Qantas Airways Ltd:
A case study for Financial Statement Analysis
Peter Wells* and Anna Wright.
12 February 2004

Not to be used or cited without the permission of the authors
*

Corresponding author: School of Accounting, University of Technology, Sydney, Broadway NSW 2007 Australia
Tel: 61-2-9514 5295
Fax: 61-2-9514 5515 Email: peter.wells@uts.edu.au

6.

Financial Analysis
The aim of financial analysis is to present and summarise information contained in the

financial statements in a manner that facilitates an understanding of the activities of the firm, and ultimately, forecasting future period financial statements.

6.1

Reformatting of financial statements
A major problem with general purpose financial reports is the intertwining of the

operating (and investing) and financing activities of the firm. Furthermore in the accounting analysis previously undertaken (section 5) accounting practices will be identified that are considered inappropriate or that obscure actual firm performance. These issues can be addressed through the reformatting or recasting of the financial statements of the firm.
A consequence of the intertwining of the operating and financial activities of the firm is that summary measures of firm performance will reflect both operating and financial activities and management decisions, with this making interpretation of such measures problematic.
Accordingly, a necessary first stage of financial analysis is the separation of operating and financing activities in the financial statements.

This will facilitate a more meaningful

interpretation of the historic performance of the firm, and allow more insightful forecasting of future periods.
Any reformatting or adjustment of the financial statements should be undertaken on a consistent basis across the Statement of Financial Performance, the Statement of Cash