Business Analysis of financial management - Myassignmenthelp.Com

Question: Discuss about the Business Analysisof financial management. Answer: Introduction: Business analysis and valuation of an organization is a procedure which is basically used by the administration of business to calculate the economic value of an organization in context of the owner of the company. Business valuation and analysis is used by the financial markets to evaluate the price which is willing to pay by a business to affect the sales, market position and economic position of the company (Higgins, 2012). Various tools could be used by the businesses to analyze the main value of the business. The value of the business could be evaluated through analyzing and investigating over the competitors of the company, new entry into the market, suppliers power, buyers power, strength, opportunities, threat, weakness, financial performance etc of the company. For this report, Qantas limiteds case study has been evaluated. According to the given case, business valuation could be analyzed through calculating the performance of Qantas limited in the market place. For analyzing the valuation of Qantas limited in superior manner, 5 forced model of porter, SWOT analysis, accounting policies, corporate strategies, financial performance etc. of the comapny has been analyzed. Qantas limited: Qantas limited is flag Carrier Company of Australia. It is recognized as the largest airline in the Australia according to the fleet size, international destinations and the number of international flights. The company came into existence in 1920 and from that, various changes have occurred into the performance, profit and position etc of the company. In May, 1935, first international flight of the company has begun. The company has various subsidiary companies which are performing various operations related to airlines such as catering. Jetstar airways segment of the company has assisted the comapny to enhance the revenue level a lot (Qantas, 2018). Currently, 35000 people are working for this comapny in around 43 countries. All the airways of this comapny have a logo of red kangaroo. Porters five forces model: Five forces model has been presented by Porter. This model is a basic framework to evaluate the competition of the company in marketplace. This model expresses about the competition and the attractiveness of the company. Porters five forces model has been evaluated on Qantas limited. Following is the framework of Qantas Limited: Competition in industry: Industry rivalry is an important element for every company as it briefs the comapny about the companies which could affect their business. It is requisite for every organization to evaluate the industry position and firms in the market. According to evaluation on Qantas, it has been evaluated that various companies are there which could affect the business and the performance of the comapny (Madhura, 2011). In domestic market, two companies are the main rival of the comapny which are Tiger plc and Virgin Airways whereas in global market, British airways could be a big rival of the company. New entrants threat: Threat from new companies in the industry is an important element for every company as it briefs the management and the stakeholders about the companies which could affect their business. It is requisite for every organization to evaluate the impacts of the business due to a new company in the industry. According to evaluation on Qantas, it has been evaluated that Qantas limited is not required to have any threat from new entrants as enter into the airline industry requires huge investment and thus companies do not enter into the airline industry. Substitute products threat: The threat from substitute products is an important element for every company as it briefs the comapny about the products which could affect their business and the products of the company. It is requisite for every organization to evaluate the impacts of the business due to substitute products in the industry. According to evaluation on Qantas, it has been evaluated that the threat from substitute products is quite lower for the company. The main substitute products of the company is trains and the ships which is mostly used by the companies for a fewer distance (Gillen and Gados, 2008). Suppliers bargaining power: Bargaining power of suppliers is an important element for every company as it briefs the comapny about the supplier which supplies raw material to the company. It is requisite for every organization to evaluate the impacts of the supplier and their bargaining power on the cost of the company. According to evaluation on Qantas, it has been evaluated that the bargaining power of the suppliers is quite higher as few suppliers are available in the industry and the buyers are quite higher. Buyers bargaining power: Lastly, bargaining power of suppliers has been evaluated. It is an important element for every company as it briefs the comapny about the buyers which buys products and avail services of the company. It is requisite for every organization to evaluate the impacts of the buyers and their bargaining power on the selling price of the company (Kaplan and Atkinson, 2015). According to evaluation on Qantas, it has been evaluated that the bargaining power of the buyers are quite higher as various companies are offering the services and that is why buyers could manipulate the selling price of the comapny. Through the above analysis, it has been found that the porters 5 forces ode explains about the marketing factor of the comapny. SWOT analysis: Further, the internal performance of the company has been analyzed through calculating the internal changes of the company: Strength Weakness Qantas limited is enjoying the monopoly market in Australian marketplace. Qantas limiteds promotional policies are quite strong Australian government has a back of Qantas limited Qantas limited is the largest and oldest aviation comapny in Australian market. Largest international destinations have been covered by the company. Company has various string relationships in the market (Fu, Oum and Zhang, 2010). The main weakness of the comapny is high rate labours and weak relationship with the employees. The company mainly focuses over the business class people. . Opportunity Threat Technology could be used by the company to enhance the market This comapny is the main attractiveness of the investors Various strong relationships have been managed by the company with international companies. Huge market share is hold by the company. Main tourist destinations have been covered by the company. Fuel prices are quite higher. Labour cost of the Australian market and the industry is quite higher. Huge competition is there in the aviation market (Campbell, Goold and Alexander, 1995). Corporate strategy of the company: Further, the corporate strategy of the company has also been evaluated. Corporate strategy of an organization express about the scope and the direction of the company. It expresses that how an organization performs its operations to accomplish the mission. The Qantas case study explains that the numerous alterations have been occurred into the policies and the strategies of the comapny from 1992 to current year. The alterations have mainly occurred to accomplish the task and the mission of the business. Even the Australian flagship has changed its policies and due to which the strategies of the comapny has also been altered. The company have managed the new policies and the plans to enhance the performance in the market (Frazer, 2015). Qantas limited has adopted the innovations, technologies, operations, sources, functioning etc to manage the performance of the operations (Barney, 1992). Further, the changes into the main operations and the subsidiary companies have also been done to grab the market. More, the company has diversified its operations and the marketplace to recognize on international level. In 1992, the comapny was not recognized by the international market but now it has adopted the international expansion strategies and it is known by 45 countries for its longer route and the coverage of tourist destination (Hogarth, and Makridakis, 2011). This comapny has launched various new operations through establishing various subsidiary companies such as Qantas catering for catering operations, Jetstar airways for lower income people, Qantas holidays for tourist destinations etc. these changes have done by the administration to enhance the performance of the company. Accounting policies: Accounting policies are the set of regulations, policies, rules, process etc that assists the business and the auditors to record the financial data and analyze the financial data of the comapny. These policies are mainly set by the accounting institutions of the country and compulsorily used by the companies while recording the data into the financial reports. Auditors are learnt to look over these policies and evaluate the financial reports of a particular company. Mainly following policies should be analyzed by the auditors while evaluating the financial reports of airline firms: Asset and liability recording: Asset and liabilities should be recorded by an organization after evaluating the accounting standards, accounting rules and the GAAP principles. The valuation of the assets and liabilities of a business depends on the accounting policies. So, it is expected from an auditor to analyze the financial figures and asset and liabilities of the comapny according to accounting policies and the accounting standards (Dean and Yunus, 2001). Depreciation policies: Further, charge of depreciation is done by every company to analyze the exact worth of the assets of the company. Depreciation is charged by the companies to less the tax burden or sometimes for enhancing the worth of the comapny, mainly less depreciation are charged by the companies. Thus an auditor should analyze the depreciation amount of the comapny according to accounting policies and the accounting standards. Financial performance of Qantas in 2013: Further, for evaluating the total value of the Qantas limited, financial performance and the position of the business have been evaluated. Through the study over the financial performance of the company, financial reports of the comapny have been evaluated. Financial reports include income statement, cash flow statement and the balance sheet of an organization. Through conducting the study of ratio analysis, financial performance of the company has been calculated. Ratio analysis briefs about various position of the comapny. Firstly , liquidity ratios have been analyzed and it has been found that the current ratios and the quick ratio of the comapny is quite good (Datamonitor, 2009). More, the profitability position of the comapny express about a bad performance of the company. More, the capital structure ratio and the efficiency ratios have been calculated and it has been found that the comapny has maintained a good performance in the market to manage the performance of the company. Financial performance of Qantas in 2017: In addition, the business valuation of the comapny has been analyzed on the basis of financial figures of the company of 2017. For it, financial performance and the position of the business have been evaluated. Through the study over the financial performance of the company in 2017, financial reports of the comapny have been evaluated. Through conducting the study of ratio analysis, financial performance of the company has been calculated. Firstly, liquidity ratios have been analyzed and it has been found that the current ratio and the quick ratio of the company is quite lower and company should enhance the level of current asset to manage the performance of the company (Besley and Brigham, 2008). More, the profitability position of the comapny express about a good performance of the company. It explains that the profitability position of the comapny has been better. More, the capital structure ratio and the efficiency ratios have been calculated and through the capital structure of the company, it has been found that the comapny has maintained optimal capital structure in the market to manage the performance of the company as well the working capital is also managed by the company. Differences in financial performance: More, the differences of the comapny have also been evaluated and following differences have been found: Increment in the revenues Policies of FlagShip is same Performance has been increased (Craigie and Bekiaris, 2010). Similarities in financial performance: More, the similarities of the comapny have also been evaluated and following similarities have been found: Liabilities in both the years are quite similar Asset performance is same International polices have been changed. Conclusion: Thus, the above study briefs that position of the comapny has become competitive and the changes are quite optimistic. Through the study and the analysis on company, it is recommended to the investors of the comapny to invest into the comapny to enhance the investment amount of the company. References: Barney, J. 1992. Firm Resources and Sustained Competitive Advantage. Journal of Management, vol. 17, no. 1, p. 99. Campbell, A, Goold, M and Alexander, M. 1995. Corporate Strategy: The Quest for Parenting Advantage. Harvard Business Review, viewed 9th Jan 2018, https://hbr.org/1995/03/corporate-strategy-the-quest-for-parenting-advantageandgt. Higgins, R. C., 2012.Analysis for financial management. McGraw-Hill/Irwin. 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Gillen, D and Gados, A 2008. Airlines within airlines: Assessing the vulnerabilities of mixing business models. Research in Transportation Economics, vol. 24, The Economics of Low Cost Airlines, no. 1, pp. 2535. Madura, J., 2011.International financial management. Cengage Learning. Qantas. 2018. Qantas Fact file. [Online] Viewed on 9th Jan 2018: https://www.qantas.com.au/infodetail/about/FactFiles.pdf.