Financial Analysis

Emirates Airlines Is one of the large airlines of the world. It is also considered
most luxurious airlines. It serves almost 2400 flights per week. All these
figures clearly depict its glory. (Emirates Airline, 2010). Financial analysis of a
firm tells about the current situation or position of the organization. In
financial analysis different Ratios are calculated to find out the organizations
progress and its financial credibility.
Liquidity Ratio
These ratios determine the capability of a firm to meet its short term
obligations.
Current ratio
Ability to meet short term liabilities with short term assets. Amounts are in
AED bn
=Current Assets/Current Liabilities
2014=

27354/32428= 0.84

2015=

27735/34481= 0.80

Current assets of the Emirates increased marginally over the last year. There
is increase in the current liablilities due to the expansion projects started by
the Emirates. Current ratio decreased as compared to the previous year.
Quick ratio
It eliminates those assets that may be difficult to convert into cash like
inventory etc.
=Cash +Short term Securities+ Account receivables)/Current liabilities
2014=

16562/32428 =0.51

2015=

17227/34481 =0.50

Emirates Quick ratio is stronger in 2015.

Cash Ratio
It measures the capability of a firms cash along with other investment that
can be easily converted into cash in order to pay its sort term liabilities.
= (Cash+ Short term)/Current liabilities
2014= 16561/32428 =0.51
2015= 16885/34481 =0.49

Profitability ratio
Measures that how well a firm is performing in terms of its ability to generate
profit.
Gross margin
Operating margin
=Operating income or loss/Sales
2014 => 78376/80717=0.97
2015 => 86728/82926=1.05
Operating Margin in 2015 is more than the 2014 this is supporting the fact
that Emiratess profit has been increased or supporting the fact of Emirates
profitability.
Net margin
=Net Income or loss/Sales
2014 => 3417/80717=0.04
2015 => 4728/86728=0.05
Net profit margin is considered as accurate to calculate the companys
profitability margin because it does not include the expenses. The companys
Net profit margin increased from .04 to .05 it means that company is moving
towards profits the operations of company are generating profits for the
Emirates.
ROA
Stands for Return on Assets and calculated as follows
= (Net income+ after tax interest expense)/ Average total Assets
2014 => (3417+1179)/101604= 0.05
2015 => (4728+1449)/111362= 0.06
Return on assets shows any organizations total return over their assets
which tells that how good organization is utilizing its assets. Companys
increased from 0.05 to 0.06. But is not so significant as the change is
smaller.
ROE
Stands for Return on Equity and calculated as
Net income/Average Share holders

2014=> 3417/25471=0.134
2015=> 4728/28286=0.167
Increase in the ROE shows that the Emirates has created more worth for its
share holders.
Turnover ratio
Receivable turnover
Is calculated as
=Total Sales/Average receivables
2014=> 80717/9086=8.88
2015=> 82926/8589=9.65
Turnover ratio has increased from 8.88 to 9.65 shows that total sales have
increased over the credit sales significantly. It means Emirates cash has
increased and it in result increased the Cash Ratio of Emirates.
Collection period
Is calculated as
=365/Receivable Turnover ratio
2014=> 365/8.88=41.10
2015=> 365/9.65=37.82
It shows in how many days the cash for Emirates had been collected and this
collection period had been reduced from 41 days to 37 days approximately.