Cathay report - AC5511 Financial and Management Accounting Project Financial Statement Analysis Group 4 Gao Yingying Gao Yingying 54483926 Huang Wenjing

Cathay report - AC5511 Financial and Management Accounting...

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AC5511 Financial and Management Accounting Project: Financial Statement Analysis Group 4: Gao Yingying Signature Gao Yingying 54483926 Yingyin g Huang Wenjing 54676576 Wwenji ng Li Chen 54272127 Chen Liu Yuanping 54598569 Yuanpin g Liu Ying 54531989 Ying Zhang Yu 54508060 Yu
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Catalog PART 1 EXECUTIVE SUMMARY ................................................................ 1 1.1 B ACKGROUND I NFORMATION -A IRLINE I NDUSTRY AND C ATHAY P ACIFIC C OMPANY .............. 1 1.2 S TRATEGIES R ELATED S TRENGTHS AND C ONCERNS ..................................................... 1 1.2.1 Strengths .................................................................................................... 1 1.2.2 Concerns .................................................................................................... 2 1.3 O VERALL EVALUATION ......................................................................................... 2 1.3.1 Profitability ................................................................................................ 2 1.3.2 Short-term Liquidity and Efficiency ................................................................... 2 1.3.3 Long-term Solvency ...................................................................................... 2 PART II BODY OF REPORT ...................................................................... 3 2.1 I NSIDE V IEW OF C ATHAY P ACIFIC ........................................................................... 3 2.1.1 Business Strategy ......................................................................................... 3 2.1.2 Porter’s Five Forces Analysis .......................................................................... 4 2.1.3 SWOT Analysis ............................................................................................ 6 2.1.4 Economic Attributes Framework Analysis ........................................................... 6 2.1.5 Risks of Cathay Pacific .................................................................................. 9 2.2 A NALYSIS ON FINANCIAL STATEMENT ....................................................................... 9 2.2.1 Horizontal Analysis (Trend analysis) ............................................................... 10 2.2.2 Vertical Analysis (Common Size Statement) ....................................................... 10 2.2.3 Profitability Analysis ................................................................................... 12 2.2.4 Debt obligations ......................................................................................... 16 2.2.5 Conclusion ............................................................................................... 22 PART III APPENDIX ............................................................................. 23 A PPENDIX I – I NCOME STATEMENT ............................................................................. 23 A PPENDIX II – R ATIOS AND CALCULATIONS .................................................................. 24 A PPENDIX III – L IST OF R EFERENCES ......................................................................... 28 1
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Part 1 Executive Summary 1.1 Background Information-Airline Industry and Cathay Pacific Company Cathay Pacific Airways was founded on 24 September, 1946 by American Roy C Farrell and Australian Sydney H de Kantzow. It was initially based in Shanghai, then eventually moved to Hong Kong and established the airline. Expansion was fast and, in 1948, Cathay became Hong Kong's leading trading companies. Nowadays, Cathay pacific carries approximately one million passengers each month. In airline industry, air travel remains a large and growing industry. In Europe and North America, where the air travel market is already highly developed, slower growth of 4%-6% is expected. The most dynamic growth is centered on the Asia/Pacific region, where fast-growing trade and investment are coupled with rising domestic prosperity. 1.2 Strategies Related Strengths and Risks Cathay Pacific’s strategies aim in five different areas: codeshare establishment, alliance, differentiated pricing, modern fleet and advertising. In order to know about the Cathay Pacific’s economic situation, operation processes, strengths and weaknesses, we conducted three analysis methods: Porter’s Five Forces Classification Framework, SWOT analysis and Economic Attributes Framework. The analysis details will further discuss in the part body of report. 1.2.1 Strengths Codeshare establishment and alliance strategies help Cathay Pacific increases the competition ability by cooperating with other airlines. Differentiated pricing strategy maintains Cathay’s attractiveness for those price- sensitive customers. In addition, advertising strategy further facilitates Cathay’s reputation in its high service quality. These strategies together assist Cathay Pacific has found a place in the realm of airline transportation.
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