May 6, 2017 at 6:24 pm
I am almost done with the project on Delta airlines
Do you know any reputable sites with which I can check for plagiarism before submission?
WriteCheckMay 7, 2017 at 3:41 pm
I have some queries and your guidance will be much appreciated.
Initially, I read all the pages of this forum and cut the main areas for reflection of my work. Trephena always mentioned that read the strategies, CEO reports and your business Analysis will be based on those which will eventually guide your financial analysis.
To give you a brief summary, Air Canada – My main company has four priorities in their strategy;
1. Revenue and Cost Transformation
2. International Growth
3. Customer Engagement
4. Culture Change
I have aligned these with PESTEL and SWOT and I shall review it once again and make adjustments where necessary. However when it comes to points 3 and 4, it is basically to do more on the awards they received, the training they provide to employees to help customers, their Maple Leaf Lounge for high priority customers, and you know, basically the same which of-course other airlines must be doing as well, it is not something unique or special, perhaps what I may say special is “Air Canada is the only international network carrier in North America to receive a Four-Star ranking according to independent U.K. research firm Skytrax and they were awarded as the best in N.A. I am hesitant about bringing in awards because to elaborate why they were the best in a way links down to other points, such as their partnerships with other carriers, their new fleets, their employees and so and so, I am not sure if this is fine, because the same as i said partnerships – they are a member of the Star Alliance network this can be a strength on its own, their newly ordered fleet – 787 Dreamliner and I think I read in the CEO Report that they are the only airline in Canada to have this which is a strength on its own as well, all these factors are a reason altogether why AC is claimed to be the largest airline in Canada… All i feel is the way I have presented the Strengths don’t seem so strong in the way I have explained them…I hope to hear from you on this one..
Another query is to do with the weaknesses, one of the weaknesses I put was to do with legal cases it is facing, some of which were in previous years and not the years I am working on, all in all, I wanted to potray that these legal cases are tarnishing their reputation and showing loopholes in the way they are administering. However, I was told these relate more to the “L” of PESTEL, but in that “L” I did not mention about these but rather about how regulations affect them – more to do with Safety Regulation and then talked about barriers to Foreign ownership restriction – not more than 25% voting rights to foreign owned and controlled which Govt is planning to raise this cap soon to encourage competition and the other was to do with emission regulations subject to carbon tax.
In a way, I feel those relate more to “P” than to “L” ..I think I need your guidance on that as well. and perhaps to cut the legal cases in weaknesses and paste it to PESTEL – “L” and add something else in weakness. Right?
While I type, I feel I am realising what I would need to do! 😀 but yes, your response will be of great help
Moving on, I am using the following KPI’s:
Revenue per ASM, Cost per ASM, Yield, Load Factor and Aircraft Utilisation.
Ratios – profitability ratios, Asset turnover, Gearing, current ratio and EPS.
I think these are enough yeah? Do you suggest more?
My query is that I am confused whether I should integrate the ratios with the KPI’s in explaining say Revenue, I talk about RASM then about operating profit or to first talk about all the KPI below the business analysis and then talk about all the ratios below all the KPI’s… I am somewhat confused about that…
Last question, in my excel files, I have extracts of SOFP, SOP&L and SOCF for both companies, I will also put the ratio formulas for the ratios I will calculate, Should I also put my graphs there? and then the same graph in the RAP as well? or can I just put the graph in the RAP and reference it to say Appenix 1 – SOFP of AC. I dont think it should be referenced to the annual report when I have got those extracts from the annual reports, right?
Apologies for a long query but I really want to say A BIG Thank you for the great work you are doing. Your guidance is helping so many of us. Thank you! 🙂May 8, 2017 at 10:05 am
Does it make a difference if in my annexures I have slightly changed the layout of the results but keeping the underlying figures and bottomlines same of course e.g. in my balance sheet I have presented as follow:
Non-current assets+Current Assets=Equity+Non-current Liabilities+Current Liabilities
whereas in the financial statements presentation is as follows:
(Current assets+Non-current assets)-(Current liabilities+Non-current liabilities) i.e. Net Assets=Equity.
Thanks.May 8, 2017 at 2:00 pm
Is it okay if I am using charts to discuss the KPI’s?
ThanksMay 8, 2017 at 4:46 pm
jut one query.How many words would you reccomend writing about the analysis of the business models swot and pestel?May 8, 2017 at 7:41 pm
@Jahnvi – you seem to have done a good lot of research, so well done for that. There would be no harm in setting out the basic CEO’s strategies in your business analysis and you could refer to them (especially 1 & 2) when doing an assessment of the company performance.
I tend to agree with you the legal cases are more indicative of their tarnished reputation (a weakness) than being part of the legal aspect of a PESTLE. In the PESTLE you are looking at general factors in the environment that might also affect other similar companies and not ones that are just specific to your company – so legal regulations and laws are part of the PESTLE not cases being brought against the company. As the 25% voting issue is being imposed by the government then, yes this is a political issue but it could also be a threat (as it comes from the external environment) to future expansion as it may deter foreign investment.
Yes you can integrate the KPIs in with the financial analysis where relevant as they might help explain some of the revenue / profit / cost figures. Your ratios sound about right and it is how well they are explained that matters most. You could present some of the KPIs as charts and graphs if this is appropriate.
Graphs can be created in the spreadsheet if you want or straight in the report. Sometimes it is easier to do them in the spreadsheet so that you experiment with formats and can then just copy them into your Presentation. As long as there are proper titles to the information in the appendices it is obvious that the information has come from the annual reportsMay 8, 2017 at 8:06 pm
@arun – I don’t suppose it really matters but I am not sure why you are changing the order as it can be confusing when things switch around within the same piece of work. However if you are being consistent within your report and the bottom lines are the same that is the main thing.
[Traditionally assets (apart from for a bank where the reverse order was used) were always listed from most fixed to most liquid and liabilities were ordered current followed by non-current].May 8, 2017 at 8:10 pm
@samin – there is no prescribed number of words. However I would suggest that you do a good application of the models first before the financial analysis and ensure that the factors from the models are linked with the financial performance.May 8, 2017 at 8:45 pm
@trephena – Thank you very very much for first of all creating the time to read that long post and then going a mile ahead to give a quality response.
I really admire your service 😀
Thank you once again 🙂May 9, 2017 at 7:44 am
i) My main company is Qantas and its comparator that I have chosen is Virgin Australia but there seems to be a disparity in the size and nature of both the companies in that Qantas operates on a more global scale. Therefore I am starting to rethink whether the two are comparable in the financial analysis.
I noticed this when I was comparing the revenues of the two as Qantas’ revenue ranges from 15,000-16,000 m whereas Virgin’s ranges from 4,000-5,000 m. Should I just get along with the analysis.
ii) Any tip on how to make the variations among the elements of the financial statements more noticeable in the graphs. As in the case of revenues I have made a column chart but the increasing trend is hardly noticeable.
Thanks.May 9, 2017 at 8:33 am
1) Qantas and Virgin Australia are best companies that you can compare. They are only and close rivals in Australian aviation, both are competing against each other strongly and both operates more or less in same segments. I did them and I passed so don’t worry.
Even though Qantas has more international presence, but when I did my research, more then 70% of its revenue was based from domestic operations and Virgin Australia, even though small comparatively, has transformed from LLC airline to full commercial airline at level of Qantas since 2000. Virgin Australia even started cargo services and loyalty program to face Qantas.
Lastly, you will be comparing revenue growth rather than absolute figures so, large difference between revenues due to size difference won’t matter. And matter of fact is that you can’t find a company whose figures are very close to the main company.
2) You really can’t do much here, can’t simply increase the revenue!? If revenue has grown slightly in one year, you can talk less about that year. If the trend is same for all 3 years, then you can talk why the trend is increasing slightly and compare it with competitor.May 9, 2017 at 9:26 am
In my Delta airlines company for Topic 8, is it a must to give recommendation and is a bibliography list also necessary? I gave conclusion and reference list tho’May 9, 2017 at 2:38 pm
My query is slightly similar to @arun
In my ratio analysis, is it okay if I do the Net Profit ratio analysis rather than operating profit because when I previously did the revenue growth and RASM, In both cases my main company – Air Canada is leading, same is the case in Operating Profits, they are higher, however my competitor company – WestJet has a higher net income in two years compared to Air Canada which can at least show that my competitor is not always lagging behind as will be the case in Operating Profit(on average 73% higher than WestJet).. so that is why I was considering doing Net Profit, in which I will explain Operating and Non-Operating high costs that caused it.
The only issue is both these companies in a way do operate in the same segments like in Canada, USA and in Europe where both Air Canada and WestJet have direct flights but for Air Canada it goes even further to Asia, Africa, etc unlike WestJet which then indirectly operates through code-sharing partnerships which are about 42 agreements, Although Air Canada does have such agreements as well. which Air Canada as well has.
And that is the main reason why I tend to find Revenue, Operating Profits, RASM of Air Canada higher than WestJet. However, WestJet has beaten Air Canada’s net profit in two years – this again can be because its costs would not be as high as Air Canada’s and of course how they are funding in terms of fleets which I shall cover in gearing. So, is it okay If I use Net Profit and not Operating Profit?May 9, 2017 at 2:50 pm
Finally submitted the project!
Fingers crossed for the results…
Thanks a lot to @trephena and everyone else who helped and supported me throughout answering my queries promptly and giving valuable guidance.
Now one thing I’m worried about is, the number of slides in my PPT is 19. Is that ok or should I be concerned? I know I can’t do anything now.. but still..May 10, 2017 at 10:57 am
Just to confirm, as long as I use external sources here and there in the financial analysis I can use the annual reports to reason out the variations, is that right?
As I know a mentor who told us to use the annual reports for only figures and not for reasoning.
Thanks.May 10, 2017 at 7:34 pm
Please ignore my previous query as I did find the answers to it 🙂
But I want to ask you something else – If I did the Net Profit analysis and in that I find about very many points to relate to the the trends such as low fuel costs, high salaries, high depreciation, high maintenance costs and that is just for operating expenses. Non operating, the highest was the FX losses. Therefore, If I explain all those factors, It might tend to be a big detail on that compared to others but If I leave some of the points, would that not be a reason for poor analysis?
My Mentor told me not to make it very confusing, explaining one or two main things and keeping it clear..but in a head such as Net Profit, there are so many factors as mentioned above…so I would appreciate your feedback on this..
Last question, If I have observed falling asset turnover for both companies and the reason is largely because the growth in total assets is higher compared to the growth in revenue which is the cause of the fall. However, my main company has a higher Asset Turnover compared to the competitors because its revenue grew at a better rate than the competitors. Now should I explain further into this? Like why didn’t the revenue grow higher? because I thought the points I would mention to explain why is – such as say increased competition is what I can think as a factor why revenue did not grow higher – the point is if I elaborate into this, it is similar to the same points explained in revenue growth! and for some ratios as this, it is hard to find external resources to explain why this fell. By the way, I will explain the KPI of aircraft utilisation below this so is that fine or it still needs more elaboration?
Thank you! 🙂May 10, 2017 at 8:41 pm
@syfar42 – Conclusions and Reference list are mandatory, recommendations and bibliography are optionalMay 10, 2017 at 8:45 pm
@Jahnvi – if you feel more comfortable with net profit rather operating profit then go with it. Whatever you choose explain the underlying factors well.May 10, 2017 at 8:48 pm
@chandan – 19 slides should be fine. Just choose the most important ratios for your graphs and do not have more than 2 per slide and don’t use too much text -it should mainly be bullet pointsMay 10, 2017 at 8:58 pm
@arun -do not make obvious statements however use the CEO and directors report to help with comments. Ensure you EXPLAIN and it does not read like the notes to the accounts e.g. the marker needs to know why net profit is higher or lower and will not be impressed if you tell them this relates to changes in depreciation/ admin/ marketing / staff costs etc – it is why these elements have changed you need to explain.
Part 3 is therefore a balance of external sources and the annual report (mostly the written part of the report with just figures coming from the financial statements)May 11, 2017 at 12:24 pm
Thank you very much for the reply regarding the recommendation and bibliography requirement
My mentor was saying that recommendation is also mandatory, whereas you are saying its optional, im getting a bit confused whether to do or not 🙁May 11, 2017 at 6:01 pm
Thank you @trephena
A question: If the company does not pay dividends at all. Can I allocate that in the SWOT Analysis. However, I am confused as it in a way relates to both a strength and weakness…if I have less points for weaknesses, can I then write about that?
Thank you! 🙂May 11, 2017 at 7:30 pm
You simply can’t put no dividend at weakness. You need to analyse it and come up with well sourced reasoning. Maybe the shareholders don’t mind if they are not getting dividends? They are more interested in re-investing? In my opinion, I will only put not paying dividends in weakness if it really harmed the relationship with shareholders, because POOR relationship with key stakeholders can be great weakness.
Search the internet about the reaction of shareholders of company not paying dividends for few years.May 11, 2017 at 9:52 pm
@Jahnvi -weaknesses are harder to identify than strengths however you may be able to find some if you see what the comparator is doing really well or something that favours them. Where your main company in comparison is not performing so well or seems to be at a disadvantage it may be because they have a strategic weakness e.g. route network, older aircraft, already highly geared so not so attractive to investors.
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