Area of judgments
QANTAS is one of the biggest companies in Australia. This mini-report will analyse and examine the financial status of QANTAS for the last three years (2007, 2006 and 2005) by studying these three annual reports and applying some financial ratios that will help the investors and shareholders to understand where the company stands and to enable them to make the right decision. But before going further in this report; the investors and the shareholders need to be familiarised with the following points as main areas of judgments in this mini-report:
? Inventory valuation: as one of the most important areas that show how the top management performs and manages the company is the inventory value. In QANTAS case, the inventories value in 2005 was $333 Million and it has been decreased to $180.3 Millions which indicates that the company has reduced the cost of the inventory by more than 54%. However, according to the annual report this reduction caused by “inventories held for sale” (QANTAS: Annual Report (2006), p.77). Regarding the method that QANTAS applied to calculate the inventory is weighted average cost ( QANTAS: Annual Report (2007), p.81)
? Depreciation: as it has been stated in QANTAS Annual Report (2007, p.82) QANTAS applying a straight-line method on all items of “property, plant and equipment except for freehold and leasehold land which are not depreciated”. Nevertheless, the depreciation value has been increased from 2005 ($ 1,241.3 million) to 2007 ( $ 1,362.7 million) because of the expenditure on “new aircraft acquisitions including one A330-300 and three Q400, and progress payments made on the A380,B787,B738 and A330 aircraft” (QANTAS: Annual Report(2007), p.51)
? Assets use life: according to QANTAS Annual report (200 ...