Qantas Airways is a leading Australian airline company that operates in the aviation industry. To evaluate its financial performance, various ratios can be used to analyze its profitability, efficiency, liquidity, capital structure, and market performance.

Profitability Ratios: The operating profit margin measures the percentage of total revenue that is generated from operations after deducting all operating expenses. In 2022, Qantas Airways’ operating profit margin was -17.11%, which improved from the previous year’s restated figure of -24.82%. This indicates that the company was able to reduce its operational costs and generate more revenue in 2022.

The net profit margin measures the percentage of net income earned per dollar of revenue generated. Qantas Airways’ net profit margin for 2022 was -9.44%, which was an improvement from the previous year’s restated figure of -28.51%. The increase in net profit margin suggests that Qantas Airways has been successful in controlling its expenses and increasing its revenues.

Cash Flow Ratios: The cash flow to sales ratio calculates how much cash flow is generated per dollar of sales revenue. In 2022, Qantas Airways had a positive cash flow to sales ratio of 29.31%, indicating that it was able to generate significant cash flows from operating activities compared to the previous year’s negative ratio of -6.50%.

Liquidity Ratios: The current ratio measures whether a company has enough short-term assets to cover its short-term liabilities within one year. In 2022, Qantas Airways had a current ratio of 0.53, indicating that it had enough current assets to pay off its current liabilities.

The quick ratio is similar to the current ratio but only includes highly liquid assets such as cash and accounts receivable minus inventory divided by current liabilities. In 2022, Qantas Airways had a quick ratio of 0.51, which suggests that the company had a higher level of liquidity than in the previous year.

Efficiency Ratios: The asset turnover ratio measures how efficiently a company is using its assets to generate revenue. In 2022, Qantas Airways had an asset turnover ratio of 0.49, which was an improvement from the previous year’s restated figure of 0.31%. This indicates that the company was able to generate more revenue per dollar of assets used.

The accounts receivable days ratio measures the average number of days it takes for Qantas Airways to collect payment from its customers. In 2022, the company had an average collection period of 33.68 days, which was similar to the previous year’s restated figure.

Capital Structure Ratios: The debt-to-equity ratio measures how much debt financing a company has compared to equity financing. In 2022, Qantas Airways’ debt-to-equity ratio was -104.44%, indicating that it had more liabilities than equity and suggesting a high level of financial risk.

The interest coverage ratio measures how many times a company can cover its interest expenses with its earnings before interest and taxes (EBIT). In 2022, Qantas Airways had an interest coverage ratio of -2.96, indicating that it may have difficulty covering its interest expenses with its current earnings.

Market Performance Ratios: Earnings per share (EPS) measures how much profit is earned per outstanding share. In 2022, Qantas Airways’ EPS was negative at -$45.6 due to a loss incurred during the year.

The price-to-earnings (P/E) ratio compares the current market price per share with EPS and indicates whether investors are willing to pay more for each dollar of earnings generated by Qantas Airways. In 2022, Qantas Airways’ P/E ratio was negative (-0.10), indicating that investors were not willing to pay for each dollar of loss generated by the company.

In conclusion, Qantas Airways’ financial performance improved in 2022 compared to the previous year. The company was able to generate more revenue from its operations, reduce expenses, and improve its liquidity position. However, it still faces challenges with its debt-to-equity ratio and interest coverage ratio. To ensure sustainable growth in the future, Qantas Airways must continue to focus on optimizing its financial management strategies.