Try it now!

USD
10

Calculate your price

Number of pages:

Order Now
Table of Contents

Financial Analysis for Ryanair and Easyjet - Part 10

1119

3.6 Horizontal analysis of Balance sheets of Ryanair

The noncurrent assets of Ryanair have increased over the last few years. An increase of 17% was observed in the year 2010 and then an increase of 13.7% was observed in the year 2011. However there was only a slight change in the non-current assets whereas the non-current assets increased only by 0.1%. The most important component of the non-current assets is the property, plant and equipment which have increased by 18.4 and 14.4% in the years 2010 and 2011 respectively and then PPE decreased by 0.2% in the year 2012.

Do you need to write a short essay for tomorrow but you prefer to spend your time for some more agreeable things? Let Pro-Papers cover your back and write one of the best short essays for you!

The current assets of Ryanair have also been showing an increasing trend. There was an increase of 20.5%, 13.5% and 11.5% in the current assets of this growing airline in the years 2010, 2011 and 2012 respectively. The most important component in the current assets is the cash and cash equivalent and it shows that the company needs to keep sufficient level of cash on hand to make sure that it is able to manage its operations appropriately.

The current liabilities of Ryanair have been fluctuating as it increased by 12.4% in the year 2010 and then further increased by 18.6% but then it decreased by 1.2%. The major component in this section of the balance sheet is the Accrued expenses and other liabilities.

Non-current liabilities of Ryanair have been increasing since 2010. An increase of 22.5% in the 2010 followed by 20.2% in the year 2011 and then an increase of 2% in the year 2012 was report showing an increasing trend of liabilities.

The shareholder equity of the company has also been increasing. Ryanair has shown increase in the shareholders equity by 17.5%, 3.7% and then almost 12% in the years 2010, 2011 and 2012 respectively. One of the major components of the shareholders equity was the retained earnings. By retaining more from the earnings, the management has been able to retain more and thus use these funds for the purpose of expansion and investment. The total value of the retained earnings of the company in the year has increased then decreased and then increased again thus there is a fluctuating trend. In the years under study, the total value of the retained earnings has increased as the airline has been retaining completely or some portion of the earnings. The total retained earnings increased by 17% in the year 2010 but then decreased by 5.6% in 2011. 22% growth was then followed in the retained earnings in the year 2012. On the other hand, the other important component of the shareholders equity i.e. Share premium account did not show much changes and it shows that the company has not floated more shares in the market during the years under study.

Non-current assets 2012 2011   2010   2009  
Property, plant and equipment 4,925.20 4,933.70 -0.2% 4,314.20 14.4% 3644.824 18.4%
Intangible assets 46.8 46.8 0.0% 46.8 0.0% 46.841 -0.1%
Available for sale financial assets 149.7 114 31.3% 116.2 -1.9% 93.15 24.7%
Derivative financial instruments 3.3 23.9 -86.2% 22.8 4.8% 59.97 -62.0%
Total non-current assets 5,125.00 5,118.40 0.1% 4,500.00 13.7% 3844.785 17.0%
               
Current assets              
Inventories 2.8 2.7 3.7% 2.5 8.0% 2.075 20.5%
Other assets 64.9 99.4 -34.7% 80.6 23.3% 91.053 -11.5%
Current tax 9.3 0.5 1760.0% 0   0  
Trade receivables 51.5 50.6 1.8% 44.3 14.2% 41.791 6.0%
Derivative financial instruments 231.9 383.8 -39.6% 122.6 213.1% 129.962 -5.7%
Restricted cash 35.1 42.9 -18.2% 67.8 -36.7% 291.601 -76.7%
Financial assets: cash > 3 months 772.2 869.4 -11.2% 1,267.70 -31.4% 403.401 214.3%
Cash and cash equivalents 2,708.30 2,028.30 33.5% 1,477.90 37.2% 1583.194 -6.7%
Total current assets 3,876.00 3,477.60 11.5% 3,063.40 13.5% 2543.077 20.5%
Total assets 9,001.00 8,596.00 4.7% 7,563.40 13.7% 2543.077 197.4%
               
               
Current liabilities              
               
Trade payables 181.2 150.8 20.2% 154 -2.1% 132.671 16.1%
Accrued expenses and other liabilities 1,237.20 1,224.30 1.1% 1,088.20 12.5% 905.715 20.1%
Current maturities of debt 368.4 336.7 9.4% 265.5 26.8% 202.941 30.8%
Current tax       0.9 -100.0% 0.425 111.8%
Derivative financial instruments 28.2 125.4 -77.5% 41 205.9% 137.439 -70.2%
Total current liabilities 1,815.00 1,837.20 -1.2% 1,549.60 18.6% 1379.191 12.4%
               
Non-current liabilities              
               
Provisions 103.2 89.6 15.2% 102.9 -12.9% 71.964 43.0%
Derivative financial instruments 53.6 8.3 545.8% 35.4 -76.6% 54.074 -34.5%
Deferred tax 319.4 267.7 19.3% 199.6 34.1% 155.524 28.3%
Other creditors 146.3 126.6 15.6% 136.6 -7.3% 106.549 28.2%
Non-current maturities of debt 3,256.80 3,312.70 -1.7% 2,690.70 23.1% 2195.499 22.6%
Total non-current liabilities 3,879.30 3,804.90 2.0% 3,165.20 20.2% 2583.61 22.5%
Shareholders’ equity              
Issued share capital 9.3 9.5 -2.1% 9.4 1.1% 9.354 0.5%
Share premium account 666.4 659.3 1.1% 631.9 4.3% 617.426 2.3%
Capital redemption reserve 0.7 0.5 40.0% 0.5 0.0% 0.493 1.4%
Retained earnings 2,400.10 1,967.60 22.0% 2,083.50 -5.6% 1777.727 17.2%
Other reserves 230.2 317 -27.4% 123.3 157.1% 20.061 514.6%
Shareholders’ equity 3,306.70 2,953.90 11.9% 2,848.60 3.7% 2425.061 17.5%
Total liabilities and shareholders’ equity 9,001.00 8,596.00 4.7% 7,563.40 13.7% 6387.862 18.4%

3.7 Horizontal Analysis Of Balance Sheet Of easyJet

There has been a constant and a slight increasing trend in the non-current assets of easyjet. The non-current assets have increased by 8.7% this year, however in the previous year it increased by 9.8%. in the year 2010, the total non-current assets of the airline increased by 13.5%. the major component in this category of assets is the property, plant and equipment which have been increasing over the years. PPE increased by 19.6%, 11.5% and 11.4% in the years 2010, 2011 and 2012 thus showing that the airline has been increasingly investing in the PPE.

As the non-current assets of the airline have been showing an increasing trend, the current assets of the company have variations during this time period. The current assets of the airline increased by 2% and then by 14% in the years 2010 and 2011 respectively but then it declined last year. The major component in the category of non-current assets is the cash, followed by trade receivables. Therefore with the drastic fluctuations in the cash, the total current assets of the airline are fluctuating.

So the total assets of the airline have also shown fluctuations like current assets of the company as they were showing increasing trend but then declined this year. However as the company has been able to maintain its sales and profits, with fewer assets then it shows that the company is now better able to utilize its assets and ensures that the assets are able to better contribute in the profitability.

To raise the assets, the airline is using both the debt and equity. The current liabilities of the airline though contribute little in the overall capital structure but still it is important element for the organization to consider and analyze. The current liabilities did not show much increment in 2010 but then it increased by 10.6% and 7.4% in the following two years. Trade and other payables is the major current liability of the airline which has been increasing at a pace of almost 10 to 11% annually.

The non-current liabilities of the airline have also shown a similar trend as the total assets of the company i.e. an increase has been found in the years 2010 and 2011 but in the year 2012 the total noncurrent liabilities have decreased by 22% thus showing that the airline is trying to reduce its risk by decreasing the level of long term debt and long term liabilities from the capital structure. Borrowings is the major component among all the heads of non-current liabilities and the trend shows that the management is trying to reduce the risk to make sure that it is in a comfortable position to pay the interest charges.


Total shareholders’ equity has been increasing since 2009. In the year 2010, an increase of almost 15% was found then the shareholders’ equity increased by 13.6% in 2011 and then an increase of 5.2% was reported in the total equity of the shareholders. Retained earnings of the airline and the share capital and share premium are important components. The retained earnings have increased however the rate of increase in the retained earnings has been fluctuating particularly because of the dividend policy the company has adapted. easyJet has only paid dividends in 2012 and not in the previous years and thus this year, the value of retained earnings have not increased with the same rate. However the share capital and share premium have been more consistent thus indicating that no additional shares have been floated by the management.

  2012 2011   2010   2009  
Non-current assets              
Goodwill 365 365 0.0% 365.4 -0.1% 365.4 0.0%
Other intangible assets 91 86 5.8% 86.8 -0.9% 81.7 6.2%
Property, plant and equipment 2395 2149 11.4% 1,928.10 11.5% 1,612.20 19.6%
Derivative financial instruments 21 24 -12.5% 8.2 192.7% 7.8 5.1%
Loan notes 10 11 -9.1% 13.1 -16.0% 12.6 4.0%
Restricted cash 29 33 -12.1% 32.5 1.5% 48 -32.3%
Other non-current assets 57 63 -9.5% 53.5 17.8% 62.7 -14.7%
Deferred tax assets 0.4 -100.0%
Total Non-current assets 2968 2731 8.7% 2,487.60 9.8% 2,190.80 13.5%
             
Current assets              
Assets held for sale       73.2 -100.0% 73.2 0.0%
Trade and other receivables 241 165 46.1% 194.1 -15.0% 241.8 -19.7%
Derivative financial instruments 73 83 -12.0% 52.6 57.8% 68 -22.6%
Restricted cash 130 90 44.4% 23.1 289.6% 24.3 -4.9%
Money market deposits 238 300 -20.7% 260 15.4% 286.3 -9.2%
Cash and cash equivalents 645 1100 -41.4% 911.9 20.6% 788.6 15.6%
Total Current assets 1327 1738 -23.6% 1,514.90 14.7% 1,482.20 2.2%
               
Total Assets 4,295.00 4,469.00 -3.9% 4,002.50 11.7% 3,673.00 9.0%
               
Current liabilities              
Trade and other payables -1021 -916 11.5% -828.7 10.5% -750.7 10.4%
Borrowings -129 -155 -16.8% -127.4 21.7% -117.6 8.3%
Derivative financial instruments -26 -52 -50.0% -9.6 441.7% -91.1 -89.5%
Current tax liabilities -29 -9 222.2% -27.5 -67.3% -57.7 -52.3%
Maintenance provisions -59 -45 31.1% -71.4 -37.0% -45.1 58.3%
Total Current liabilities -1264 -1177 7.4% -1,064.60 10.6% -1,062.20 0.2%
Net current assets       450.3 -100.0% 420 7.2%
Non-current liabilities              
Borrowings -828 -1145 -27.7% -1,084.60 5.6% -1,003.00 8.1%
Derivative financial instruments -24 -27 -11.1% -4 575.0% -2.6 53.8%
Non-current deferred income -46 -59 -22.0% -56.6 4.2% -52.6 7.6%
Maintenance provisions -141 -177 -20.3% -144.1 22.8% -168.6 -14.5%
Deferred tax liabilities -198 -179 10.6% -147.9 21.0% -76.7 92.8%
Total Non-current liabilities -1237 -1587 -22.1% -1,437.20 10.4% -1,303.50 10.3%
Net Assets 1794 1705 5.2% 1,500.70 13.6% 1,307.30 14.8%
               
Shareholders’ equity              
Share capital 108 108 0.0% 107.3 0.7% 106 1.2%
Share premium 656 654 0.3% 651.6 0.4% 642.5 1.4%
Hedging reserve 42 14 200.0% 34.8 -59.8% -23.9 -245.6%
Translation reserve 1 1 0.0% 0.8 25.0% -0.4 -300.0%
Retained earnings 987 928 6.4% 706.2 31.4% 583.1 21.1%
Total Shareholders’ equity 1794 1705 5.2% 1,500.70 13.6% 1,307.30 14.8%
               
Total Shareholders’ equity + liabilities 3,031.00 3,292.00 -7.9% 2,937.90 12.1% 2,610.80 12.5%

3.8 Vertical analysis of Income statement of Ryanair

Vertical analysis of Ryanair shows that the company is earning almost 78 to 80% of its revenues from scheduled revenues and the remaining revenues are earned from ancillary revenues. The highest revenues the company earned through scheduled revenues were this year where this figure reached almost 80%. Among different costs, the fuel and oil charges are the most important one. Fuel cost was as high as 42% in the year 2009, however as the fuel prices declined, the airline was able to increase its fuel cost ratio to sales in the upcoming years. The fuel and oil cost then declined to almost 30% in 2010 and then in the year 2011, it increased to 33.8% of the total revenue. The same trend was followed in 2012 as the fuel charges ratio to sales increase in 2012 and it reached to 36.3%. Staff costs of the airline is the another important costs for the airlines. However the ratio of staff costs to sales has been declining since 2010 particularly because of the fact that the company has been able to increase its revenue more in comparison to the additional employees that the company is hiring. Therefore it shows that less employees are able to treat customers and thus it is helping the company to improve its profits.

Tired of trying out various search queries on articles writing? Don't worry about that anymore. Our company offers you to buy articles of a high quality for reasonable prices.

Airport and handling charges are another important cost which has been decreasing during the period under study. The main reason for this is that with the increasing passengers and revenues of the airline, this cost has been declining.

The operating expenses of the company were as high as 97% in the year 2009 however with the passage of time, the company has been able to decrease the expenses. The main reason is the reduction in the fuel prices as with this, Ryanair has been able to reduce the operating expense. The operating expense of the company has been reduced after 2009 to around 84% to 86% of sales. So with this reduction in operating expenses, the operating profit of the airline has been improved from 3% in 2009 to almost 13.5% in 2010 and 2011. In 2012, the airline was able to further improve its operating profits to 15.56%.

The net profits of Ryanair were a negative 5.75% in 2009 showing the airline was in loss. In 2010, the profits increased to around 10% and it was same in the year 2011 as well. Then in the year 2012, the net profits further increased to 12.7%

Operating revenues 2012 2011 2010 2009
Scheduled revenues 79.81% 77.91% 77.79% 79.67%
Ancillary revenues 20.19% 22.09% 22.21% 20.33%
Total operating revenues – continuing operations 100.00% 100.00% 100.00% 100.00%
Operating expenses        
Staff costs -9.45% -10.36% -11.21% -10.51%
Depreciation -7.04% -7.65% -7.88% -8.71%
Fuel and oil -36.30% -33.81% -29.92% -42.73%
Maintenance, materials and repairs -2.37% -2.59% 0.00% -2.27%
Aircraft rentals -2.07% -2.68% -3.20% -0.43%
Route charges -10.49% -11.31% -11.25% -9.74%
Airport and handling charges -12.62% -13.55% -15.36% -15.07%
Marketing, distribution and other -4.10% -4.26% -4.85% -0.43%
Icelandic volcanic ash related cost        
Total operating expenses -84.44% -86.55% -86.54% -96.85%
         
Operating profit – continuing operations 15.56% 13.45% 13.46% 3.15%
Other income/(expense)        
Finance income 1.01% 0.75% 0.79% 2.57%
Finance expense -2.49% -2.59% -2.41% -4.44%
Foreign exchange gain/(loss) 0.10% -0.02% -0.03% 0.15%
Loss on impairment of available-for-sale financial asset 0.00% 0.00% -0.45% -7.56%
Gain on disposal of property, plant and equipment 0.24% 0.00% 0.07% 0.00%
Total other expense -1.14% -1.85% -2.04% -9.28%
Profit before tax 14.42% 11.60% 11.41% -6.13%
Tax expense on profit on ordinary activities -1.65% -1.28% -1.19% 0.38%
Profit for the year – all attributable to equity holders of parent 12.76% 10.32% 10.22% -5.75%

Leave a Reply

Your email address will not be published / Required fields are marked *

USD
10

Calculate your price

Number of pages: