Accounting and Financial management

support the financial analysis ideas expressed in the memo, the reader should feel that they have a complete set of facts to substantiate these ideas and provide a reference for them.First we take a look at the financial performance ratios of the two companies. The return on assets ratio of the company shows how well the company is in generating revenues from their assets. i.e.how many dollars of EBIT (earnings before interest and taxes) they can achieve for each dollar of assets they control.the data shows Airline A has return on assetsIf we analyze the return on assets we will fin that the Airline A in FY 2000 is really high that it means the company is generating good revenues from the assets on the company but going on in the FY 2005 the ratio is dropped to 4.22 which is really observing for the company. The airline B has the return on assets ratio ofThe airline B has a worse ratio as the company is not able to generate good returns from their assets. After comparing the two ratios we will analyze that the airline A is better in generating revenues from their assets of the company than airline B.Now we look at the return on equity ratios of the companeis . Return on Equity (ROE, Return on average common equity) measures the rate of return on the ownership interest (shareholders equity) of the common stock owners. ROE is viewed as one of the most important financial ratios. It measures a firms efficiency at generating profits from every dollar of net assets, and shows how well a company uses investment dollars to generate earnings growth .the ratio of the company A isBy analysing the above ratio we have calculated that the company A has not a better viw of the return on equity as the ratio decreases over the period of six years. On the other hand the company B has done ecxeptional performance in returns generated from the funds over the period of six years. By comparing the two we have analyzed that company B more efficient in using their funds. High

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