Air Asia Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Air Asia Case Solution

AirAsia Group Bhd's long-term debt to total commodity prices has risen since September. 2019 (0.40) to Sept. 2020 (0.46). It could be suggested that AirAsia Group Bhd is over-reliant on on debt to expand or grow its business.

A ratio greater than 1 indicates that a large portion of the assets are funded by debt. In other words, a company has more debt than assets. A higher rate also indicates that a company may be at risk of defaulting if its interest rates plummet.

A rating of less than 1, meanwhile, indicates that a large portion of the company's assets are equally funded.

5) The business dues ranking is used to evaluate how much the firm has obtained.

Generally decreased risk levels are good, and linked to a individuals workings that does not need to hang on increasingly on loans, and are therefore economic secure. These businesses will have a decreased credit ranking (below 0.5 or 60%), suggesting that most of their resources are fully monitored (funded by the firm own value, not dues).

Anincreaseddegree of risk, with anincreased rate of value, means that the firm has taken anincreased risk. If a firm has a high credit ranking of (above 0.5 or 60%) then it is often review as “overworked” (meaning that most of its resources are financed, not valued).

6)

When suggestinganinvestment method, focus should be given to a number of things. These things are the important to toleratingthe series you select Features include: Cost - Debt money is cheaper than equity charges so if the firm has it the ability to take on more debt, can be costly.

Cash flow - While duesare cheaper than equity, it goes on the firm is commit to pay extra amount in the form of returns. Failure to paying this returnscould lead to action being taken to stop the firm. Company directors must control all the firm’s risks and keep it at a standard, where stockholders and other key stockholders are present satisfied. Total risk is made on investment chance and business chance.

C. Value investor

Value investing is the concept of purchasing the assets at a discount rate from its original value. It also known as security margin of safety where a company sells its assets at discount rate to the valued investors. The value investors are the more concerned stakeholders who are concerned with the company’s growth, its share prices, book value and profitability. The value investors hold the assets for a long time unless the company’s profitability becomes higher and increased. The value investors are more likely investment candidates who takes the assets in the under value stock times and for the company’s position sustainability and reaches at the over valuation time.

The value investors of Air Asia would assess the c company’s position first that would it reach at the suitability and profitability condition or not. Before value investing, they would analyze the profitability of the company through its annual report and stock prices from the past history.

Return on Equity

The return on equity ROE defines the return rate on equity which is invested in the business. The ROE shows the return on net assets. Return on equity is used in investment decision making where to analyze how much return is gained by the company on net assets.

The ROE of Air Asia shows the 0.3088428265, 0.2341811126, 0.2741020797,-0.09730274775, 1.10646526 in 2016,2017,2018,2019 and 202020 respectively. The ROE was higher in the year of 2016 then it declined at a 1.10646526 in 2020 which shows that company management is not efficient to generate the returns from the equity. The company would keep in investment decisions because it would help out to increase the assets utilization and better ways to invest in further projects.

Dividend Payout Ratio

The dividend payout ratio indicates that how much money a company is giving to its shareholders as a dividend and how much ratio does it keep for regrowth in business. A higher DPR shows that company pays higher dividend to its shareholders and reinvesting less for business growth and lower DPR shows vice versa.

In the case of Air Asia, the company has the -0.05438112072, -0.5104131798, 1.0250284, NA and 3.144409074 in 2016,2017,2018,2019 and 2020 respectively. The financial values show that company paid less dividend in starting years and higher in the 2020. This showed that in the starting years of 2016, 2017 and 2018 it reinvested higher in business and in 2019 and 2020 it paid higher to its shareholders and reinvested less in business.

Net cash flows from operation to PBT

The net cash from operating income shows that how much a company is generating profit before the tax payment. If a company earns higher operating income so it has to pay the higher taxes and less income so less taxes. It is used in investment decision making where the company evaluates that how much income is earned before taxes and how much expenses are borne by the company.

In Air Asia, the Profit before Taxes are 53,938 , 2,252,034 , -302,423 , -521,660 and -3,347,084 in 2016, 2017, 2018, 2019 and 2020 respectively. This shows that its PBT decreased in from starting to last year and the company got loss before taxes. However, Air Asia would analyze its PBT and the decision would be based on these criteria and past values in investment purposes.

Current ratio

The current shows that how much company’s current assets are efficient to pay off its current liabilities. This shows that company has the higher current assets. It also indicates that how can a company maximize its current assets to pay off its short term obligations.

In Air Asia, the Current ratio of the company are 0.970759486, 0.810427866, 1.287209807, 0.7416979879 and 0.4421739163 in 2016,2017,2018,2019 and 2020 respectively. The analysis showed that company had average position in the starting years and increased in 2018. The current position of the company is below from average and its shows that it has less current assets which the short term obligations are paid off. The current assets ratio is kept while making the decision for investments because it shows company’s current position and its efficiency to pay off its current obligations.

Price earnings

The price earnings ratio shows that how much company is earning on its share prices. The ratio also indicates the undervaluation and overvaluation of the company. Under valuation means that share price is lower than its standard price and over valuation means it is greater than its standard price.

In Air Asia, the Price earnings ratio is 0.302578019, 0.4689655172, 0.2891341256, -1.845744681 and -0.762745098 in 2016,2017,2018,2019 and 2020 respectively. The analysis shows that it has decreased its price earnings ratio which interprets that its share prices are undervalued in the recent years. Air Asia would keep the price earnings ratio while making the decisions of investment because it would aid in evaluating the profitability of the company and its revenue which can increase the share prices of the company within its existing market.

D. External Audit

The external audit is an independent examination by the company which is set for the organizations’ accountability. The external audit role is to verify the financial operations of the company and provide an authentic and true picture of the financial records where there must be no chance of fraudulency. The external audit role is also assisting and provide the guidance about the improvement and control of many processes where there is a need.

What do external audit do?

An external audit is an independent and external party who evaluates the financial position of the company and review the records of business operations. They are liable to make the reports for clients’ accounts and financial position of the company. They report to the committee of audit and provide the recommended views to the company. Moreover, they are responsible to analyze the company’s financial operations and detect any interruptions and fraudulency within the accounting period. External auditors are also responsible to assure the other operations like company’s health and safety areas, IT sectors, digital operations and social responsibilities. Hence, they are the autonomous bodies who detects the fraud and inaccurate financial records and provide the authentic and evident reports of the company and provide an authentic and true picture of the financial records where there must beno chance of fraudulency. The external audit role is also assisting and provide the guidance about the improvement and control of many processes where there is a need.

Going Concern

An ongoing examinationis the accounting flow of a firm with the fund needed to continue use regularly until it gives indisputable proof. The term also refers to a firm’s ability to make good amount of revenue to keep it suspended. If a business is not a present problem, it means that it is dishonest and its assets are shut. For example, many .com are no longer a worrying firm’s after a advancement increase in the late 1991's.

Financial levels try to know what the firm should reveal in its income statement and balance sheets if there is any uncertainty about its capacity to continue as an ongoing problem. In May 2015, the Financial Accounting procedures Board said that the F.S should reveal the situation that support the entity's strong doubt that it could continue as an ongoing problems. Statements should also reflect administration explanation of future administrations plans and strategies..........................

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Air Asia Harvard Case Solution & Analysis

Air Asia Case Solution

6)

C.