Topic 8

An analysis and evaluation of the

ACCA Registration : 2264804 business and financial performance of
Submission Period : 34 organization over three years period
Contents

 Introduction of Company
 Introduction of Competitor
 Financial Analysis
 Business Analysis
 Conclusion and Recommendations
Introduction of Company

EMIRATES AIRLINE
 Based in business hub Dubai
 Wholly government owned
 Founded in 1985
 Started with Two borrowed aircraft from Pakistan
 Operating in over 150 destination and 80 countries
 Employees over 50,000
Introduction of Competitor

TURKISH AIRLINE

 Based in Turkey

 Founded in 1933 with five aircraft

 Operating 261 destinations and 108 countries

 Employee working over 27,000

 Partially owned by Government

Analysis

• Ratio Analysis
Financial
Analysis
• Competitor Analysis

• SWOT Analysis
Business
Analysis
• Porter’s Five Force Analysis

• Conclusion
Results • Recommendation
Profitability

Net Profit Margin

Net Profit Margin % Turkish Net Profit Margin % Emirates

10.16%

8.76%
7.98%

7.63%

5.45%
4.23%
3.63%
3.38%

2013 2014 2015 2016

 Profitability

RETURN ON EQUITY
25.00%

20.00%
PERCENTAGE %

15.00%

10.00%

5.00%

0.00%
2013 2014 2015 2016
Return On Equity % Turkish 21.66% 10.94% 21.39% 22.08%
Return On Equity % Emirates 10.46% 13.42% 16.71% 22.58%
Liquidity

Current Ratio
Current Ratio (Times) Turkish Current Ratio (Times) Emirates

1.12

0.86 0.84
0.80 0.81 0.82
0.77
0.68

2013 2014 2015 2016

Solvency

Debt to Equity

65.00%

64.00%

63.00%
Percentage

62.00%

61.00%

60.00%

59.00%

58.00%
2013 2014 2015 2016
Years
Solvency
Interest Cover Ratio
7.00

6.00

5.00

4.00

3.00

2.00

1.00

0.00
2013 2014 2015 2016

Interest cover (Times) Turkish Interest cover (Times) Emirates

Efficiency
Load Factor
80

79.5

79

78.5

78

77.5

77

76.5

76

75.5

75

74.5
2014 2015 2016
Load Factor Turkish % Load Factor Emirates%
Business Analysis

Opportunities:
Strengths:
Largest Aircraft of Airbus A380
Generating huge Profits
Joined Business venture with Disney land
44% Market Share in Asia Pacific
Added 34 more destination in 2016 and
High Value of Brand
new passenger service in 8 cities

SWOT
Analysis

Weakness: Threats:
Low Current Ratio Operate in highly competitive market
High Debt Ratio Government can change Policies
LF was Low in 2016 by 3.1% from last Brand can be affected by any wrong
year. decision.
Conclusion

 Overall profits increased due increase in revenue

 Liquidity position is below 1 throughout
 Gearing more than 50%
 Load Factor was slightly low in 2016
Recommendations

 Improve its Current Ratio

 Generate finance through other resources then
interest borrowings
 Improve Efficiency in utilizing aircraft capacity