Management is the name of synergy of four major things, a) Planning b) Organizing c) Leading d) Controlling. No matter what type of management is, but one thing for sure when ever the name of management comes these four things automatically associated with it. Likelihood the different aspects of management, marketing management albeit has a significance role in the long run of the organization. Organizations are formed with a major aim to earn profits but to earn profits, dedication and hard work is required, apart from compelling the employees to do the work. Management or the managers are supposed to manage their employees and their work in a professional manner which is ethical and appreciable is well. Proper management will ultimately increase the performance and motivate the employees, because according to Steven Kopin self motivated employees are more productive and dedicating rather than the unmotivated ones (Bierman, H.Jr (2008). Finance department plays a vital role in every organization and ensures that the organization have enough resources and liquidity to meet its legal obligations as well as facilitate its shareholders. The primary goal of the finance manager is to ensure that his company has the adequate supply of capital and sufficient statutory reserves. The ultimate goal of every organization is the same “to increase the surplus” but the question is how the finance manager becomes the part of the success story and how they can maximize the value of their organization..
There are two ways of looking at the financial manager’s role.
(1) Minimize the cost of organization,
(2) Maximize the organization value through different financial securities.
The financial manager or the chief financial officer (CFO) is responsible for financing the enterprise and acts as an intermediary between the financial system’s institution and markets. While, on the other hand, the business manager is responsible for a different kind of work like investing in plants and equipments, undertake research, hire staff and sell the firm’s product. Major financial decisions made by the managers of a business are either investment decisions or financing decisions. In investment decisions, manager considers the amount invested in the assets of the business and the composition of that investment. The main prospective of this study is quite straightforward, as we have to select a company, and then have to make a pro forma income statement and balance sheet for that company (Vernimmen, P 2000). The company which we have selected for the analysis is British Airways. Apart from the pro forma analysis, we have also calculated some financial ratios of the company to have a glance over its future. In the next section, we will see the corporate history of the company to educate our reader regarding the company we have selected in a plausible manner.
Aircraft and Airline industries are on of the main assets of the countries to earn revenue. If we see the same, after applies on the economy of United Kingdom (UK) then we can say that British Airlines is one of the main source for them to viable the country economically. British Airways Plc is the national flag hauler of the UK, with its headquartering located in Waterside Hammondsport in London. British Airways is the largest airline operates in the country according to the fleet size and according to the international and domestic flight as well.
The corporate history of the industry was very interesting as it because it had been formed on 1st September 1974 with the collaboration of four famous airlines companies of that time of UK. The four companies which were dissolved in March 1974 to shaped British Airways, and the name of the companies were British Overseas Airways Corporation (BOAC), British European Airways (BEA), Cambrian Airways Cardiff (CAC) and Northern Airlines Newcastle (NAN). The company owned by the government after its formation and all the revamps regarding the company was totally associated with government but in February 1987 the company was privatized. For over 26 years, the airline had a massive Boeing fleet, which was the main and solely resource to increase the bottom line of the airline, but the revolutionary era came in the late 90s as the in the year 1998 the company placed its first direct order for Aircraft Bus. Let’s see some financial aspects of the British Airlines to examine our desirable result in a plausible manner (British Airways Financial Reports 2005-2009).
British Airways is listed in the London Stock Exchange and the airline has the owner to become a constituent of the FTSE 100 index. Until FY 2008, British Airways was the largest airline of the United Kingdom with respect to the quantitative figures or more precisely we can say, with respect to the amount of passengers. The airline carried 35.7 million passengers during the year 2008, which was the highest figure ever achieved by the British Airline in its corporate history. The extravaganzas and the customer orientations were continuously surging after the launching of the Airbus, which eventually helped to spur the earning potential of the airline dramatically.
British airline have won a number of awards on their excellence, from which the award was rewarded them in the year 2006 of airline won the Skytrax Airline of the year. The main rival of the British Airways is Easy Jet which is also engaged with the aviation business. In the year 2008 British airways enjoyed a remarkable quantity of passengers of over 35 million, but the trounce had just commenced for them when the Easy jet reported their passengers quantity which exceeded from 44.5 million and enjoyed the revenue pleasantly.
After the description of the corporate history of British Airways, now we are all set to analyzed future income after tax of the company. In the next section, we have put the net income after tax for the five years and with the help of that sales and expense proportion we have calculated the NIAT for the next 5 years.
NET INCOME AFTER TAX (in Millions)
We have analyze the balance sheet of BA critically and found some interesting result regarding the organization. Albeit the organization has a wonderful story of success from the past number of years, but the year 2009 evident them a real costly one. The main cause behind this decline is global financial turmoil which compelled a number of industries and financial institutions to be default and triggered hundred of thousands of people to be unemployed. Apart from that, the organization has to be cautious and vigilant and must work extremely hard to overcome those threats which we have discussed earlier. Well regarding the investment, than I must say that the new investors who really wish to put their money in BA’s stock an expects a good return, than it will be good for them to abrogate the idea of investment because of the uncertain financial market conditions and severe volatility because all the indicators are against the company. Well for the existing customer I should wish a very best of luck because they literally are in severe mental stress, but don’t worry my friends there would be downturn after a huge hike and that downturn will be for a shorter period, so better for you people to hold your positions till the right time comes or concerned with your brokers to hedge your trade pertinently. The forecasted balance sheet of BA also manifests the same jeopardy and makes the life of the company catastrophic, the company has to come up with strong strategies to emancipate themselves form this severe downturn.
FORECASTED NET INCOME
FORECASTED EQUITIES AND LIABILITIES
Total Liabilities and Equities
FORECASTE Net Operating Profit After Tax (NOPAT)
The forecasted tables are presenting a horrible picture for the existing and new investors. The company has taken the suggestion in account to mitigate such threats accordingly. Some intensity will automatically ease with the departure of the current financial crisis, which probably would be in the 3rd quarter of the current financial year (According to International Monetary Fund), so the management of the company keeps their finger cross and dives in the sea with brutality with the propensity to defeat these threats as soon as possible.