Air New Zealand ( Air Nz ) Limited Essay

2) The higher ratio of Debt to Total Equity may result to the lower of the debt credit rating. The lower of the credit rating will result to increase of the interest rate which will cost more to the company.

This step involves short and long term debt equity analysis. The proportion of equity capital depends on the possessing and additional funds will be raised. The choice of the source of funds the company has are the issue of shares and debentures, loans to be taken from banks and financial institutions and public deposits to be drawn in form of bonds. The choice will depend on relative merits and demerits of each source and period of financing. The management of the investment funds is key in allocating that the funds are going in the correct place. The profits that are made can be down in two ways dividend declaration which includes identifying the rate of dividends and retained profits in which the volume has to be decided which will depend upon expansion and diversification of the company. The management of cash is another important function. Cash is needed for all different aspects of the company such as payment of salaries, overhead and bills. All of these are important in a company and how successful the financial aspect is going to be.The financial management practices include capital structure decision, investment appraisal techniques, dividend policy, working capital management and financial performance assessment. A company needs to have well financial in order to be successful. “A company that sells well but has poor financial management can fail.” (Johnston)

Equity ratio and debt ratio are both designing for capital structure and they are negatively related with each other. The cost of equity is higher than the cost of debt, but shareholders will not require companies to repay them dividends and principals any time. However, companies must pay the debt holders interests and principals each year. And increasing leverage ratio will result in increasing the return to shareholders, yet at the same time, it will increase the repayment commitments and then raise the risk to company and shareholders.

Air Canada has been in the business of air transport for an extended period of time. Due to the experience and the exposure of the carrier in the field, it has made a commendable progress through many strategies as well as customer proximity. One of the approaches taken by the airline involves the identification as well as an implementation of cost reduction initiatives in a bid to increase revenue from its operations (Air Canada, 2016). It is also attempting to connect with the existing carriers across the world to connect the current customers to the international world. This approach has been adopted to increase its competitive advantage over other existing airlines.

The company position is strong enough so its better that company should use debt financing instead of equity financing.

Debt ratio - The Debt/Equity ratio is a measure of a company 's financial leverage and indicates what proportion of equity and debt the company is using to finance its

7. Debt-to-Equity Ratio: We can find this by taking total debt divided by total equity. This ratio analysis measures/shows a company’s financial leverage.

The debt to equity ratio examines the credit from a financing standpoint to see how much equity and debt is the company using to finance its assets. The debt to equity ratio determines how much of their growth the company is experiencing by increasing debt and shows if the company had to pay off debt and how much money would remain for the shareholders profits. The formula for figuring the debt to equity is:

Debt ratio - The Debt/Equity ratio is a measure of a company's financial leverage and indicates what proportion of equity and debt the company is using to finance its assets. A high number indicated that the company is

Founded in Queensland Australia in 1920, Qantas has now become Australia 's biggest name in relation to domestic and international airline. Originally registered as the Queensland and Northern Territory Aerial Services Limited (QANTAS). Qantas is widely regarded as one of the world 's top airlines and one of the strongest brands in Australia. Over the years it has managed to build a reputation for excellence in

The Aussie Air negotiations were a series of five-party talks between Down Under Air (DUA), the Aussie Air Shareholders (AAS), Aussie Air Management, the Federal Government and the Aussie Air Workers’ Unions. I was the united unions’ spokesperson for the negotiations, representing their interests in order of priority: job security, current management’s contract length and stock prices. This paper will review the contents of the negotiations, relating them to key ideas and concepts gleaned from research and lectures through thorough reflection and critical analysis. It will discuss the success of the negotiations, the tactics used to claim value, the methodology of creating value, and the revision of strategies with dynamic relationships as new information emerged. It will also examine the politics of coalitions formed and the observations of cognitive biases and emotions.

The Debt-Equity Ratio shows that most of the capital was in terms of ordinary shares and is becoming more reliant on Shareholders Equity than on debt to finance operations.

Owned by parent company Qantas, the Jetstar Group is comprised of a network of value-based air carriers that deliver passenger services across Australia, New Zealand and the Asia Pacific region (About Jetstar, 2012). The Jetstar Group's most recent five-year strategy has been to "turn the international business around [by] reducing investment in underperforming business areas and directing capital towards growth opportunities" (Qantas Reports Strong Full-Year Profit in Challenging Conditions, 2011). In addition, the Jetstar Group intends to "focus on improving the customer experience, develop a stronger and broader alliance

There is no universal theory of the debt-equity choice, and no reason to expect one. In this essay I will critically assess the Pecking Order Theory of capital structure with reference and comparison of publicly listed companies. The pecking order theory says that the firm will borrow, rather than issuing equity, when internal cash flow is not sufficient to fund capital expenditures. This theory explains why firms prefer internal rather than external financing which is due to adverse selection, asymmetry of information, and agency costs (Frank & Goyal, 2003). The trade-off theory comes from the pecking order theory it is an unintentional outcome of companies following the pecking-order theory. This explains that firms strive to achieve an

Capital structure is defined as the mix of the long-term sources of funds that a firm use. It is composed of equity, debt securities and affect long-term financing of the entity. It is made up by shareholder’s funds, long-term debt and preference share capital. The capital structure mostly focus on the proportions of debt and equity displayed in the company financial statements, especially in the balance sheet (Myers, 2001). The value of a firm can be calculated by the sum of the value of its firm’s debt and equity.