March 11, 2016 at 12:06 am
@darkangle5 – to an extent it depends on how you are fixed on word count. KPIs related to passenger loads are used in the industry and although Hamnad is right it doesn’t directly link to the financial statements it does impact on results and a good business analysis is equally as important for T8 as the financial analysis.
Load factors are a performance measure and indicate how effective strategies are – the right routes are being flown, whether the right size aircraft are being utilised if the percentage is low ( this would be analysed on a flight by flight basis but obviously you don’t have this level of detail) They are also measures of efficiency: a high load factor shows assets are being well utilised and efficiency in use of resources -it costs almost as much to fly an aircraft with 20 passengers as it does to fly the same with 200. They are particularly relevant in two specific contexts (1) if an airline wants to raise seat prices then it is more likely to have less impact on demand if that route has an existing high load factor -in this sense they are critical in the business model of low cost airlines (2) where a competitor has a consistently higher load factor or where load factors start to fall but competitor’s do not then they indicate that something in the operations and potential in the marketing mix is wrong. Another thing to remember is that although accounting practices and treatments vary (aircraft dep’n rates, revenue recognition etc) passengers per kilometre is a simple and reliable measure that is a constant in the sector which makes it a very useful tool for evaluating performance and making comparisons in terms of efficiencyMarch 12, 2016 at 11:42 am
darkangel5ParticipantMarch 12, 2016 at 12:09 pm
No, i believe this measures their passenger seat KM available vs passenger seat KM occupied. For cargo, you need to look at the weight or space available vs weight or space taken.
Hammad Ahmed Qureshi – OBU Registered Mentor.March 12, 2016 at 12:52 pm
.March 12, 2016 at 2:32 pm
Ali Farooq OBU Registered MentorParticipant
First of all you will see core services of your main company and have to evaluate the significance of Cargo business and it’s revenue. If it is then you need to highlight separately you can not ignore major line of business of the company.
OBU Registered MentorMarch 12, 2016 at 4:03 pm
@darkangel5 – if you can find the figures then yes you should cover this as a separate but important business segment. Like load factors there are usually stats that relate to kg/per kilometre flown. It is worth remembering that when looking at the capacity of a jumbo jet for example that only a small part of the available hold space is used to transport passenger baggage – most of it will be used for freight.
Cargo tends to be more important for medium to longhaul flights (rather than shorthall) this is because alternative forms of transport are available (road/rail). So anyone doing an airline that focuses on shorthaul flights (those under about 1,500 miles) can probably ignore cargo. It is not so relevant therefore for Ryanair and Easyjet as their strategies are more directed to transporting the maximum number of passengers in the most efficient way (with the quickest turnarounds possible) and therefore they tend not to use aircraft with much freight capacityMarch 14, 2016 at 10:24 am
I have a query concerning the analysis and evaluation. In the info pack it says the first you describe the results and analysis them later. my question is do the OBU markers follow the prescribes layout of rap when marking? because there is to much discouragement about describing the results and yet the info pack clearly states that you have to first describe and a critical analysis later.
kind of confused please help.March 14, 2016 at 10:45 am
Yes, they are concerned on description and analysis both but it is in context that you provide results and must do analysis, don’t just state results by writing that sales up by 10%, cost up by 12% etc. They want analysis, reason for changes i.e. what drives these changes.
So when you write sales up by 10% and state that it is as result of new product launched in 2016 with reference, this is analysis of result.
A good analysis example:
2010 was a good year for ABC company because its margin went up from 6.1% to 7.8%. Car market showed an improvement of 32%, while ABC company sales grown by 58%. Despite economic crisis and low GDP growth of 2.4% compared to 4.5% in last-year ABC company done well. It has been able to control its cost as its cost-of-sales were 93.8% in 2009 and 92.1% in 2010. ABC company has also done well against XYZ Company, its GPM grown by 1.7% compared to 0.2% of XYZ Company. Reason for this is poor cost control as costs are approximately same as a percentage of sales in both years of PSMC besides 63% sales increase. Increase in sales was also due to launch of 1300cc swift. (All facts were referenced).
Above para contain both analysis and results.
Hammad Ahmed Qureshi – OBU Registered Mentor.April 25, 2016 at 10:14 am
@trephena While we are doing the swot, is it more preferable to mention how company is using their strengths/opportunities in the swot itsslef? I’ am not sure if swot here is all about just plainly mentioning the companys strength/weakness/opportunity/threat or its about showing how they are utilising/overcoming it?April 30, 2016 at 7:23 pm
@darkangel5 – the basic SWOT is just a straightforward statement of the company’s strengths, weaknesses etc (with as much referencing as possible to show that the statements you are making are valid). You explore some of the SWOT and PESTLE factors when doing the financial analysis as you should be linking the strategic decisions and directions (i.e. found in the statements from press releases, company highlights, the CEO and directors’ reports ) that have produced the results and these are based on the company’s strengths and opportunites and the environmental factors found in the SWOT & PESTLE. I have tried to show this type of linkage in my article on Evaluation & Analysis and how to approach it on our homepage http://www.opentuition.com/obuApril 28, 2017 at 12:55 pm
What if I calculate Profitability, liquidity and solvency ratios using the spreadsheet and take the Investment ratio and efficiency ratio figures from the Annual report? Will that be enough to show my IT skills?April 29, 2017 at 12:15 am
That is fine to use ratios calculated by the company in the annual report -justify this by saying they are reliable and likely to be more accurate (however as the basis of the calculation is not known the comparisons between companies may not be so valid). However as long as you acknowledge this and provide proper explanations this should be ok.
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