EMIRATES GROUP COMPANY Essay Example

EMIRATES GROUP COMPANY 4

EMIRATES GROUP COMPANY

  1. Describe and evaluate the general position and business environment of the institution( Emirates Group Company)

The Emirates Group is an international aviation company that is geographically located in Dubai, United Arab Emirates. Its headquarters are situated in Garhoud. The Emirates Group Company comprise of Emirates Airline and the Dnata. The Emirates Airlines is considerably the largest airline in the Middle East. Dnata on another hand is an Aviation Services Company which is involved in handling survives for around 17 airports.

This industry of Emirates Group has a turnover of an estimation of US$18.4 billion according to Amundsen, S. A. (2015). The industries have also more than 62000 employees in the various units and firms. The company offers various products and services. The main service offered by the company is the air transport service which accounts the largest percentage of the revenue generated by the company. However, it offers other services such as airport aviation services, engineering services and flight catering.

The major competitors of Emirates Group are Qatar, Etihad, which are also based from the Middle East. These companies offer the same air transport services to their customers making the competition very stiff. However, Emirates Group wants to introduce services from Dubai to Chicago as a way of expanding its customer base. This strategy will enable the company thrive the stiff competition poised by Qatar and Etihad Airways and thus sustain over the long term.

  1. Analyse any three types of risks that the company could face

There are various risks that the Emirates Group Company could face. The first is the market risk. With the current global economic crisis, the company may face a major problem in the future (Sadgrove, M. K. 2015). Due to the economic crisis, it will be impossible for customers to afford to spend on the airline especially considering that the company mostly considers the high-end customers. The best way to cope with this risk will be lowering the fares of their airlines. Lowering the amount of travelling will also attract low-income earners thus mitigating the market risk.

The second risk that Emirates Group could face is the exchange rate risk. Considering the company sells tickets in many different parts of the world there is the possibility of exchange rate risk. This is because the different countries govern their currencies in their way making it a big threat to the airline company. However, this risk can be reduced by minimising exposure of their tickets to large currencies. The company should ensure minimal exposure of foreign exchange to avoid a financial constrain (Mamoghli et al., 2015).

The third risk that is possible for the company is the business risk. The company has been experiencing problems with poor runways and poor maintenance of their airlines that may pose a business risk. The business risks may have massive negative impacts to the company. To reduce this business risk, the company should implement new mitigations method like constant maintenance of their runways and improving their airlines.

EMIRATES GROUP COMPANY

A) Liquidity Ratio

I) current Ratio for 2013, 2014=current Assets/current liabilities

For 2014 =27,354/32,428*100

For 2013 =34,947/31,319

ii) Quick Ratio for 2013, 2014= Current Assets Less Stock/Current Liabilities

For 2014 = (27354-1706)/32,428*100

For 2013 = (34947-1564)/31319*100

=106.59%

  1. Calculate the following and write a detailed analysis about the company’s position and performance

EMIRATES GROUP COMPANY 1

2013=601/78=7.71

2014=747/88=8.49

Inventory turnover ratio=cost of goods sold/annual inventory

2013= (84+72)/2=78

2014= (92+84)/2=88

Annual average value= (closing inventory+ opening inventory)/2

iii) Inventory turnover ratio

2013=365/ (2254/12.38)=2.00

2014=365/ (2498/14.61)=2.13

Collection period=365/ (total sales/accounts receivable)

2013=2254/182=12.38

2014 =2498/171=14.61

ii) Receivable turnover ratio=total sales/average account receivable

2013 ` =365(601/3.70) =2.25

2014 =365(747/3.66)

Average payment period=365/ (cost of goods sold/account payable)

2013 =6969/1885=3.70

For 2014 =8066/2205=3.66

I) payable turnover ratio= total purchases/average accounts payable

b) Efficiency Ratios

EMIRATES GROUP COMPANY 2EMIRATES GROUP COMPANY 3

2013=6536/127=51.46

2014=7448/136=54.76

vi) Return on equity (ROE) = net income/average shareholder’s equity

2013= (71159-70274)/70274*100=1.26%

2014= (80717-78376)/78376*100=2.99%

v) Return on investment (ROI) = (total revenue-total cost)/total cost*100

2013= (7448-601)/7448*100=91.93%

2014= (7448-747)/7448*100=89.97%

iv) Gross operating margin= (revenue-cost of goods sold)/revenue*100

2013=86/6536*100=1.32%

2014=117/7448*100=1.57%

iii) Operating profit margin=operating income/revenue*100

2013=22/23032*100=0.1

2014=56/80717*100=0.067

ii) Net profit margin=net profit/sales*100

2013= (4564-63)/6=750.17

2014= (4580-63)/6=752.83

I) earnings per share= (earnings of ordinary shares-holders shares)/no. of ordinary shares

d) Profitability ratios

2013=15,961/23032*365=252.94

2014=25879/80717*365=117.02

  1. Debt-ratio=debts/revenue*100

2013=15,961/23032*100=69.3%

2014=25878/25471*100=101.6%

  1. Debt-equity ratio=debt/equity*100

Solvency ratio

REFERENCES

Amundsen, S. A. (2015). Implementation and division of operational risk in contracts between a service company and operators-a case study.

Mamoghli, S., Goepp, V., & Botta-Genoulaz, V. (2015). An operational “Risk Factor Driven” approach for the mitigation and monitoring of the “Misalignment Risk” in Enterprise Resource Planning projects. Computers in Industry, 70, 1-12.

Sadgrove, M. K. (2015). The complete guide to business risk management. Ashgate Publishing, Ltd.