviation company performance are used in the analysis and the metrics are calculated on the basis of financial figures and non-financial information given in the company websites, annual reports, and professional websites. Analyzing period for this section is 2013 -14 to 2017 - 18. Table 1: Economic Integrity Benchmark Metric 2017/18 2016/17 2015/16 2014/15 2013/14 Underlying PBT $M 1,604 1,401 1,532 975 -646 Statutory PBT $M 1.391 1,181 1,424 789 -3.976 ROIC % 22 20.1 22.7 16.2 -1.5 Underlying EPS Cents per share 64 55 53 32 -21 Statutory EPS Cents per share 56 46 49 25 -129 Net FCF $M 1,442 1,309 1,674 1,104 0 Analysis: Underlying PBT: This is a non-statutory measure, showing the profit earned in the normal course of business, with normal parameters. No one off profit or loss is included. The trend shows the metric is increasing steadily. Statutory PBT: This is derived by adjusting any one off profit or loss with the underlying PBT. It has markedly improved since 2013/14. Underlying EPS: It is calculated from underlying PBT. After deducting tax from underlying PBT the amount is divided by weighted average number of shares outstanding. The trend shows steady increase. Statutory EPS: It is calculated from statutory PBT. The trend shows steady increase. Net free cash flow (CFC): It is the operating cash available after deducting cash spent