Financial Ratio Analysis of Sydney Airport
Financial Ratio Analysis of Sydney Airport
Income statement
2021
$m 2020
$m 2019
$m 2018
$m 2017
$m
Revenue 621.2 803.7 1639.6 1584 1483.3
Operating expense -278.4 -295.6 -303.4 -302.3 -284.5
Gross profit 342.8 508.1 1336.2 1281.7 1198.8
(EBIT) -55.4 187.4 707.5 867 810.7
Finance/Interest expense -720.4 -431.8 -420.9 -433.5 421.6
Profit/loss before income tax -775.8 -244.4 286.6 `433.5 389.1
Profit/loss after income tax -657.8 -107.5 215 371 348.6
Net operating receipts 157.6 45.5 905.7 860.9 787.3
Balance sheet
2021
$m 2020
$m 2019
$m 2018
$m 2017
$m
Current assets 337 1598.9 840.2 1111.8 672
Non-current assets 7684.9 11253.9 11792.2 11942.4 11651.1
Total assets 8021.9 12852.8 12632.4 13054.2 12323.1
Current liabilities 1364.9 1074.8 1590.7 795.7 1112.7
Non-current liabilities 10644.8 10740.1 11795.3 12186.6 10576.5
Total liabilities 12009.7 11814.9 13386 12982.3 11689.2
Total equity 3987.8 1037.9 -753.6 71.9 633.9
Borrowing 7754.3 8352.8 9,426.70 10,151.80 8566.6
Analysis of Profitability:
Gross profit margin = Gross profit / Revenue *100
Net profit margin = Profit after tax / Revenue *100
Operating profit margin = Operating income / revenue
2021 2020 2019 2018 2017
Gross profit margin 55% 63% 81% 81% 81%
Net profit margin -106% -13% 13% 23% 24%
operating profit margin 25% 6% 55% 54% 53%
Return on Assets (ROA) = (EBIT) / Avg. total assets *100
Return on Total Investment (ROI) = (EBIT) / Equity + long term borrowings *100
2021 2020 2019 2018 2017
ROA -0.69% 1.46% 5.60% 6.64% 6.58%
ROI -0.47% 2.00% 8.16% 8.48% 8.81%
The gross profit margin for the FY 2021 is low when compared with the FY 2019. It has dropped to 55% from 81% respectively whereas the Gross profit is also comparatively less.The net profit margin and as well the operating profit margin also shows an negative impact when compared. The reason behind this was the passenger movements had a fall and freight operational movements was the only source. From the above calculation Sydney Airport is facing a huge loss.
The ROA and ROI of the FY2021 indicates that the Sydney Airport is not performing well.
(Gowthorpe, 2018)
Analysis of operating efficiency
Non-current asset turnover = Revenue/Non-current assets
2021 2020 2019 2018 2017
Non-Current asset turnover 0.08 0.07 0.14 0.13 0.13
The non current turnover is 0.08 in the FY2021 but when compared to the previous Financial years till 2017 it has gradually decreased.
(Gowthorpe, 2018)
Analysis of Liquidity:
Current ratio = Current assets/ Current liabilities
Quick (Acid Test) ratio = (Current assets-Inventories)/ Current liabilities
2021 2020 2019 2018 2017
Current Ratio 0.25 1.49 0.53 1.40 0.60
Quick (Acid test) Ratio 0.25 1.49 0.53 1.40 0.60
The current ratio is the same as Quick (Acid test Ratio) because there is no inventory as it is a service based company.
When compared with FY2020 the current ratio is a huge decrease and was about 0.25 in FY2021.
(Gowthorpe, 2018)
Analysis of Solvency:
Debt-to-equity ratio = Total debt/ Total equity
Leverage ratio = Total debt/ Total assets
Interest coverage ratio = Profit before interest and taxation/ Interest expense
2021 2020 2019 2018 2017
Debt-to-equity ratio 3.01 11.38 -17.76 180.56 18.44
Leverage ratio 1.50 0.92 1.06 0.99 0.95
Interest coverage ratio 1.08 0.57 -0.68 -1.00 0.92
Debt to equity ratio when comparing FY2019 with FY2021 which is 3.01 whereas for every dollar of equity it has 3.01 dollars in debt the company share is moderately risky for investors. Leverage ratio states that for every dollar of asset the company has 1.5
dollars in debt. Interest coverage ratio is 1.08 so they can match the interest they owe when analyzing the previous years they face difficulties in repaying.
(Gowthorpe, 2018)
Analysis of cash flow :
2021 2020 2019 2018 2017
Net cash flow from operating activities 157 434.3 1370.7 1232.4 1183.2
Net cash flow used in investing activities 1.3 -354.3 -313.5 -402.4 -541.1
Net cash flow used in financing activities -810.9 370.5 -908.4 -837.2 -624.5
From the above we can understand the analysis of cash flow consists of operating activities , investing activities and financing activities from the FY2021 it is clearly mentioned that the operating activities have been decreased when compared to FY2019. The investing activities have been improved as per the data FY2021 is satisfactory. The cash flow in financing activities had a rise in the FY2020 and had a fall at F2021.
Conclusion:
(Sydney Airport Financial analysis report from FY2017 to FY2021) from the above statement we can conclude that it had faced a loss due to the pandemic situation which took place at the FY2019 and had an impact on the overall sales. But when compared to the previous data before FY2019 it was gradually making profit and had a progress with consistency. The above analyzing the profitability which showcased an negative impact because the net profit margin shows a decrease and the ROA and ROI values for the previous FY2020 was not satisfactory. Sydney Airport faced a global downturn in passenger traffic in the history of aviation which led to instability thus as an analyst it will show gradual improvement and it is risky to invest for the upcoming financial year.
Reference:
https://www.sydneyairport.com.au/investor/investors-centre/reports/financial-statementshttps://www.wallstreetmojo.com/cash-flow-analysis/#ccfoGowthorpe, C., Business Accounting and Finance. 5th ed. s.l.:Cengage.
