Jet Airways

Jet Airways

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Introduction:
Accounting is the pillar of every company to measure its growth, loss, revenue , capital, its really specify the real terms in foam of figures and sometimes in tables, in accounting there are certain rules are obtained to make more accuracy while playing with figures.
To apply and the all ‘ rules of game‘of an business we taking an aviation company known as “Jet Airways” before we get into, here are some intro points about this company.
History:
Jet Airways was found in 1st April 1992 by Mr. Naresh Goyal and they started their operation after one year may 5th 1993, Jet began international operations from Chennai to Colombo in March 2004. The company was listed on the Bombay Stock Exchange
Jet airways India’s second major airline in terms of market shares after Indigo airlines based at Mumbai known as India’s economic capital in addition to being its India’s widest network with 3000 flights a day with 76 destinations worldwide, main operations are handle from Mumbai but secondary hubs are Delhi (Nation Capital of India) Kolkata and Bangalore, It has an international hub at Brussels Airport, Belgium.
Founder &Management:

Naresh Goyal, the founder Chairman of Jet Airways, India’s premier airline, has over 4 decades of experience in the Civil Aviation industry.
After graduating in commerce in 1967. Mr Goyal begin his travel business with GSA for Lebanese international airline, himself chairman holding 80% of company shares.
Currently this airline running with six boards of directors:
1. Mr. Javed Akthar
2. Mr. Iftikar M. Kadr
3. Mr. Aman Mehta
4. Mr. James Hogan
5. Mr. Gaurang Shetty
6. Mr. James Rigney
After an overview of jet airways now we mould its ratios and figures:
Accounting Principles & Standards:
Accounting principles are main consideration , certain standards like rules of operations are pillar characteristicis to built accounting statements. Accounting principles can be presented in many ways, sometimes its create confusion for readers mainly for beginners, but still acoounting principles are main tool to obtained financial statements. Its hold the whole acoounting process together.
In order to make useful, there are some characteristics such as being practical and dependable. As a dependable for it must be acurate, unbiased and verifiable and practically accounting information must be compareable, prepared in a time frame, user friendly, consistent and able to differentiate.
In accounting beside these characteristics, certain operational rules are obtained are following:
• How a firm matched their revenue with expenses
• At what time expenses are revenue has been reported

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• How much and when information is disclosed for reader to understand the conditions
• How to handle a project showing out of accounting figures
Assumptions to rely for a reader:
• Financial information must measured in time frames like years, months
• Must use a certain unit of currency like dollars.
• One and only method to follw is Double Entry Method
• Information not to be mixed with any unrelated firm
There are some accounting principles that opposed the current accounting standards , An accounting standard is a bar or agreement to overcome the accounting issues. accounting standards states that:
• Type of inventory system used by a company
• How capital leases are recorded; for how many years intangible assets should be amortized.
• Type of depreciation used by firm.
Literally there are number of accounting standars have been issued at different times, no standard is evergreen become outdated and get renewed or discarded.
These accounting principles and standards are “rules of game” to play with the accounting “game of cards” . if a firm choose not to play within these rules lead to damage or loss for sure , as recently we have seen in U.S corporate accounting scandals.

Financial health:

Investment Valuation Ratios
Face Value 10.00 10.00 10.00 10.00 10.00
Dividend Per Share -- -- -- -- --
Operating Profit Per Share (Rs) 104.59 214.50 289.91 244.11 69.32
Net Operating Profit Per Share (Rs) 1,952.02 1,763.46 1,480.59 1,209.09 40.28
Free Reserves Per Share (Rs) -- -79.02 80.48 79.35 33.52
Bonus in Equity Capital 10.89 10.89 10.89 10.89 10.89
Profitability Ratios
Operating Profit Margin(%) 5.35 12.16 19.58 20.18 5.17
Profit Before Interest And Tax Margin(%) -0.13 5.85 12.29 10.81 -2.57
Gross Profit Margin(%) -0.14 5.99 12.45 10.97 -2.60
Cash Profit Margin(%) 1.92 -1.53 4.42 3.35 -6.52
Adjusted Cash Margin(%) 1.92 -1.53 4.42 3.35 -6.52
Net Profit Margin(%) -2.78 -7.93 0.07 -4.41 -3.44
Adjusted Net Profit Margin(%) -2.78 -7.93 0.07 -4.41 -3.44
Return On Capital Employed(%) 6.21 12.28 12.33 8.81 -1.07
Return On Net Worth(%) 141.73 229.14 1.15 -56.54 -31.07
Adjusted Return on Net Worth(%) -- -93.98 -40.33 -73.29 8.38
Return on Assets Excluding Revaluations -39.67 -62.48 96.91 95.79 49.96
Return on Assets Including Revaluations -39.67 136.78 301.66 306.02 65.67
Return on Long Term Funds(%) 8.07 15.41 14.31 12.08 -1.41
Liquidity And Solvency Ratios
Current Ratio 0.45 0.39 0.64 0.34 0.37
Quick Ratio 0.54 0.50 0.77 0.86 1.09
Debt Equity Ratio -- -- 16.11 16.80 12.61
Long Term Debt Equity Ratio -- -- 14.22 11.98 9.33
Debt Coverage Ratios
Interest Cover 0.47 1.31 1.72 1.31 -0.26
Total Debt to Owners Fund -- 8.22 16.11 16.80 12.61
Financial Charges Coverage Ratio 1.30 1.10 1.43 1.24 0.49
Financial Charges Coverage Ratio Post Tax 1.39 0.85 1.49 1.27 1.34
Management Efficiency Ratios
Inventory Turnover Ratio 21.42 3,051.04 2,778.81 4,349.40 70.16
Debtors Turnover Ratio 13.75 13.64 14.39 13.53 11.31
Investments Turnover Ratio 21.42 3,051.04 2,778.81 4,349.40 70.16
Fixed Assets Turnover Ratio 1.05 0.81 0.72 0.59 0.62
Total Assets Turnover Ratio 2.00 1.50 0.91 0.72 0.66
Asset Turnover Ratio 1.64 1.08 0.78 0.58 0.64

Average Raw Material Holding -- -- -- -- --
Average Finished Goods Held -- -- -- -- --
Number of Days In Working Capital -85.41 -86.80 12.23 2.22 27.70
Profit & Loss Account Ratios
Material Cost Composition -- -- -- -- --
Imported Composition of Raw Materials Consumed 96.74 -- -- -- --
Selling Distribution Cost Composition -- 8.94 9.87 9.43 9.49
Expenses as Composition of Total Sales 45.65 44.35 44.56 39.11 42.29
Cash Flow Indicator Ratios
Dividend Payout Ratio Net Profit -- -- -- -- --
Dividend Payout Ratio Cash Profit -- -- -- -- --
Earning Retention Ratio -- -- 100.00 -- --
Cash Earning Retention Ratio 100.00 -- 100.00 100.00 --
AdjustedCash Flow Times 26.37 -- 23.52 39.06

Current Ratio = Current Assets / Current Liabilities

Equity = current assets- current liabilities


Principal Activities :
jet aireways is an aviation company which deal in flights around 86 destinations locally and around the globe also engaged in ground handling work for other airlines only in India , in a small interval of time airline having a tight grip over industery , now Jet airways considering India’s fastest growing airline.
List of competitors:
Company Name Region
Indigo India
Spice jet India
Air India India
Go air India
Malaysian Airlines Malaysia




Description 2011 2012 2013
Jet Airwys 38,000 41,001 43,400
Malaysian 37,433 37,444 39,001
Go air 39,400 42,000 42,100
Spice Jet 23,000 23,400 21,200
Indigo 44,000 42,100 41,300



Price Senstive Announcement:
jet airways operating domestic and international routes al well, but they just start there internation operation and according to my survey they have much focus over internation operations more than domestic, even its international operatins have been better than local operation.
Company internation operation revenue for 2012 was 13,408 while it was 5,867 for domestic operations, passangers get revail or premium cards for internation travel which also use for domestic travel,, company always comes with new promotions every month for general or business class flying abroad.
Much ticket price variation only seen through peak days on Saturday, Sunday and during Indian festival season to depending destination , by produced much revenue Jet airways in collaboration with number of airlines throughout the world like Etihad airways, lufthansa, Singapore airlines, quantas airways, garuda indonesia , emirates, air canada, many more.
Gradual growth by international operation investors are intrested to buy Jet airways shares , most part of jet shares are in Dubai after chairman’s hand
Transparency:
In terms to get more trust and popularity among customers, transparency proved be a weapon for compnies, now days people are aware and well educated they love to see thing real and genuine , also cause less conflicts and issues and make companies and brands more carefull regarding their products, but when a company become transparent they have to be more carefull also with their manufacturing, supplies, hygenic methods.
In case of Jet airways the word “tranparent” we taking as financial statement of company, because a transparent firm able to get more investors, when they know financial statement of Jet airways and feel risk free to become shareholder to Jet Pte Ltd.
Jet Airways CEO with company employess .



Corporate Governance:
Corporate governance refers to the set of techniques, proesses and systems under a company is being directed.it provides mandatory information and directions to run the company to achieve their goals and missions.its provide long term benefits for investors .
Corporate governance leads a company to fair workframe, intigrity, being transparent with employees and share holders regarding all transactions, and crucial decisions
Jet airways have a clean image on the corporate governance, a high level of confidence associated by this company , therefore the company get their investors from foreign, because of their good image on governance during recession in (2008) it was not a point of disussion unless like other companies.
Example:
corporate governance has been recently in news in India , after the fraud case at Satyam by chairman Raju, actually trouble arise when company Satyam announced to buy shares in Matyas for $1.3 billion, however its being the biggest fraud ever tracked in India
According to Milton Friedman, “ there is a social responsibility of business to use its resources and engage in activities designed to increase its profit as long as it stays with in the rules of the game” this statement was given in 1970 and if we compare with current environment . there are some arguments about this statement.
Friedman’s statement directed that only employees have responsibilties, not businesses, the employees hired by companies have a responsibility to just make profit for them , Friedman’s main purpose to make profits to benefit a society best instead to focus much on social responsibilties.

The manager of any company who need more man power to run his opeartions would like to work in a country or region , child labour is acceptable, so that cost can be controlled to make more profit and when society knows about the issue of child labour indvidual was not blammed. Instead company was consider irresponsible to involve child labour, and its effect image led to boycott the products of that company.
In 1992 Drucker mention in his statement that
“economic performance must be the first respnsibility of every business . a business or company does not show any profit at least equal to its cost of capital is socially irresponsible, because its wastes society’s resources, but economic performance is not main or sole duty of any business.
Unfortunately ,Milton Friedman’s statement about social responsibility no longer in trend in 2014 , but a fully-fledged strategy for a successful business in social and economic environment, Milton had a lack with discounted the natural human need to survive by sticking.
Milton could have explored to create solutions to social issues without effecting the company profit performance




.


References:
Jet air India Ltd (2003) Retrieved on 5th April, 2014 from http://www.jetairways.com/EN/SG/AboutUs/FactSheet.aspx
Jet air India Retrieved on 5th April, 2014 from http://www.jetairways.com/EN/SG/AboutUs/BoardofDirectors.aspx
Dion global solution limited (2004) Retrieved on 5th April, 2014 from
http://www.moneycontrol.com/financials/jetairways/ratios/JA01#JA01
http://www.oldschoolvalue.com/blog/valuation-methods/balance-sheet-ratios/#ixzz2xL1aOBy8
Corporate governance (2014) retrieved on 6th April from
http://www.ask.com/question/why-is-corporate-governance-
Bennet coleman (2014) retrieved on 9th april from
articles.economictimes.indiatimes.com/2009-01-18/news/28462497_1_corporate-governance-satyam-books-fraud-by-satyam-founder
Dracker, P.F. (1993) post-capitalist society New york, Harper Collins Friedman, M. (1970)

The Social Responsibility of Business is to Increase its Profits.
New York. The New York Times Company. Jobber, D. (2007)
Principles and Practices of Marketing, 5th Edition

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