Virgin Airlines finance and market capability - Essay Example

Corse Virgin Airlines finance and Market Capability Virgin Atlantic was started in the 80s by Richard Branson after his success with his music label. In the later years, he focused on improving the services of the airline and in general bulk investments. Since then, the airline has grown into an award winning organization which yet shows great potential. In UK, the airline has recently founded the Little Red project which purposefully does domestic flights within the UK.
Ratio analysis for Virgin Atlantic year 2014 financial statement. All figures are in thousand dollars
Debt-to-Equity Ratio
1. Total Liabilities / Shareholders Equity
2014: 540,923 / 459,253 
1.18
The ratio shows that Virgin has been aggressive in financing its growth with debt.This can result in the company paying additional interest expense and this is likely to affect the companys profitability in the future.
2. Quick Ratio
(Current Assets – Inventories)/ Current Liabilities
(438,931 - 0) / 337,847
1.3
This ratio shows that virgin is capable of paying back its debts in time. This shows the company relative stability in the airline market
3. Return on Equity (ROE)
Net Income/Shareholders Equity
60,109 / 459,253 
= 13.09%
Shows the amount of net income returned as a percentage of shareholders equity. The ratio can be used to compare the profitability of the Virgin with other companies in the airline.
4. Net Profit Margin
=Net Profit / Net Sales
60,109 / 1,489,967
=4.03%
The ratio shows the efficiency of the virgin at converting its revenue into profit. Virgin is covering it revenue to profit at a very low rate. This can be attributed to high operating expense.
It is important that results from other analytical tools be integrated to these results so as to come up with policies that have no loopholes.
Works cited
"VA Income Statement | Virgin America Inc. - Yahoo! Finance." VA Income Statement | Virgin America Inc. Stock - Yahoo! Finance. Yahoo, 1 Jan. 2014. Web. 17 Mar. 2015. ..
Helfert, Erich. Financial Analysis Tools and Techniques: A Guide for Managers. New York: McGraw Hill Professional, 2001.
"VA Balance Sheet | Virgin America Inc. - Yahoo! Finance." VA Income Statement | Virgin America Inc. Stock - Yahoo! Finance. Yahoo, 1 Jan. 2014. Web. 17 Mar. 2015. Read More