Financial Appraisal Of Ryanair Ryanair's Financial Appraisal Essay

Length: 7 pages Sources: 1 Subject: Business Type: Essay Paper: #27338554 Related Topics: Performance Appraisal, Financial Ratio Analysis, Financial Management, Taxation
Excerpt from Essay :

Financial Appraisal of Ryanair

Ryanair's Financial Appraisal

In this report we provide an elaborate financial appraisal of Ryanair for a naive investor with no financial expertise.

The key conclusions of this report are:

- Ryanair has a very strong as well as continuously expanding market position which is enabled by its expansion of its fleet by 40 new aircrafts to a total of 272 as well as the opening of new routes (328) and bases.

-One reason as to why Ryanair has achieved as well as maintained its very strong position is its dedication to quality service care and service provision. These approaches have ensured that the company has an exceptional financial performance as well as improved efficiencies.

The Strategic Issues that are facing Ryanair

The current increase in fuel prices by about 37% which the company attempted to offset by the instituting a 12% increase in average fare. The changes in the price of fuel as well as the availability of fuel increases the chance of negative impact on the profitability of the company

- The seasonal grounding of aircrafts by the company is likely to affect its profitability

- Reduced fares may affect profitability

-- the acquisition of new aircraft as well as any form of instability could affect the profitability of the company.

-- the new routes as well as expanded operations may adversely affect the company financially.

-- the increase in the airport access charges is likely to affect the company's profitability

- The incomplete acquisition of Aer Lingus (29.8% acquisition) could expose the company to heavy financial risks

-Poor labor relations could expose the airline to operational risks

- The overreliance on internet reservations as well as the planned elimination of the airport check-ins could expose the company to various risks associated with online threats caused by interruption of the online services.

-Volcanic emissions are likely to affect the company's operations

-Introduction of taxes by the government could affect the company's operations

- EU regulations on Emission Trading as well as Passenger compensation are likely to affect the company's operations

- Introduction of new as well as increasing of the already existing aviation taxes is likely to affect the company's profitability

-Currency fluctuations are likely to affects the company's financial results.

-Stiff competition from other Airline companies in the European airline industry.

-- the company is faced with several unresolved issues as a result of a more strategic approach of addressing human resource issue in regard to the relation to the trade union policies.

- Ever tightening aviation regulations such as high tax rates in certain routes has in the made the company to drop some routes such as Budapest Ferihegy Airport routes.

1.2. The Financial Statements as well as the overall financial position of the company

Ryanair's current financial position is comparatively stronger than its competitor's as well as the one for the previous years. On the basis of the financial data available from the 2011 annual report, all of the company's financial indicators are good with the exception of Liquidity. There are also issues regarding the company's methods of accounting like payment of corporate tax.

1.3. Ability of Ryanair to meet its challenges

Ryanair's very strong and a relatively stable finance makes it able to effectively cope with its main challenges with the main exception of loosing most of its property fund; a fact which could have adverse consequences.


Ryanair, the largest low-cost carrier in regard to the number of passengers carried in Europe has a strong focus on high frequency, short-haul as well as low-fare service. The year 2011 saw Ryanair register an impressive financial result with its revenue experiencing a 21% increase while profits going up by 26% to reach a total of € 401 (Research and Markets,2011). The financial year ended 2010 were not very favorable for the company as a consequence of external factors that impacted the business such as the closure of parts of the European airspace as well as the introduction of unfavorable taxes.

Financial results

Profits (Loss) after taxation: In the 2010 fiscal year, the Company recorded a post-tax profit of €305.3 million on its normal activities.The profitability was attributed to the 28.9 reduction in the cost of fuel and oils.

Scheduled revenues: The company's scheduled passenger revenues reduced by 0.8% from...


This primary reflected a reduction of 12.7% in the average fares

Ancillary revenues: The Company's ancillary revenues which is made up of the revenues from non-flight operations increased by about 11% from € 598.1 million in 2009 fiscal year to € 663.6 million in 2010 fiscal year.

Operating expenses: The company's operating expenses reduced from 96.9% in 2009 fiscal year to about 86.6% in 2010 fiscal year. This reflected a 28.9% reduction in the cost of fuel.

Depreciation and amortization: The company's depreciation s well as amortization per ASM reduced by 19% . In absolute terms, these costs reduced from 8.1% from the one of the previous fiscal year.

Operating profit: The company's profits tripled on a per-ASM basis in 2010 fiscal year as well increased considerably in absolute terms from €92.6 million for the 2009 fiscal year to €402.1 million.

Foreign exchange (losses)/gains: The Company recorded a foreign exchange loss of € 1 million in comparison with the foreign exchange gains of € 4.4 million in 2009 fiscal year.

Taxation: The effective rate of tax for the 2010 fiscal year was pegged at 10.5% in comparison with the 2009 fiscal year's figure of 6.3%.

Profitability ratio:

This ratio is used in evaluating profitability of the Company from its sales and investment.

Operating margins:

This ratio is used in the determination of the company's pricing strategy as well as operation efficiency.

Operating margins =Operating income/net sales

Operating margins for 2010= 402.1 / 2,988.1 =13.46%

Operating margins for 2011= 488.2 / 3,629.5 =13.45%

The 2010 operating margin decreased slightly from 13.46 to 13.45% which indicates that there was a slight reduction in sales.

Net profit:

=Net profit/net sales *100

Net profit for 2010= 305.3 / 2,988.1 =10.22%

Net profit for 2011= 374.6 / 3,629.5 =10.32%

There has been an increase in the Net Profit for the company in 2011.This is good since it symbolized a positive return on investment

Return in Equity:

The Return on Equity of a given company is used in the measure of the ability of the company's management to generate enough returns for the capital that has been invested by the company investors (owners).

Return on Equity= (Net Profit / Net Worth or Owners Equity) x 100

Return on Equity for 2010= 305.3 / 2,848.6 =10.72%

Return on Equity for 2011=374.6 / 2,953.9 = 12.68%

There is an increase in the return on equity symbolizing better gains for investors for time to come.


The company's financial performance for 2011 is quite impressive and is a sign that it has maintained its 2010 fiscal year momentum of profitability. The fluctuations in fuel as well as exchange rates are what are poised to make the company suffer some losses. Since the main strategy of the company is to deliver very low fares, the company needs to lower its operating costs as well as increase its passenger traffic.

The main factors to be considered by potential investors are return on equity and factors such as fluctuations in fuel prices as well as currency fluctuations. Overall, the company is worth investing in since it has had a healthy financial history for three consecutive years.

Financial Appraisal of Paladin Energy

Paladin's Financial Appraisal

1. Executive summary

In this report we provide an elaborate financial appraisal of Paladin for a naive investor with no financial expertise.

The key conclusions of this report are:

-- the company has involved itself in expansion activities which made it realize total revenue of $128 million a seventeen percent increase as compared to the figure of $128 million realized in 2009

-Some of the main reasons why the company has maintained an excellent financial health as well as a strong market condition in its constant quest to provide quality service and expand its operations.

1.1. The Strategic Issues that are facing Paladin

-- the company is exposed to risks arising from the concentration of credit risks emanating from its customers

-- the company is exposed to liquidity risks

-- the company is exposed to foreign exchange risks

-- the company is exposed to interest rates risks

1.2. The Financial Statements as well as the overall financial position of the company

Paladin's financial position is at the moment very strong as compared to the previous years. On the basis of the 2010 annual report, all of the company's financial indicators are excellent. There are however issues with the corporation's methods of accounting such as tax payment and commitment to environmental preservation.

1.3. Ability of Paladin to meet its challenges

Paladin is very strong in regards to financial backings and might. It can effectively cope…

Sources Used in Documents:


Paladin (2011).Paladin Labs 2010 Annual report

Research and Markets (2011). Paladin Labs Inc. (PLB) - Financial and Strategic SWOT Analysis Review

Ryanair (2011).Ryanair 2011 Annual report

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