Financial Ratio of Airasia
Financial Ratio of Airasia
Based on appendix 1, it does explain to us that every year there are increases in gross profit margin. Although the profit of the company is increasing but the performance of the company are not satisfy because the cost of sales of the company also increasing every year. The gross profit margin increases due to large number of travellers using the air travel to fly which promote a low fare, no frills concept that make a higher demand among the customers. In 2008 and 2009, Air Asia was increased its routes to other countries and this significant to the improvement which due to customers demand. The cost of sales for Air Asia increased due to high purchasing cost for example Air Asia purchased of new airbus and aircraft in year 2007 which caused a high jet fuel and operation expenses.
The net profit margin of Air Asia was stability and no any changes significantly until 2008 which because of the financial crisis that faced by Air Asia in year 2008 was caused the price of jet fuel increased. In 2008, the ROCE was affected badly by the loss that the company making which is due to raise capital to purchase new aircraft. When volume of passengers grew was increases and the fuel price reducing, it automatically increases the sales and reduces the cost in year 2009. Thus, ROCE and net profit increased for the company.
In year 2005 and 2006, current ratio and acid test ratio was high which explained that inefficient control in working capital and will caused the company to expand its business. Both acid test and current ratio is lower in the year 2009 and this indicates