Financing and Real Investment - Essay Example

The Ryan family of UK started the business with 1 15-seater Bandeirante aircraft and 25 staffs. Within the span of less than 30 years, it has become the best low cost line service provider in entire European market. It is operating in the European market with 8,896 staffs, 272 Boeing 737-800 serving more than 73,553,580 passengers annually. It has achieved tremendous growth in terms of finance, passengers and market share. Its no-frill strategy for low cost has made it to achieve cost leadership in their entire Europe (RyanAir, “History of RyanAir”).

Competitive Position of RyanAir With rapid growth of passengers and market share, it is become the leader of low cost airline industry. Its effective no-frill strategy for low cost leadership has brought a revolution in the market. It has been able to achieve the upper hand position in the market by offering lowest prices, by serving the largest coverage and by achieving the highest traffic growth. The following figure presents a comparison of low cost competitors in the European market. . Financing and Real Investment Activities in RyanAir With the increasing market share and increasing volume of operational business, RyanAir requires a significant amount of aircraft and other assets including plant, property and equipment.

As per the reported consolidated balance sheet of 2011, RyanAir has increased its net value of plant, equipment and property by €619.5 million. The consolidated cash flow of RyanAir has presented the €897.2 million outflow of cash in 2011 comparing to €997.8 millions in 2010. However, 2011, RyanAir has made lower investment comparing to the previous years but, management has decided to invest in the real assets with increasing market share (RyanAir-c, p.3-8). The financial activities of RyanAir also show a positive indication.

The management has disclosed that within the last three years, RyanAir has returned €850 million to its shareholders but still its financial position is quite. In 2011, the net cash flow from financing activities has reduced in 2011 as it has repaid the long term borrowings of €280.7 million and also pain dividend to shareholders of €500.0 million. This is good indication for the shareholders as in spite of paying €500.0 million of dividends its retained earnings stood at €1,967.6 million.

Besides, the company has also made investments in financial assets and derivatives in the previous years and in 2011, it holds the Derivative financial instruments of €23.9 million and Available for sale financial assets of €114.0 million (RyanAir-c, p.3-8). A5 Introduction In order to assess the financial condition of any organisation, the financial analysis techniques are quite necessary important. However, for the financial analysis techniques, certain skills are required which is