Nork airways financial analysis

Financial statement analysis involved scrutinizing healthiness and prospects of the enterprise by lodging and evaluating the relations bounded by varied items in the financial statement. Evaluation of financial status is of great significance to stakeholders since this information is used to assess profitability and benchmark their investments. This took the form of trend analysis through ratios to show the general pattern of the ratios in comparison with those of rivals and sector benchmarks. Common size analysis was paramount in giving deep insights into key changes and trends highlighted and also give a fair comparison with competitors since the enterprises are of different sizes. The items are displayed in percentage form as well as in Baht form where each item is stated as a percentage of some total of which that item is part of.

7 in 2015 followed by further decline to 0. 83 in 2017. This is due to constant growth in inventory at 100% in 2013 and 2014 followed by slight increase up to 2017 (see attached appendices table 1). This ratio measure the ability of an enterprise to honor its current obligations from its most liquid property given the illiquid nature of inventory. It is essential paramount in examining the airline enterprises due to their capital intensive nature characterized by huge debts amounts. Nok holdings has had a ratio of 0. 51 for years 203 and 2014 followed by 1. 4 in 2014, negative 18 in 2015 and 9. 6 in 2016. This is attributable to huge increase in debt to finance operations due to losses while equity reserves were being depleted as internal sources of finance as the firm has been making loss since 2014.

1 in 2015-2016 before declining to 0. 9 in 2017. This means 59%, 110% and 90% of assets were financed using debt respectively. The rise in the ratio attributable to a slight increase in assets over the years and a decrease in equity. Interest Coverage Ratio This shows the number of times interest expenses can be honored with earnings from operating. Nok enterprise has had an inventory turnover ratio of 107 in 2013 declining to 98 before rising to 112 in 2016 before declining again to 103 in 2017. This is attributable to sluggish increase in cost of passengers and services (98%) in 2014 compared to increase in inventory in (100%) thus a decline in the ratio. Apart from 2014 the ratio is above 100 which means on average the enterprise is selling off its inventory over a hundred times in a year.

Total Asset Turnover This shows the amount of sales revenue generated from utilization of one Bhat of asset. Nok enterprise has seen a rising ratio from 172 in 2013 to 282 in 2016 followed by a slight decline to 277 in 2017. Basic earnings per share, shows the portion of profit allocated to each outstanding common stock; that is the earnings ability of the enterprise. A high earnings per share is considered favorable. The enterprise has had a declining basic earnings per share from 1. 88 in 2013 to negative 4. 47 in 2014 and then negative 1. 63 times of its loss. This loss making has been witnessed across the industry due to increasing operating expenses in the industry especially the rise in fuel prices. Dividend indicates the amount of earnings attributable to each share from the amount of earnings that an enterprise distributes to its shareholders.

Nok has had a dividend of 0. 54 in 2013 and 0. The enterprise has seen an increase in service revenue from 637 million in 2013 to 2186 million in 2017. This is attributable to incremental baggage load revenue and provider sales due to the fact the enterprise had modified the coverage of bags allowance rate by cancelling free fee on loading of 15-kilogram luggage for its promotional passengers. In addition, also Nok subleased aircrafts to different airlines for enhancing plane usage and fixed cost control correctly. Also the launch of passenger book on concept so as to increase variety of product offering to all its clients has contributed to the rise in revenue. Number of Passengers Number of passengers is total number of clients attended by the airline in terms of consuming the flight service of the enterprise.

The enterprise has seen a growth from 3567 million in 2013 to 5840 in 2017. This is in tandem with global industry projections as more people are adopting flight as way of travelling boosted by economic growth across the world and Asia. Revenue Per Available Seat Kilometer This evaluates efficiency across airlines; it a product of divided operating profit by available seat kilometers. Due to its holistic nature of taking into account most of revenue generating items it is considered and favored by majority of airlines. Nok has had a declining ratio from 2. Nok has experienced a declining ratio from 0. 09 in 2013 to negative 0. 19 in 2016 and negative 0. 09 in 2017. This shows rising cost of items sold and the negative figure is an indication that cost of items sold has exceeded revenue.

This is the main cause of their continued loss year after year. Another area of improvement is hedging strategies from foreign exchange rate exposure as well as jet fuel prices. It should make good use of both external hedging practices of derivatives like forward contracts, futures contracts, currency swaps and options. In addition, it should also employ internal risk management techniques like netting, lagging and leading among its subsidiaries. This hedging will help control cost by minimizing exposure to foreign exchange and fuel prices. 6 Debt to asset ratio= total liabilities/ total assets 0. 9 Table 3 Profitability Particular 2013 2014 2015 2016 2017 Million Baht Gross margin (loss) 1099 (666) (1568) (3269) (1899) Revenue 11314 12174 14296 16938 20376 Gross profit margin(loss) = gross profit/revenue 0. 09) Net profit(loss) 1066 (665) (1664) (3269) (1899) Net profit margin(loss)= net income/revenue 0. 09) Table4 Market measures Particular 2013 2014 2015 2016 2017 Million Baht Dividend 0.