Air Asia Financial Analysis

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1.0 Executive Summary

Malaysia Airline System Berhad (MAS)is a group having several businesses organization includes Malaysia Airlines, MAS Cargo, Firefly, MASwings, MAS aerospace and so on. Other businesses which are under MAS are hotel operations, catering, computerized reservation services, coach transportation, trucking and warehousing services, retailing of goods, terminal charges and tour and travel related activities(Malaysia Airline System Berhad, 2010). Malaysia Airlines had won awards of ‘5-Star Airline’ and ‘World’s Best Cabin Staff’ from Skytrax. It were also recognized as ‘Asia’s Leading Airline’ and the ‘Best Airline in SoutheastAsia’( Malaysian Airline System Berhad, 2011). MASkargo meanwhile was recognized as the ‘Best Air
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Companies use the shareholders’ funds as one of the financial resources to operate daily business. However, shareholders will invest in a company which has a favorable trend of financial ratios. Employees need to know the profitability of the company as the profitability decides bonus and financial compensation given toemployees thus to have job security. Lending institutionswill finance to companies whichperform well to know their debt paying ability in the future.
2.2 Efficiency Ratio
MAS
Financial Year | 2009 | 2010 | Settlement Period of Trade Receivables | 52.22 days | 38.45 days | Sales revenue for Capital Employed | 2.78 times | 2.61 times |

Industry Comparison (Air Asia) Financial Year | 2009 | 2010 | Settlement Period of Trade Receivables | 82.16 days | 72.21 days | Sales Revenue for Capital Employed | 0.82 times | 0.37 times |

Figure 2
Efficiency ratios or asset turnover ratio, which shows how a company uses its assets to generate sales and to find out how quickly inventory can be turned into cash and can used to satisfy debts( Moles et al., 2011 ). In the settlement period of trade receivables both company have signed good performance. Average settlement period for trade receivables decrease from year2009, 52days to 2010, 38 days. The settlement period of MAS is reducing 13.77 days and the settlement period of Air Asia is reducing 9.95days. This is a good sign as it shows that credit customers take shorter time to pay back their debts to MAS
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