Write a 2000-word comparative report based on the financial scenario given and considering the relevant financial principles concepts and theories. Conduct a peer analysis using the data and information provided for the competitor firm. Conduct the necessary financial analysis and make recommendations based on the analysis ethical implications and limitations.
8006FMGT Financial Management Assignment
Learning outcomes :-
1.Demonstrate understanding of core contemporary financial management theory techniques and practice.
2.Critically evaluate and effectively communicate recommendations to address financial management issues.
3.Apply financial management theory and techniques to professional practice in an ethical manner.
You are the Chief Financial Analyst at Air New Zealand Ltd. As the IBIS World 2022 states Air New Zealand Limited is a New Zealand public company deriving revenue from the provision of international and domestic air transportation services. The company employs approximately 7,840 full-time equivalent people operates in New Zealand Australia Asia the United Kingdom and North America and is ad ministered from its head office in Auckland. The company is listed on the New Zealands Exchange NZX under the code AIR and on the Australian Securities Exchange (ASX) under the code AIZ.
Air New Zealand has been operating under severe operating and financial pressure since the onset of COVID-19 pandemic. Mr XXX the Chief Financial Officer of Air New Zealand has now requested you to prepare a comparative financial report for the next Board Meeting to be held in the second week of June 2022. You are required to submit the comparative financial report to Mr XXX by Thursday May 2022 for circulation among its board members before the Board meeting in June.
For comparison purposes Mr XXX has advised you to use Qantas Airways Ltd Air New Zealand’s Trans-Tasman competitor. As the IBIS World (2022) states Qantas Airways Limited is an Australian public company that operates international and domestic air transportation services freight services and loyalty programs. The company employs around 29,000 people globally operates predominantly in Australia New Zealand and Asia and has a presence in the United Kingdom and the United States of America. Qantas is headquartered in Mascot New South Wales and is listed on the ASX under the code QAN.’
Your comparative financial report should address points 1 to 5 below:
1.Comment critically on the five-year performance trends for Air New Zealand’s liquidity profitability efficiency and financial leverage using the relevant ratios provided. Compare the performance trends of the two companies and discuss the specific areas in which Air New Zealand compares positively and negatively with Qantas Airways.
8006FMGT Financial Management Assignment
2.Using the DuPont Method provide a critical analysis of Air New Zealand’s Return on Equity (ROE) performance during 2017-2021 relative to Qantas Airways.(Assume there are no outstanding preference shares for Air New Zealand and Qantas Airways)
3.During 2021 Air New Zealand experienced a high level of air ticket cancellations due to COVID-19 pandemic related travel disruptions. The Operations Team has proposed half of those refunds to be posted in the next year’s (2022) financial results to give a fairer reflection of operational efficiency of Air New Zealand in Include a critical discussion of the ethical implications of this proposal from the Operations Team.
4.The Chief Financial Officer has proposed to raise new capital to improve the overall financial stability and health of Air New Zealand. Evaluate the pros and cons of raising new capital using debt (i.e., bonds and/or bank loans) and equity (i.e., ordinary shares) for Air New Zealand.
5.Based on your analysis and discussion above (in Questions 1 through 4), make specific recommendations to the Board of Air New Zealand for achieving greater stability and financial health. Identify and discuss the limitations of your analysis.
Note: Students are advised to conduct a broader search to augment the analyses in the comparative financial report. Read about the assessment issues in journal articles (using the AIB Online Library’s “Summon Single Search” or Google Scholar), books, industry reports entity reports, business literature etc. Remember to note down your sources while researching and reference them correctly in the report.