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Flight Financial Ratios

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Flight’s total revenue has increased in the past four years. However, the amount of tax the firm has to pay has substantially increased in the same period because tax expense is based on the amount of revenue that is pre-tax profit. Flight is a profitable company with a good return on equity ratio of 26.13% in 2013, which means that Flight is able to generate $0.26 profit for every dollar of shareholder equity. In terms of return on asset ratio, the company has not been able to achieve its target as it loses around 20 cents for investing each dollar of its asset.
Liquidity is an indicator of the ability of a company to satisfy its current liabilities. The current and quick ratio are the main liquidity ratios. Flights current ratio is below …show more content…

Flights cash flow and quick ratio indicate that its current assets and net operating cash flow are enough to cover its short term liabilities when the need arises.
Asset efficiency is an indicator of how much revenue a company can generate from its assets. Flight is the market leader, however in recent periods its asset turnover ratio is below the average level, this means that the company isn’t very efficient in converting its inventory to sales as well as with its collection of receivables for its debtors. In this case Flight I feel is not utilizing its assets well and is not producing at the capacity it could.
In conclusion, Flights profitability and asset efficiency are average but they have been increasing in comparison to its industry standards. The liquidity and gearing ratio might make the company seem leveraged to a certain extent. After closely studying Flight, it shows that the company’s financials have fairly improved since 2010. Though, some of the financials still need a boost in order to entice more investors to invest. For current shareholder it is logical to stick with the company and stay invested as the company seems to have a promising future and a vast horizon for expansion, but the shareholders should be cautious if they plan on buying more shares in the near

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