# Ana Airways Airlines

Topics: Financial ratios, Financial ratio, Balance sheet Pages: 12 (3485 words) Published: February 21, 2013
Ratio Analysis
Financial ratio analysis a popular financial analysis tools which is widely used for analyzing financial performance of large as well as small companies. Through ratio analysis business owners are provided with information on trends within their own company, which is often called trend or time-series analysis. If trends are determined within their industry, it is called industry or cross-sectional analysis. Why are ratios useful?

* Standardized numbers
* Facilitates comparisons
* Used to highlight weakness and strength
Five Major Categories of Ratios
* Asset Management/Activity/Turnover Ratios

It measures whether we have the adequate amount of asset for the level of sales? Or how efficiently does the company use its asset? Calculated ratios are:
* Receivable Turnover
* Inventory Turnover
* Payable Turnover
* Total Asset Turnover
* Working Capital Turnover

* Liquidity Ratios

It measures can we make required payments in time when they fall due? Or how capable is the company in meeting its short-term debt obligations? Calculated ratios are:
* Current Ratio
* Quick Ratio
* Cash Ratio
* Cash Conversion Cycle

* Debt Management/Financial Sustainability/Solvency Ratios

It measures do we have the accurate mix of debt and equity? Or what is the company’s debt load like compared to its net worth?

Calculated ratios are:
* Debt-Equity Ratio
* Debt-Asset Ratio
* Debt-Capital Ratio
* Financial Leverage Ratio
* Time Interest Earned/Interest Coverage Ratio

* Profitability/Operating Performance Ratios

It measures how well is the company utilizing its resources to make profits and create shareholders value? Calculated ratios are:
* Gross Profit margin
* Operating Profit Margin
* Net Profit Margin
* Return on Asset (ROA)
* Return on Equity (ROE)
* Return on Capital Employed (ROCE)

* Market Value/Valuation Ratios

It measures is the stock price of the company trading at an attractive price? Or do investors like what they see as reflected in P/E ratio and M/B ratios? Calculated ratios are:
* Price-Earnings Ratio
* Market-Book Value Ratio
* Dividend per Share
* Dividend Payout Ratio
* Earnings Yield Ratio
* Dividend Yield Ratio

For the projection of Year 2012 we assume that company is operating at 100% capacity that’s why amount of fixed asset is increased in proportionate to the growth rate of sales. In the same way, long term debt is increased assuming that the company need additional fund for further operation. Ratio Analysis of ANA Airways

Activity Ratios|
Ratio/year| 2002| 2003| 2004| 2005| 2006| 2007| 2008| 2009| 2010| 2011| Receivable Turnover| 12.51| 12.73| 11.55| 11.34| 12.56| 12.56| 13.44| 13.31| 14.42| 12.54| DSO| 29.18| 28.66| 31.59| 32.19| 29.07| 29.07| 27.16| 27.42| 25.30| 29.10| Payables Turnover| 9.33| 10.03| 9.27| 8.02| 7.64| 7.64| 8.23| 8.39| 8.60| 7.77| No of days payable| 39.10| 36.40| 39.37| 45.52| 47.79| 47.79| 44.37| 43.52| 42.44| 46.96| Asset Turnover| 0.8| 0.8| 0.8| 0.8| 0.8| 0.8| 0.9| 0.8| 0.7| 0.7| Working Capital Turnover| 63.90| 44.12| -40.90| -62.52| -2451.17| -25.49| -21.68| -23.50| -128.87| 25.21|

Liquidity Ratios|
Ratios/Year| 2002| 2003| 2004| 2005| 2006| 2007| 2008| 2009| 2010| 2011| Current Ratio| 0.9| 1.1| 1| 0.8| 1.1| 0.9| 0.9| 0.9| 0.9| 1.1| Quick Ratio| 0.80| 0.77| 0.55| 0.78| 0.62| 0.55| 0.46| 0.62| 0.69| 0.88| Cash Ratio| 0.49| 0.53| 0.32| 0.54| 0.37| 0.33| 0.29| 0.41| 0.47| 0.61|

Debt Ratios|
Ratios/Year| 2002| 2003| 2004| 2005| 2006| 2007| 2008| 2009| 2010| 2011| Debt-Equity| 7.8| 6.9| 4.4| 2.4| 1.9| 1.7| 2.8| 2.0| 1.8| 1.8| Debt-asset| 0.91| 0.90| 0.86| 0.79| 0.75| 0.74| 0.82| 0.74| 0.73| 0.72| Financial Leverage| 10.91| 10.29| 8.28...