Paper Topic:

Accounting and Financial Management

1 . Before examining the liquidity ratios and the cash flow figures , it is useful to briefly have a look at the consolidated operating data (because the financial results are closely related to the company 's operational efficiency ) and at some of the more important financial figures

In this sense , we observe that the revenue per seat has increased with over 2 from September 2004 to September 2005 . The revenue per seat is defined as the available for passengers . This shows an increasing efficiency in managing the planes ' overall occupation : higher revenue is obtained

for one sold ticket . Additionally , the number of passengers has also increased , which is encouraging corroborated with the increase in revenue per seat

The group turnover increased as a percentage from 2004 to 2005 from ?1 ,091 million to ?1 ,341 .4 , which represents a significant increase of almost 23 . However , we need to point out that the cost of sales (that is , the cost of producing this turnover ) has also increased with 25 .5 which means that the gross profit has only increased by a margin of 8 .2

Turning to the group 's liquidity ratio now , the current ratio calculated by dividing the current assets value to the current liabilities value , cannot be computed in this case or rather it is not relevant . This is because the net current liabilities value are , in both years we are examining (2004 and 2005 , negative ?53 .2 million in 2004 and ?20 .2 million in 2005 respectively . We will examine the cash flow statement for further conclusions

There are two things were mentioning here : the cash flow from operating activities and the capital expenditure . Both increased from 2004 to 2005 , while the increase in cash in the year was lower . The cash flow from operating activities increased with 5 .8 , while the capital expenditure increased with 75 .9 . We may consider that this increase in capital expenditure is too high over the year . However , in my opinion , this can be considered a positive aspect : capital expenditure is generally used to upgrade the existing assets or to purchase new ones . In this sense , we are likely to see in this increased capital expenditure an investment the company made towards increasing its operability , its potential for business in the future etc (we can believe , for example , that part of this was used to buy new airplanes or to repair the existing ones , with possible effects on company revenues

2 . According to the company 2005 annual report , EasyJet uses different forms of financing for its fixed assets . The company acquired 34 aircrafts in these , 22 were sold to lessors and then leased back under operating leases and 12 were financed by debt . Other financing sources are mortgages and sales of older fixed assets

In this sense , one of the most important sources of financing is external debts , including bank credits for example . According to the same report , all of the group 's debt is asset related , that is , used to purchase...

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