AirAsia Financial Analysis

Topics: Balance sheet, Financial ratios, Asset Pages: 17 (2459 words) Published: November 3, 2014
AIR ASIA BERHAD
1. INTRODUCTION

Corporate governance is commonly known as the policies, practices or procedures a company implements to protect the financial interest of individuals. Publicly held companies are primary users of corporate governance because they sell stock to shareholders, who own the company. Several layers of management exist in these organizations, requiring shareholders to demand a high amount of accountability. A well balanced framework of accountability that is based on clear communication and understanding of roles and responsibilities across the organisation. A robust performance, financial, risk and information management systems. High standards of conduct of members of the organization. Organisations with a consistent corporate governance have the ability to maintain high-quality services and improve their performance as well. Good governance in organisations when based on openness, clarity and honest accountability enhances public trust and civic engagement.

2. OBJECTIVES
Individuals who do not put the company's interest ahead of their own self-interest may be subject to dismissal. This ensures that everyone understands that punishments exist for failing to honestly and objectively inform shareholders about the company's financial health. Before investing in a company it is vital to understand what it does, its market and the industry in which it operates. You should never blindly invest in a company. Financial analysis is a process that evaluates businesses, budgets, projects, and entities for analysis purpose. It is done for the purpose of determining the suitability for investment in a business.

1

There several mainly focuses on the process used to direct and manage the business and affairs of the company with the objectives of striking a balance on: 

The attainment of the company's objectives.



The alignment of corporate behavior to meet the expectations of shareholders.



Accountability and good stewardship, taking into consideration theinterests of shareholders, stakeholders, corporate participants and society at large.



financial analysis is to analyze the stability, solvency, liquidity, and profitability of a business.



In order to these, mathematical calculations involving figures extracted from the financial statements are used and known as financial ratios mainly to get an idea of a company’s valuation and financial performance.

3. BACKGROUND OF COMPANY

Air Asia was established in 1993 and commenced operations on 18 November 1996. It was originally founded by a government-owned conglomerate DRB-Hicom. Air Asia Berhad is the only Malaysian-based low cost airline and also a pioneer of low- cost travel in Asia. The main hub is the low-cost carrier terminal (LCCT) at Kuala Lumpur International Airport.

started

its

operations

Air Asia was established in the year 1993 and
on

the

18

November1996.

Originally, it was founded by a DRB-HICOM which is the government owned conglomerate. Then, Tony Fernandes’s company which is Tune Air Sdn. Bhd. bought the company on the 8 September 2001 with estimation of RM 40 million debts.

2

The operations of Air Asia began on 8 December 2001 until now. There are many continuous transformations that Air Asia makes in order to succeed, to achieve its strategic mission and vision and also to sustain in the industry. In Southeast Asia, at that time, Air Asia Malaysia was considered as one of the most well known budget airlines and operating in many Asian countries. Air Asia has considerate advantages over other airlines in many ways. Firstly, its experience of being in this industry for long time contributes to the already established service standard, operational expertise, infrastructure readiness, as well as bargaining power with suppliers.

4. MCCG practices of the company to reduce ageing problem .

The most commonly known financial ratios are :1) Liquidity Ratios 2) Activity...
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