MBS539 – Accounting for Managers Assignment Requirements –20% In groups of 2 or 3, you will complete a written assignment related to the below tasks. This report will contribute 20% to your overall...

Running Head: ACCOUNTING FOR MANAGERS    1
ACCOUNTING FOR MANAGERS         13
MBS539 – ACCOUNTING FOR MANAGERS
Table of Contents
Introduction    3
(i) Task 1: Overall Understanding of Qantas Airways Limited, Macro and Microeconomic Factors affecting its Performance    3
(ii) Task 2: Industry Characteristics of the Qantas Airways Limited’s Market for 2016 and 2017    4
(iii) Major Elements of Balance Sheet of Qantas Airways Limited for its Interest    4
(iv) Any Particular Interest in Balance Sheet and if it is Impacted by Special Events    5
(v) Major Elements of Income Statement of Qantas Airways Limited for its Interest    5
(vi) Any Particular Interest in Income Statement and if it is Impacted by Special Events    5
(vii) Task 3: Ratio Analyses of Qantas and Air New Zealand for 2016 as well as 2017    6
Qantas Airways Limited    6
1. Gross Profit Margin Ratio    6
2. Profit Margin Ratio    6
3. Current Ratio    6
4. Quick Ratio    6
5. Return on Total Assets Ratio    7
6. Accounts Receivable Turnover Ratio    7
7. Debt Ratio    7
8. Earnings per Share Ratio    8
Air New Zealand    8
1. Gross Profit Margin Ratio    8
2. Profit Margin Ratio    8
3. Current Ratio    8
4. Quick Ratio    8
5. Return on Total Assets Ratio    9
6. Accounts Receivable Turnover Ratio    9
7. Debt Ratio    9
8. Earnings per Share Ratio    9
(viii) Analysis    10
(ix) Conclusion and Recommendation    10
References    11
Introduction
The business of Qantas Airways Limited has improved significantly in 2017 comparison to previous years. The company has reduced majority of its debts that has increased the confidence of the shareholders on the company. The financial performance of the company has been good in the year ended 2017. The present report analyses its performance and operations in context of 2017 and 2016 as well as with respect to its competitor Air New Zealand.
(i) Task 1: Overall Understanding of Qantas Airways Limited, Macro and Microeconomic Factors affecting its Performance
The organisation has earned a Profit after Tax of $1401 million, which is the second highest in the 97 years history of the organisation. The Profit Before tax was $1181 million. The business had a return on Investment of 20.1%, which is among the best in the industry. The net debt of the company fell from $5.2 billion to $434 million that helped the company to turn 60% of its fleet debt-free (QANTAS, 2017). The company distributed an amount of $627 million among the shareholders through an on-market buy-back and dividends. The Earnings before Interest and Tax (EBIT) of the domestic segment was $645 million that was 12% more in comparison to last year. On the other hand, the international business showed an increase of 36% in EBIT.
The underlying Profit before Tax of the Group improved heavily that had helped the business in reducing down its debt significantly. The statutory profit for the year decreased from $1029 million to $853. However, the total income rose by more than 20% due to an increase in the other comprehensive income for the year. Overall, the position of the firm has improved as the top line as well as bottom line has improved. The domestic as well as international operations has shown a growth.
In addition to that, reduction in debt in spite of an increase is business is recommendable. Organisations require fund while expanding their business. In the case of Qantas Airways Limited, all the parameters are indicating positive results. This is an indication of the superior performance of the company in comparison to previous years. The company has paid dividends an also bought back equity shares. This shows that the fund available with the company has reduced. In spite of that, the top line and bottom line has improved. This shows the efficient use of funds that is reflected by high Return on Investment of more than 20% (QANTAS, 2017).
(ii) Task 2: Industry Characteristics of the Qantas Airways Limited’s Market for 2016 and 2017
The domestic passengers in the country increased 1.2 in the year 2017 over 2016 to 61.65 million passengers. The industry growth was slow in comparison to other economies across the globe. The number of aircraft trips decreased by 0.5% in 2017 over 2016 to 681000 aircraft trips. The passengers travelling from regional airports increased; by 1.3% in 2017 over 2016. The international aviation industry shows a decent growth in 2017 over 2016. The number of international scheduled passengers increased 6.7% in 2017 over 2016 to 38661 million passengers (QANTAS, 2016). The aviation industry of Australia is expected to grow at a faster pace due to strong growth in emerging market across the globe. According to Forsyth (2018), the movement of freight has also improved that has been helpful in witnessing the growth of aviation industry of Australia.
In the recent times, the price of corporate economy class tickets has reduced by as much as 7%. This has been due to the increasing competition in the aviation industry. Multinational companies are entering the Australian Aviation Market and are investing heavily for increasing their market share. This has led to a significant increase in competition that has been a delight for the air travellers. According to Forsyth (2018), the aviation industry has contributed to more than 4.5% of the Australia’s Gross Domestic Product.
This indicates the importance of the aviation industry for the development of the country. The domestic sector has contributed more 30-35% of the revenue for the industry. On the other hand, the corporate and tourism sector has contributed around 35% and 25% respectively in the year 2016 and 2017. The industry has been able to attract healthy foreign investment in the last 2 years that has been helpful for the overall growth of the industry and the country (QANTAS, 2017).
(iii) Major Elements of Balance Sheet of Qantas Airways Limited for its Interest
    In case of Qantas, the company has huge liquid cash and cash equivalents. In the year 2017, the company has almost 10% of the total assets are cash and cash equivalents. On the other hand, in case of Air New Zealand, the cash and cash equivalents in the year 2017 was around 17-18%. This may be an indication of the fact that the airline industry requires huge liquidity. However, Air New Zealand has much higher cash as a percentage of total assets in...