However this section of the report discusses the comparison of the two companies in a summarized manner. The report then moves to analyzing the financial statements horizontally i.e. This makes the airline 24 years old. Financial ratios are another important way through which the management and other users of the financial statements analyze and compare the performance of the company with other companies or industry. British low cost airline easyJet forecast annual profit at the upper end of expectations, showing the benefits of robust demand and cancellations at bigger rival Ryanair in 2018. Please check your spam folder if the email doesn’t appear within a few minutes. Once the ratio has been calculated interpretation and the reasons for the change in the ratio over the period of time has been discussed. each component is individually analyzed and then the changes in the ratio has been discussed. The report uses different types of financial ratios which can be broadly divided into the categories of profitability ratios, efficiency ratios, liquidity ratios and financial gearing ratios. By closing this banner, scrolling this page, clicking a link or continuing Please wait while we process your request. Analysis of financial statements is of utmost importance as this information is utilized by investors, managers and businessmen to make business and capital decisions. luck! to first discuss the theory and defining the ratio and after defining the ratio in detail, the researcher has analyze the financial statement of first Ryanair and has calculated that particular ratio for the airline. In case of potential new entrant in the low fare segment, the strategy adopted by EasyJet and Ryanair thwarts competitions and renders entry of new companies financially unviable. Currently, the UK imposes a tax of 13 per passenger and similar taxes exist in nearly all the major markets, besides increasing airport access fees and aircraft storage charges. Thus a relation has been setup by the researcher from the analysis and interpretation of the financial ratios. Moreover, to discuss the ratio in more detail the researcher has adapted a strategy to highlight each element or component of the ratio and analyze the change in that particular element as well because the changes in each particular element would result eventually in changing the main ratio. Vertical analysis has been helpful in analyzing each of the elements of the financial statement individually as well as their impact on the overall financial statement. First of all, the income statements have been analyzed of both the airlines and then the balance sheets. Ryanairs working capital in 2013 is 1170 million, while EasyJets is 69 million, but this reduces to 1170 million and -159 million, respectively. Leave The Business Plan ranges from an industry analysis to an internal financial analysis. In addition to this, using financial ratios are helpful in identifying areas of costs that are too high and thus the management can take steps to reduce the costs and improve their profitability. Then the report concludes the overall report. Horizontal analysis allows the management to trace and track changes over a period of time. � �}ks�F�h�ǰ���éD��!�A�ʥd�N���T�ɤR�&�$a� ���U5{��Vm�Vm����?�?p��=�th����c��x&"��ӧϻ?�����l����C����Ù��J?#+t�����cq���'\��wk�Oϊ�[k�$,�CNJ��2o�U{���]����B'�Ǹ9�����Z��wl��ș?�W��k��r�2!�2��}p"������_�f(���(��]���F��p�>�߽�s_"�v��i�V2�^
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��Ș��$�5������ML�&�U���+�6?�(����=H�*�\�뉧 applied to your existing account**. to analyze the financial performance of the company. 4.8 Comparison of operating strategies of Ryanair and EasyJet . The Ryanair CEO is Michael O’Leary. Analysis of Financial statement is one of the most important techniques that the management uses in order to analyze the performance of the companies. After the overall introduction of the report, the report covers the general overview of the two airlines and then identifies performance of the two companies over the last few years. The basic assumption/hypothesis prior to conducting the price analysis is Ryanair should have significantly lower prices in these five markets compared to Easyjet. Both airlines also have si… Ten years of annual and quarterly financial ratios and margins for analysis of Ryanair Holdings (RYAAY). Privacy Policy, Dissertation literature review writing service, Financial Analysis for Ryanair and Easyjet. British airline easyJet was less resilient than its Irish counterpart amidst the turbulent headwinds that faced European aviation in 2016. a This report has presented the financial analysis of two of the leading airlines of the world, Ryanair and easyJet. reset your password for the next 24 hours. Financial ratios are the relative measures that are taken from the financial statements of the organization and used to analyze the company and its performances. Financial information of Ryanair to perform competitor analysis. Easyjet and Ryanair have similar strategies to the extent that they both share the low-cost business model. Statistics to identify reasons for changes in financial and business performance over three years period. & 4.5 Operations of Ryanair . Strategic Analysis of the UK Low-cost Airline with Focus on Ryanair; Ryanair Company Financial Environment and Challenges; Ryanair’s Customer Service; Ryanair vs. Easyjet: Corporate and Competitive Strategy Analysis; Ryanair Company's Corporate Communications Plan; An investigation on the factors that drive demand for Ryanair travel services (Ryanair, 2012a) The above image shows that Ryanair is the most efficient airline in the world in terms of emission of Carbon dioxide. The report analyzes the financial statements of the two companies and then different financial ratios have been discussed individually. Then the report analyses the balance sheet of Ryanair vertically and then the balance sheet of easyJet. delivering advertising and other services. 4.2 Operations of EasyJet . Therefore distributors and suppliers would be using the financial statements and calculating the ratios such as efficiency ratios, average time period to pay the payables etc. EasyJet and Ryanair have the first movers advantage in the industry over new entrants owing to their flexibility to lower their fare prices more easily compared to the full fare airlines. Summary. Let me try EasyJet, for instance, operates up to three times the routes than Ryanair, despite them having almost the same fleet and full time employee size. The same strategy has been followed to analyze the financial ratios of easyJet i.e. Financial analysis of Easyjet and Ryanair 2 Financial analysis and management Financial analysis of Easyjet PLC and Ryanair Holdings Executive summary Ryanair and Easyjet are two of Europe’s largest budget airlines as they transport more than 145 million air passengers each year. Financial ratios are calculated of these two companies and then compared which of the company has performed better on that particular ratio. Financial performances are one of the most important ways of measuring and analyzing the performance of a company and financial ratios are used for this purpose i.e. Both, Ryanair and easyJet, are low cost airlines that are extremely popular among flyers hopping around Europe. Once again, this is fairly comfortable for Ryanair, but means that EasyJet had to find alternative liquid assets, other than its … Therefore financial ratios are used by management for a number of reasons. Looking for analytical essay definition on different sources but still have no clue about this kind of work? Financial ratios can be a good predictor of how the company would perform in the years to come and therefore these ratios are also used by the management of the organizations to analyze and predict how the company would perform in future. Based on a thorough analysis of comparative data from 2000-2014, he concluded that the success of EasyJet could be attributed to … RyanAir vs Easy Jet The comparison between Ryanair and easyJet identified some interesting difference between them in their service and the way they do business. EasyJet is considered as the 2nd biggest airline in Europe with a market share of 6.9% after Ryanair which holds 10.11% of the share. 4.1 EasyJet . ($17 for … ��b� g���W������������jUש돹�����3'Z���K���M�5=~b��Vl+L��h���X����a�V�ڶ���{���W߭�'�݈�_D�e�ļ?����zMfn�����Vv��Ή�4OgN,�(��0� �iȃ������� Z3c쟽y�xA7����m�Z��|���%6D��
s�ı�5��. The report then discusses about much more important part of the report i.e. my Moreover the report also uses the financial statements of the two companies since 2009 to do to vertical and horizontal analysis as well. to browse otherwise, you agree to the use of cookies. Therefore this strategy has helped the researcher in more closely analyzing the reasons for the changes that are being occurred in the financial statements and financial ratios. Analysis of the financial results reported by both airlines shows that Ryanair has generated total revenue per passenger (including all ancillaries) that has been less than that of easyJet by between 22% and 33% over the past 10 years. Catering to a slightly different market, the carrier was founded in March 1995. However, in 2013 and 2014, EasyJet posted a 5.94% and 3.39% reduction in sales, while Ryanair posted a 3.04% and 10.93% fall over the same period, even when the global industry posted a more than 5% increase in revenues (CSIMarket, 2015). The researcher has adapted a specific pattern i.e. In the same way, other stakeholders would be using these financial ratios such as competitors. The financial ratios have been divided into five categories according to their nature; however this report discusses only four categories and investment ratios have been excluded. Topics Page No. Both these airlines ever since they have come into existence in 1984 (Ryanair) and 1995 (EasyJet) have proliferated all over Europe mainly due to conducive economic conditions and environment, made possible owing to the formation of European Union which allowed airlines from member states to operate within the union without hindrance. Once the financial ratios of Ryanair have been discussed the researcher uses the financial statements of easyJet and then calculates the ratios for easyJet and analyzes them as well. This report uses financial ratios of two firms in the airline industry; Ryanair and easyJet. Make sure you arrive at the airport early, as lines are often long on … For instance, with financial ratios one can compare two companies; one with assets of more than €1 billion and the other one that has assets of only €0.5 million. easyJet Airline Company Limited Registered in England with Registered number 3034606; subsidiary of easyJet plc Registered in England with registered number 3959649 Registered Office: Hangar 89, London Luton Airport, Luton, Bedfordshire LU2 9PF Easyjet made £13.10 per passenger in (non-seat) ancillary revenues. Popular Analysis. Return-On-Investment (ROI) and others based on Ryanair Holdings PLC's latest financial reports. Strong hedging strategy in place with a young fleet and solid financial fundamentals. According to these financial ratios Ryanair Holdings Plc's valuation is way above the market valuation of its peer group. When we compare easyJet and Rynair, the latter has clearly the most outspoken price orientation of the two. The report also identifies general trend of how the company has performed not only financially but from other aspects as well like arriving on time, customer satisfaction level etc. 4.4 Ryanair . Once the financial ratios of Ryanair have been discussed the researcher uses the financial statements of easyJet and then calculates the ratios for easyJet and analyzes them as well. easyJet: 20kg. Moreover, these ratios are helpful in identifying the major strengths and weaknesses of the company. The same strategy has been followed to analyze the financial ratios of easyJet i.e. Submitted by Muhammad Sufyan Sadiq CONTENTS Chapter No. So by identifying the strengths and weaknesses of the company, stakeholders of the company are able to make their decisions accordingly. The report starts with the introduction of the overall report along with the different sections and parts that the report covers. Different financial ratios of the two companies are used to analyze which of the company has performed well. Then the report compares the two companies and provides a comparative analysis of Ryanair and easyJet. easyJet has a simple '20€ for 20kg' ($22 for 44 pounds) policy, but Ryanair's allowance is all over the place, with a different price for different weights, seasons and destinations. More. Moreover a brief description along with the highlighting some important aspects of the history of the airlines along with important statistics have also been presented. Well, ask for consultation at Pro-Papers support concerning your abortion essay intro and our writers will help you. Both airlines will also try to get you to book transportation, car rentals, travel insurance and lodging during the purchase, but you can simply ignore that part if you’re not interested and proceed to the next page. Financial information of Easyjet to compute ratios to establish comparison of financial performance between three financial years. Continue changes in each of the element of the financial statement would be analyzed on year to year basis. Financial statements show the financial performance of the companies and these statements are used by different users in order to analyze how the company has performed finally. Financial Analysis: Ryanair V Easyjet Executive Summary This paper attempts to compare and contrast the financial performance of Ryanair and Easyjet. (Enterprise Value vs. Market Capitalization) The EV/EBITDA NTM ratio of Ryanair Holdings Plc is significantly higher than the median of its peer group: around 12.00. In conducting the analysis, the same travel dates and length of travel will be used. This paper will prepare an analysis of the financial performance and position of Easyjet plc in comparison with that of Ryanair plc. Competitors would be keeping a close eye on the financial statements of the company and financial ratios and they would be identifying areas where they can improve their profitability and how their company can improve their efficiency, profitability and productivity. Check-in is where things can get interesting, especially with Ryanair. Privacy Policy. For instance, investors would be willing to invest in the company if the company is yielding good returns and has a bright future. Moreover, analysis has also been presented simultaneously with each ratio. Fare Comparison Ryanair vs. Easyjet Destination Dates of Travel Ryanair Easyjet Munich, Ger 10/13-17/2014 223.98 GBP 222.36 GBP Palma, Spain 10/13-18/2014 154.98 GBP 127.00 GBP Rome /Ciamp 10/13-17/2014 205.98 GBP (Secondary Airport) Naples, Italy 10/13-17/2014 188.08 GBP Prague 10/13-17/2017 179.98 GBP 174.96 GBP Denmark (Aarhus) 10/13-17/2017 189.98 GBP (Secondary Airport) Was going to write the essay about abortions, has made the plan, but you have not enough material for the introduction? However, in 2013 and 2014, EasyJet posted a 5.94% and 3.39% reduction in sales, while Ryanair posted a 3.04% and 10.93% fall over the same period, even when the global industry posted a more than 5% increase in revenues (CSIMarket, 2015). Here it shows how management factors focus in order to see its position in low cost market. Moreover, organizations and management use these financial ratios to set benchmarks and to set targets. Financial ratios are helpful as these ratios allow the users to compare companies of different sizes and magnitude. discount, Average Settlement period for receivables, Horizontal analysis and vertical analysis, Horizontal analysis of income statement easyJet, Horizontal analysis of Balance sheets of Ryanair, Horizontal Analysis Of Balance Sheet Of easyJet, Vertical analysis of Income statement of Ryanair, Vertical Analysis Of Income Statement of easyJet, Vertical analysis of Balance sheet of Ryanair, Vertical analysis of balance sheet of easyJet, Please see the Pro-Papers So first the income statement of Ryanair has been analyzed vertically and then the income statement of easyJet has been vertically analyzed. Moreover, these ratios are used to analyze how the company is performing in comparison to the overall industry. Financial. These financial ratios are not only used to analyze the performance of the company with its own performances but these ratios are also used to analyze the performance of the company with the performances of the competitors and industry. Financial statements of Ryanair and easyJet have been used for the last four years in order to analyze how the two companies have performed over the last three years. Four categories of financial ratios have been described and each of ratios included in these categories have been defined and analyzed one by one. easyJet operates aircraft from the A320 family, with … The Easyjet CEO is Johan Lundgren. It integrates the impact of competition in the market of low fare airlines with our own financial capability Moreover, the researcher has also come up with his own analysis as well as has tried to analyze the changes in the financial statements of the two companies with the annual reports and the overall changes in the industry. This report clearly states ryanair's long term vision by using different business models. Try your luck and win your first order discount. easyJet Airline is one of the leading low cost airlines of the world. 4.3 Financial Performance overview of EasyJet . easyJet is slightly smaller than Ryanair but also packs a punch in the low-cost market. Thus, financial ratios are very important for every stakeholders of the organization because the financial performance of the company can directly or indirectly influence each stakeholder. Chapter Four- Findings and analysis. The report then gives the conclusion of the overall report and provides recommendations for the two companies that can help them to improve their performances. Ryanair has 16,840 staff members which includes 5,446 pilots and 9,095 cabin crew. Comparative Financial Analysis of Ryanair & EasyJet for financial years ending 2010, 2011 and 2012. Financial ratios are used to present how the company has performed over the last few years. The last section of the report provides recommendations that the management of the two companies use adapt in order to improve their position and profitability. According to ELFAA (2009) statistics Ryanair provides 1,200 daily flights in contrast to the 1,000 daily flights provided by Easyjet. Please see the Pro-Papers each component is individually analyzed and then the changes in the ratio has been discussed. Based on reported annual results for the nearest financial year to 2018, Ryanair's operating margin of 15.7% compares with 13.2% for IAG, 10.0% for … Therefore these are an important way to set objectives of what the firm needs to achieve financially. **This promotional discount cannot be On the other hand, vertical analysis allows the management to compare each element in the financial statement and their impact. There are varieties of methods used by organizations for performing financial analysis of the companies such as vertical and horizontal analysis. The usage and purpose of these ratios also varies according to their needs of the users. The two low-cost airlines were hit hard by terrorist attacks and the slump in sterling post-Brexit, but easyJet has repeated strikes to add to its list of grievances. This would be helpful in identifying the areas where the company has changed or where the costs or revenues of the company have changed in the last four years. Similarly, suppliers and distributors would like to work with the company if the company is able to pay its payables in quick time and does not default. As a consequence of providing a higher volume of daily flights than Easyjet, the passenger load factor for Ryanair is lower at 81.4% according to … These operational strategies have created immense benefits for the two airlines, including optimizing airline use and increasing airline turnaround frequencies. 1.2 easyJet. Please, visit Pro-Papers article on analytical essays and to know a lot about it or even to buy yourself this paper cheap. In 2019 Easyjet reported an operating income of £427 million on £6.385 billion of revenue. fields are marked *, Pro-Papers uses cookies and other tracking technologies to customise your experience including 20€. Furthermore, like Ryanair, Easyjetalso bases its corporate strategy on Southwest’s business model. ($22), 45€ ($51) at the airport; Ryanair: 15kg or 20kg. Unlike Easyjet, Ryanair has more stable profit margins, 21.01% on average. Financial Ratio Analysis In terms of the completed financial analysis, there are several findings as follows: Operating Profit Margins (%) Easyjet's operating profit margins declined sharply, reaching only 3.85% from 10.16% and this is moderately low, compared to the three-year average of 7.09%. use vertical and horizontal analysis. Both carrier’s websites allow you to book one-way and round-trip flights, and you can pay for extra options — like priority boarding and checked luggage — as you go. Thus these financial ratios allow and help the management as well as other users of financial statements to compare one company with the other and thus it makes comparison possible and practical. OK. We’ve sent you an email containing a link that will allow you to Moreover, suppliers and distributors would also be interested in knowing the profitability of the company as if the company is not able to earn good profits then its future would be in danger and thus, stakeholders of the company analyze and use financial ratios to identify the strengths and weaknesses of the company and how the company and its financial performances can impact their business. The report then gives a brief comparative analysis, although the researcher has made an attempt to compare the two companies side by side. Moreover, financial ratios are also used by the management for benchmarking and they set their targets according to either some of the top companies operating in the same industry or according to the overall industry averages. ... Easyjet compared to this is still cheap and 50% below maximum. The report not only uses the theory related to financial management and financial analysis, but uses these concepts and theories in interpreting the results and in analyzing the performances of the two companies understudy. Therefore these ratios are helpful for the management in setting up or targeting where they should be and what they want to achieve. Ryanair and easyJet are both strong European budget airlines. Ryanair goes at length to lower their … 15€ for 15kg. Financial ratios also reveal whether the firm is performing better than the industry or not. Both airlines have perfected this strategy by introducing new price reduction measures, such as paperless booking. Don't forget to use the discount code at 4.7 Strategies of low-cost airlines. Once all the financial ratios have been discussed, the report uses the other important techniques to analyze the financial statements i.e. in order to analyze the financial performances of the company. Ryanair is the cleanest and Greenest airline (Ryanair, 2012a). Moreover, historical performance is a good predictor of how the company would perform in the years to come and therefore many users use these financial statements to analyze how the company would perform in the years to come. Moreover, financial ratios are also used to identify the trends of the company and whether the trends of the company are positives or negatives. Reply, Your email address will not be published / Required Financial ratios are the most extensively methods that are used by financial analysts, management, organizations, competitors, suppliers, distributors, economists, investors, shareholders, governmental agencies etc. 4.6 Financial Performance overview of Ryanair . 4.9 Recommendations. Use PRO-PAPERS15 discount code & save 15% on your first order. checkout! Financial ratios are not only used to analyze the performance of the company with the previous years’ performances but these ratios are also used to analyze the performance of the company with the performance of the competitors as well. the financial ratios. The Case Centre: Sendil Ethiraj LBS REF: Date:18/08/15 Ryanair in 2015 In January 2015, Michael O’Leary completed a strategic review of Ryanair vis-à-vis EasyJet. 1 Executive Summary …