European Airline RynAir - Case Study Example

The 2011 RynAir financial statements are illustrated in Appendices A-D. The report will also include a discussion of the accounting cycle. The accounting cycle is a systematic system used by accountants to keep track of economic activities in order to prepare the financial statements of the company. The flow chart below shows the steps of the accounting cycle. (Google, 2011).Ryanair Corporation must pay close attention to its accounting cycle. It all starts with the receipts and source document that are used to analyze the journal transactions.

The firm could implement a new system that digitalizes all receipts. This system would improve the accountability of the system since it would create a backup of all receipts. Accountants instead of sorting through a bunch of small paper receipts they can get a digital image of each receipt in front of their computer monitor. The accountants would be able to work faster because inefficiencies in the journal recording process would be reduced. The income statement is a statement that reflects the profitability of a company during an accounting period.

In 2011 RynAir had total revenues of €3629.5 million. In comparison with the fiscal year 2010, the company increased its revenues by 21.46%. The net margin of RynAir in 2011 was 10.32%. The firm achieved earnings per share of €25.21. The operating expenses of the company were €3141 million, which was higher than the 2010 total of €2586 million. A cost factor that increased a lot in 2010 was the fuel and cost expenses. Traditional fuel and oil expenses are the biggest cost factor in the airline industry.

In 2011 the company spends €1,227 million in fuel and cost which is an increase of 37.26%. Since the company increased its revenues at a higher rate than its expenses the overall profitability of the company was better. The balance sheet of the company is often referred to as the statement of position. The balance sheet illustrated how many assets, liability, and equity a company has at a specific point in time. The total assets of RynAir in 2011 were €8,596 million and its total liabilities amounted to €5643 million.