FI NAL PAPERI n t r o d u c t o r y A c c o u n t i n g I I “PT. Garuda Indonesia” Page 1 Prepared for: Ibu Desti Fitriani S.E., Ak., M.A., CPMA Course: Introductory Accounting II (ACCT 11103) Date of Submission: Thursday, June 12, 2014 Prepared by: Abdul Robby Nabi (1306387286) Filip Ferdi (1306438785) Melvin Hade (1306388364) TABLE OF CONTENT Statement of Authorship 3 Executive Summary 4 Chapter 1: Company Profile 5 Chapter 2: Financial Analysis 6 2A. Horizontal Analysis 7 2B. Vertical Analysis 9 2C. Ratio Analysis 11 Chapter 3: Conclusion 14 Chapter 4: Appendix 15 4A. Horizontal Analysis Calculation 16 4B. Vertical Analysis Calculation 20 4C. Ratio Analysis Calculation 24 Page 2 STATEMENT OF AUTHORSHIP We, the signatories signing under this statement, states that the work that is attached to this Statement of Authorship is purely my own work without any other contribution from other parties, unless it is clearly cited and stated in this work. This work has also never been published or used for any other purposes or classes and that the materials presented on this paper has not been presented at any other occasion. We are also aware that this paper could be multiplied for the sake of identifying the chance of plagiarism. Name NPM Major Signature Abdul Robby Nabi 1306387286 Economics Filip Ferdi 1306438785 Accounting Melvin Hade 1306388364 Economics Page 3 EXECUTIVE SUMMARY This paper was prepared to fulfill the requirement of the course Introductory Accounting II with Ibu Desti Fitriani S.E., Ak., M.A., CPMA. Garuda Indonesia is a national airline service provider in Indonesia that offers full-service airline. This paper will assess Garuda Indonesia’s financial performance for the year 2011 and 2012 and different analytical tool will be used to analyze Garuda Indonesia’s performance such as Horizontal Analysis, Vertical Analysis and Ratio Analysis. Garuda Indonesia has performed tremendously well in both years, especially in 2012 because it has successfully managed to improve various financial indicators as well as boosting sales and net income. They also have better liquidity position as well as solvency and profitability level. However, one hinderance that prevents Garuda Indonesia from getting a straight A performance is that the market expects Garuda Indonesia to be associated with higher risk in the future due to a decrease in their Price-Earning ratio. Other than that, Garuda Indonesia has performed exceptionally well. Page 4 CHAPTER 1: COMPANY PROFILE PT. Garuda Indonesia (Persero) Tbk, (formerly known as Garuda Indonesian Airways) is a state-owned airline based in Jakarta that was launched in 1949. It offers more than 42 domestic flights and 24 international flights in first class, business class and economy class. Garuda Indonesia provides is a full-service airline, but they also have a low-cost subsidiary called PT. Citilink Indonesia to serve domestic routes in Indonesia. As of 2012, the company has a total of 106 fleets, ranging from Boeing 747-400, Airbus 330-300, Boeing 737 Classic, etc. In 2012, the Garuda Indonesia group carried a total of more than 20 million passengers. The airline has complied with international safety standards given by international institution such as the IATA (International Air Transport Association). Garuda Indonesia was awarded “World’s Most Improved Airline” by Skytrax World Airline Awards in 2010. And in 2012, based on Roy Morgan research company, Garuda Indonesia has been recognized as the Best International Airline among all major airline in the world with 91 percent of the respondents being ‘very satisfied’. Last but not least, in 2013 Garuda Indonesia was awarded the World’s Best Economy Class for its service and products by Skytrax. Page 5 CHAPTER 2: FINANCIAL ANALYSIS A. Horizontal Analysis B. Vertical Analysis C. Ratio Analysis Page 6 2A. HORIZONTAL ANALYSIS We could first conduct our horizontal analysis by reviewing the Comparative Income Statement of 2011 and 2012. The first thing that we can notice is that Garuda Indonesia has performed well in 2012, where we could indicate that there is an in in Total Operating Revenues by 12.1%. This increase in Total Operating Revenues was driven by an increase in sales from Schedule Airlines Services by 11.9% as well as sales from Non-Scheduled Airlines Services by 9.2%. This means that in terms of sales, Garuda Indonesia has both boost sales in 2012, in comparison to 2011. The net increase of 12.1% in their Operating Revenue outweighs the increase in the Operating Expense of only 10%. Logically, we can see that a 12.1% increase in Total Operating Revenues and a only 10% increase in Total Operating Expense will generate a greater Income from Operations. And this is true because, Garuda Indonesia’s Income from Operations increase significantly between 2011 and 2012, where there is an increase as staggering as 82%. Moreover, after it is deducted by tax expense, Net Income for the Year of 2012 has increased as much as 72.6% for Garuda Indonesia. This shows that Garuda Indonesia has performed extensively well in 2012 because it managed to increase Net Income for the Year by 72.6%, thanks to the increase in Operating Revenues. Moreover, we can also review the Other Comprehensive Income for Garuda Indonesia in between 2011 and 2012, to give an in-depth understanding of Garuda Indonesia’s performance in both 2011 and 2012. Garuda Indonesia also experience a significant increase in Other Comprehensive Income by 307.9%. The reason why Other Comprehensive Income for Garuda Indonesia increased significantly between 2011 and 2012 is because Garuda Indonesia experience a significant increase on their Gains on Revaluation Page 7 of Property and Equipment by 360.6%. This drives the net increase of Total Other Comprehensive Income by 307.9%. This situation brings Garuda Indonesia to record a 100% net increase in Total Comprehensive Income between 2011 and 2012, resulting a $14.5 million in 2012. Next, we could turn our heads to the Comparative Balance Sheet. In 2012, Garuda Indonesia financed its operation mainly through Long-Term Loans as much as $300 million. However, they have managed to reduce the amount of Bank Loans in 2012 by 83.96%, while Long-Term Loans has increased between 2011 and 2012 by 63.91%. This data shows that Garuda Indonesia has shifted its financing scheme by having less Bank Loans and increase Long-term Loans in 2012. Total Asset for Garuda Indonesia also increased by 55.28% in 2012, in comparison to 2011 and this was mainly driven by the increase in Cash as much as 148.78%. By now, we should get a picture of how Garuda Indonesia has performed in both 2011 and 2012 and how they have shifted their financing sources proportion. We also understand that they have performed extensively well in terms of sales and in order to give a more detailed understanding of Garuda Indonesia’s performance in 2011 and 2012, we will now take a look at the Vertical Analysis. Page 8 2B. VERTICAL ANALYSIS Under Vertical Analysis, 2011 will be the base year where the base amount of 100 will be set to both Total Asset as well as Total Liabilities plus Equity. The Vertical Analysis is useful in understanding the composition of a particular account. For example, we could clearly understand where the greatest portion of the Total Asset is coming from under the Vertical Analysis. There are several highlights that should be pointed out under the Vertical Analysis of Garuda Indonesia’s performance in 2011 and 2012. The first highlight is that we should be aware that there is a slight decrease in the proportion of the Current Asset towards Total Asset. In 2011, the proportion of Current Asset towards Total Asset is 26.03%, but in 2012, this number has decreased to 25.28%. This will then clearly change the proportion of Garuda Indonesia’s Non-Current Asset towards Total Asset between 2011 and 2012. In 2011, the proportion of Non-Current Asset towards Total Asset is 73.97%, while the proportion has slightly increased in 2012 to 74.72%. Hence, the first highlight is that there is an increase in the proportion of Non-Current Asset towards the Total Asset which means that there is a decrease in the proportion of Current Asset towards Total Asset in 2012, compared to 2011. The next highlight that we can point out is under the Liabilities and Equity Account. There is also changes in the proportion of Current Liabilities, Non- Current Liabilities as well as Equity towards the Total Liabilities and Equity account. In 2011, the proportion of Current Liabilities towards the Total Liabilities and Equity is 35.2%, however in 2012, this proportion has decreased to only 30%. This also goes for the proportion of Non-Current Liabilities towards Total Liabilities and Page 9 Equity where in 2011, the proportion of Non-Current Liabilities towards Total Liabilities and Equity was 34.2%, while in 2012 this number has decreased to 25.8%. The proportion of Total Liabilities has now decreased in 2012, in comparison to 2011 and this means that there is an increase in the proportion of Total Equity towards Total Liabilities and Equity. The proportion of Total Equity towards Total Liabilities and Equity has increased from 30.6% in 2011 to 44.3% in 2012. Hence, the second highlight under the Vertical Analysis is that the proportion of both, the Non-Current Liabilities and the Current Liabilities has decreased towards Total Liabilities and Equity and the proportion of Total Equity has increased. Under the Comparative Income Statement, the base year will also be set to the year 2011, but the base year amount of 100 will be set to Total Operating Revenue. In 2011, the proportion of Total Operating Expense towards Total Operating Revenues is as high as 97%. This means that 97% of the Total Operating Revenues is transformed into the form of an expense, while the remaining 3% becomes the Income from Operations of Garuda Indonesia in 2011. The highlight that should be made is that the proportion of Total Operating Expense in 2012 has decreased from 97% in 2011 to 95.2% in 2012. This means that in 2012, the proportion of Total Operating Expense is only 95.2% towards Total Operating Revenues. This is a good indicator because this means that Garuda Indonesia has reduced the proportion of its Operating Expense towards the Total Operating Revenues. Thus, the proportion of Income from Operation towards Operating Revenues in 2012 has increased to 4.8% in 2012, in comparison to 3.0% in 2011. This fact also confirms the increase in Net Income of the Year for Garuda Indonesia in 2012. Page 10 2C. RATIO ANALYSIS The first point that should be highlighted is that Garuda Indonesia is an airline service company that does not have any Inventories as well as Cost of Goods Sold in their Financial Report. Hence, there are some Ration Analysis indicators that cannot be satisfied, due to the fact that Garuda Indonesia operates in the service industry. We could start by analyzing the profitability of Garuda Indonesia in the year 2011 and 2012. The first Ratio Analysis that we can conduct to analyze Garuda Indonesia profitability level is the Profit Margin Analysis. In 2011, the profit margin of Garuda Indonesia has a value of 0.0207, but this value has increased in 2012 to 0.0319. This analysis confirms the statement under the Vertical Analysis where the proportion of Income from Operations towards Total Operating Revenue has increased between 2011 and 2012. Hence, it is confirmed by this ratio analysis that Garuda Indonesia has experienced a greater Profit Margin in 2012, in comparison to 2011. This then goes on to the Return on Total Asset Analysis. Return on Total Asset Analysis reflects Garuda Indonesia’s ability to use its asset to generate sales and is a great indicator of Garuda Indonesia’s efficiency. Since Garuda Indonesia recorded a higher Net Income in 2012, in comparison to 2011, the Return on Total Asset has increased from the value of 0.03 in 2011 to 0.05 in 2012. This means that Garuda Indonesia recorded a greater portion of Net Income towards its Average Total Asset, and this is a positive indicator for the performance of Garuda Indonesia. Page 11 We could now also analyze Garuda Indonesia’s liquidity indicators, by looking at their Current Ratio as well as Acid-Test Ratio. Under the Current Ratio Analysis, we could see that Garuda Indonesia has improved its current ratio analysis that can be seen by the increase in its current ratio from 0.74 to 0.84. The increase in the current ratio of Garuda Indonesia shows that Garuda Indonesia have a stronger liquidity position and that it has better abilities in fulfilling current obligation and liabilities. Moreover, we could also take a look at the Acid-Test Ratio analysis where they have managed to improve their Acid-Test Ratio from a value of 0.49 to 0.61. Acid-Test Ratio assess the most liquid items and this shows that Garuda Indonesia has a well short-term liquidity position. Next, we will review Garuda Indonesia’s solvency performance, through the Debt to Equity ratio and Time Interest Earned. The solvency test is basically to analyze Garuda Indonesia’s ability to cover long-term obligations. Under the Debt to Equity ratio, Garuda Indonesia has managed to improve its solvency performance. The Debt to Equity value of Garuda Indonesia in 2011 is 2.26, but it has significantly decrease in 2012 to 1.25. This is mainly driven by a greater increase in the proportion of Total Equity in comparison to the increase in Total Liabilities. A decrease of Debt to Equity ratio from 2.26 in 2012 to 1.25 in 2011 shows that Garuda Indonesia has better ability in fulfilling long-term obligation and this means that the business is less risky. The Time Interest Earned Ratio is also another indicator to test Garuda Indonesia’s solvency performance. This ratio reflects the risk of Garuda Indonesia’s creditor in loan repayments with interest. In 2011, the time interest earned for Garuda Indonesia has a value of 4.3 and this value has increased to 8.49 in 2012. The greater value of this ratio shows that Garuda Indonesia has greater Income before Tax and Interest to settle its Interest Expense. This also means that Garuda Indonesia is less risky for creditors to issue loans. This Page 12 ratio also shows that Garuda Indonesia has a good solvency performance and up to now, Garuda Indonesia has performed tremendously well. Last but not least is the Market Prospect Ratio which assess the market’s expectation for Garuda Indonesia and this test could be assessed by using the Price-Earning Ratio. The Price-Earning Ratio can also be viewed as an indicator of the market’s expected growth and risk for a share. Garuda Indonesia’s Price Earning Ratio has decreased from 2011 to 2012 from a value of 10.3 in 2011 to a value of 8.16 in 2012. The lower Price-Earning Ratio in 2012 in comparison to 2011 shows that the market expects Garuda Indonesia to have higher risk in the future. This test shows that Garuda Indonesia is expected to be more risky in the future and this is the only aspect that Garuda Indonesia did not perform well on. Therefore, we can conclude under the Ratio Analysis that Garuda Indonesia has performed tremendously well in improving their liquidity, profitability and solvency ratios, however it has a problem in the eyes of the market prospect where the market sees Garuda Indonesia to be more riskier in the future. However, overall, Garuda Indonesia has performed well, driven by lower Operating Expense, higher Income from Operations, lower level of Liabilities and higher level of Equity. CHAPTER 3: CONCLUSION Page 13 In conclusion, we could conclude that in the year 2012, Garuda Indonesia enjoy a greater amount of Income, due to the reduction in the proportion of Operating Expense towards Operating Revenues. This fact is also confirmed with the profitability ratio where their Net Profit Margin increases between 2011 and 2012. Garuda Indonesia also manage to reduce the level of debt (liabilities) that it holds and increases the level of Equity which results in a better solvency position for the company. Garuda Indonesia’s liquidity position also improve which means that they have better abilities in meeting current obligation. Despite its staggeringly good performance in 2012, the market sees that Garuda Indonesia will be riskier in the future and this is shown from the Price-Earning Ratio. However, overall Garuda Indonesia has created 2012 as their performing year where they have managed to substantially increase sales as well as income. Page 14 CHAPTER 4: APPENDICES A. Horizontal Analysis Calculation B. Vertical Analysis Calculation C. Ratio Analysis Calculation Page 15 4A. HORIZONTAL ANALYSIS Comparative Income Statement Accounts 2011 2012 Change (in %) OPERATING REVENUES Scheduled Airline Services $2,580,538,964.00 $2,887,250,744.00 11.9 Non-Scheduled Airline Services $246,459,221.00 $269,091,577.00 9.2 Others $269,330,220.00 $316,126,641.00 17.4 Total Operating Revenues $3,096,328,405.00 $3,472,468,962.00 12.1 OPERATING EXPENSES Flight Operations $1,750,918,352.00 $1,908,975,113.00 9.0 Ticketing, Sales and Promotion $265,239,707.00 $317,443,935.00 19.7 Passenger Services $261,326,123.00 $263,949,418.00 1.0 User charges and Station $222,389,175.00 $240,479,502.00 8.1 General and Administrative $198,258,565.00 $213,737,827.00 7.8 Maintenance and Overhaul $248,166,721.00 $288,853,664.00 16.4 Transportation operation $16,282,577.00 $18,290,868.00 12.3 Network Operation $13,579,030.00 $16,883,310.00 24.3 Hotel Operation $6,957,658.00 $25,809,070.00 270.9 Other charges - Net $20,862,909.00 $9,974,151.00 -52.2 Total Operating Expense $3,003,980,817.00 $3,304,396,858.00 10.0 INCOME FROM OPERATIONS $92,347,588.00 $168,072,104.00 82.0 Equity in Net Income of Associates $1,648,960.00 $1,927,546.00 16.9 Finance Income $22,738,090.00 $6,755,823.00 -70.3 Finance Cost -$19,801,370.00 -$25,224,919.00 27.4 INCOME BEFORE TAX $96,933,268.00 $151,530,554.00 56.3 TAX EXPENSE -$32,707,732.00 -$40,687,981.00 24.4 NET INCOME FOR THE YEAR $64,225,536.00 $110,842,573.00 72.6 Accounts Page 16 Comparative Balance Sheet OTHER COMPREHENSIVE INCOME Gain on Revaluation of Property and Equipment $10,145,598.00 $46,729,409.00 360.6 Exchange differences on Translating Foreign Operations -$1,167,245.00 -$3,845,700.00 229.5 Related Income Tax -$503,273.00 -$8,316,974.00 1552.6 Total Other Comprehensive Income - Net $8,475,080.00 $34,566,735.00 307.9 2011 2012 Change (in %) Accounts Accounts 2011 2012 Change (in %) ASSET CURRENT ASSETS Cash and its Equivalents $130,951,315.00 $325,784,942.00 148.78 Related Parties $31,621,930.00 $7,109,221.00 -77.52 Third Parties - Net $107,797,712.00 $122,361,877.00 13.51 Other Acc. Receivable $6,252,917.00 $7,877,613.00 25.98 Net Inventories $67,408,623.00 $83,443,877.00 23.79 Advances and Prepaid Expenses $70,416,120.00 $84,809,542.00 20.44 Prepaid Taxes $7,612,898.00 $5,179,146.00 -31.97 Total Current Assets $422,061,515.00 $636,566,218.00 50.82 NON-CURRENT ASSETS Maintenance reserve fund and security deposits $244,361,189.00 $461,933,812.00 89.04 Advances for Purchase of Aircraft $118,832,859.00 $497,157,419.00 318.37 Investment in Associates $14,138,616.00 $16,517,489.00 16.83 Deferred Tax Assets $40,311,170.00 $11,462,857.00 -71.56 Net Property and Equipment $682,630,571.00 $798,079,135.00 16.91 Investment properties $19,200,175.00 $18,912,898.00 -1.50 Accounts Page 17 Intangible Asset $1,271,320.00 $7,217,106.00 467.69 Deferred Charges $5,764,998.00 $1,319,027.00 -77.12 Other Assets $73,024,933.00 $68,831,805.00 -5.74 Total Non-Current Asset $1,199,535,831.00 $1,881,431,548.00 56.85 Total Asset $1,621,597,346.00 $2,517,997,766.00 55.28 LIABILITIES AND EQUITY CURRENT LIABILITIES Bank Loans $35,226,303.00 $5,651,251.00 -83.92 Related Parties $52,299,031.00 $83,773,489.00 60.18 Third Parties $76,062,105.00 $89,696,142.00 17.92 Other Accounts Payable $30,948,255.00 $16,669,543.00 -46.14 Taxes Payable $9,883,820.00 $20,407,652.00 106.48 Accrued Expenses $131,011,042.00 $169,268,165.00 29.20 Unearned Revenues $100,400,165.00 $162,270,578.00 61.62 Advances received Current Maturity of LT Liabilities $2,026,319.00 $20,417,066.00 907.59 Long Term Loans $31,515,310.00 $106,125,048.00 236.74 Lease Liabilities $60,388,440.00 $58,132,590.00 -3.74 Estimated liability for Aircraft return and maintenance cost $40,574,018.00 $21,795,528.00 -46.28 Total Current Liabilities $570,334,808.00 $754,207,052.00 32.24 NON-CURRENT LIABILITIES Long-Term loans $179,869,018.00 $294,822,442.00 63.91 Lease Liabilities $194,422,982.00 $148,220,008.00 -23.76 Estimated liability for Aircraft return $23,383,434.00 $30,536,262.00 30.59 Deferred Tax Liabilities $1,246,717.00 $15,019,898.00 1104.76 Employee Benefit Obligation $154,070,790.00 $152,987,113.00 -0.70 Other Non-Current Liabiliites $1,608,921.00 $7,244,913.00 350.30 2011 2012 Change (in %) Accounts Page 18 Total Non-Current Liabilities $554,601,862.00 $648,830,636.00 16.99 EQUITY Capital Stock $2,049,030,852.00 $1,146,031,889.00 -44.07 Additional Paid-In Capital $4,088,301.00 $4,548,037.00 11.25 Other Component of Equity -$108,485,498.00 -$149,237,597.00 37.56 Stock Option - $1,148,451.00 - Retained Earnings -$1,449,327,706.00 $110,598,370.00 -107.63 Equity atrributable to owner of the Company $495,305,949.00 $1,113,089,150.00 124.73 Non-Controlling Interest $1,354,727.00 $1,870.93 -99.86 Total Equity $496,660,676.00 $1,114,960,078.00 124.49 TOTAL LIABILITIES AND EQUITY $1,621,597,346.00 $2,517,997,766.00 55.28 2011 2012 Change (in %) Accounts Page 19 4B. VERTICAL ANALYSIS Comparative Income Statement Accounts 2011 2012 Index 2011 Index 2012 OPERATING REVENUES Scheduled Airline Services $2,580,538,964.00 $2,887,250,744.00 83.3 83.1 Non-Scheduled Airline Services $246,459,221.00 $269,091,577.00 8.0 7.7 Others $269,330,220.00 $316,126,641.00 8.7 9.1 Total Operating Revenues $3,096,328,405.00 $3,472,468,962.00 100.0 100.0 OPERATING EXPENSES Flight Operations $1,750,918,352.00 $1,908,975,113.00 56.5 55.0 Ticketing, Sales and Promotion $265,239,707.00 $317,443,935.00 8.6 9.1 Passenger Services $261,326,123.00 $263,949,418.00 8.4 7.6 User charges and Station $222,389,175.00 $240,479,502.00 7.2 6.9 General and Administrative $198,258,565.00 $213,737,827.00 6.4 6.2 Maintenance and Overhaul $248,166,721.00 $288,853,664.00 8.0 8.3 Transportation operation $16,282,577.00 $18,290,868.00 0.526 0.527 Network Operation $13,579,030.00 $16,883,310.00 0.4 0.5 Hotel Operation $6,957,658.00 $25,809,070.00 0.2 0.7 Other charges - Net $20,862,909.00 $9,974,151.00 0.7 0.3 Total Operating Expense $3,003,980,817.00 $3,304,396,858.00 97.0 95.2 INCOME FROM OPERATIONS $92,347,588.00 $168,072,104.00 3.0 4.8 Equity in Net Income of Associates $1,648,960.00 $1,927,546.00 0.1 0.1 Finance Income $22,738,090.00 $6,755,823.00 0.7 0.2 Finance Cost -$19,801,370.00 -$25,224,919.00 -0.6 -0.7 INCOME BEFORE TAX $96,933,268.00 $151,530,554.00 3.1 4.4 TAX EXPENSE -$32,707,732.00 -$40,687,981.00 -1.1 -1.2 Accounts Page 20 Comparative Balance Sheet NET INCOME FOR THE YEAR $64,225,536.00 $110,842,573.00 2.1 3.2 OTHER COMPREHENSIVE INCOME Gain on Revaluation of Property and Equipment $10,145,598.00 $46,729,409.00 0.3 1.3 Exchange differences on Translating Foreign Operations -$1,167,245.00 -$3,845,700.00 -0.04 -0.1 Related Income Tax -$503,273.00 -$8,316,974.00 -0.016 -0.24 Total Other Comprehensive Income - Net $8,475,080.00 $34,566,735.00 0.3 1.0 2011 2012 Index 2011 Index 2012 Accounts Accounts 2011 2012 ASSET CURRENT ASSETS Cash and its Equivalents $130,951,315.00 $325,784,942.00 10.92 17.32 Related Parties $31,621,930.00 $7,109,221.00 1.95 0.28 Third Parties - Net $107,797,712.00 $122,361,877.00 6.65 4.86 Other Acc. Receivable $6,252,917.00 $7,877,613.00 0.39 0.31 Net Inventories $67,408,623.00 $83,443,877.00 4.16 3.31 Advances and Prepaid Expenses $70,416,120.00 $84,809,542.00 4.34 3.37 Prepaid Taxes $7,612,898.00 $5,179,146.00 0.47 0.21 Total Current Assets $422,061,515.00 $636,566,218.00 26.03 25.28 NON-CURRENT ASSETS Maintenance reserve fund and security deposits $244,361,189.00 $461,933,812.00 15.07 18.35 Advances for Purchase of Aircraft $118,832,859.00 $497,157,419.00 7.33 19.74 Investment in Associates $14,138,616.00 $16,517,489.00 0.87 0.66 Accounts Page 21 Deferred Tax Assets $40,311,170.00 $11,462,857.00 2.49 0.46 Net Property and Equipment $682,630,571.00 $798,079,135.00 42.10 31.69 Investment properties $19,200,175.00 $18,912,898.00 1.18 0.75 Intangible Asset $1,271,320.00 $7,217,106.00 0.08 0.29 Deferred Charges $5,764,998.00 $1,319,027.00 0.36 0.05 Other Assets $73,024,933.00 $68,831,805.00 4.50 2.73 Total Non-Current Asset $1,199,535,831.00 $1,881,431,548.00 73.97 74.72 Total Asset $1,621,597,346.00 $2,517,997,766.00 100 100 LIABILITIES AND EQUITY CURRENT LIABILITIES Bank Loans $35,226,303.00 $5,651,251.00 2.2 0.2 Related Parties $52,299,031.00 $83,773,489.00 3.2 3.3 Third Parties $76,062,105.00 $89,696,142.00 4.7 3.6 Other Accounts Payable $30,948,255.00 $16,669,543.00 1.9 0.7 Taxes Payable $9,883,820.00 $20,407,652.00 0.6 0.8 Accrued Expenses $131,011,042.00 $169,268,165.00 8.1 6.7 Unearned Revenues $100,400,165.00 $162,270,578.00 6.2 6.4 Advances received Current Maturity of LT Liabilities $2,026,319.00 $20,417,066.00 0.1 0.8 Long Term Loans $31,515,310.00 $106,125,048.00 1.9 4.2 Lease Liabilities $60,388,440.00 $58,132,590.00 3.7 2.3 Estimated liability for Aircraft return and maintenance cost $40,574,018.00 $21,795,528.00 2.5 0.9 Total Current Liabilities $570,334,808.00 $754,207,052.00 35.2 30.0 NON-CURRENT LIABILITIES Long-Term loans $179,869,018.00 $294,822,442.00 11.1 11.7 Lease Liabilities $194,422,982.00 $148,220,008.00 12.0 5.9 2011 2012 Accounts Page 22 Estimated liability for Aircraft return $23,383,434.00 $30,536,262.00 1.4 1.2 Deferred Tax Liabilities $1,246,717.00 $15,019,898.00 0.1 0.6 Employee Benefit Obligation $154,070,790.00 $152,987,113.00 9.5 6.1 Other Non-Current Liabiliites $1,608,921.00 $7,244,913.00 0.1 0.3 Total Non-Current Liabilities $554,601,862.00 $648,830,636.00 34.2 25.8 EQUITY Capital Stock $2,049,030,852.00 $1,146,031,889.00 126.4 45.5 Additional Paid-In Capital $4,088,301.00 $4,548,037.00 0.3 0.2 Other Component of Equity -$108,485,498.00 -$149,237,597.00 -6.7 -5.9 Stock Option - $1,148,451.00 0.05 Retained Earnings -$1,449,327,706.00 $110,598,370.00 -89.4 4.4 Equity atrributable to owner of the Company $495,305,949.00 $1,113,089,150.00 30.5 44.2 Non-Controlling Interest $1,354,727.00 $1,870.93 0.1 0.0 Total Equity $496,660,676.00 $1,114,960,078.00 30.6 44.3 TOTAL LIABILITIES AND EQUITY $1,621,597,346.00 $2,517,997,766.00 100 100 2011 2012 Accounts Page 23 4C. RATIO ANALYSIS CALCULATION Current Ratio CR (2011) = Current Asset / Current Liabilities = 422,061,515 / 570,334,808 = 0.74 CR (2012) = Current Asset / Current Liabilities = 636,566,218 / 754,207,052 = 0.84 Acid-Test Ratio ATR (2011) = (Cash + Short-Term Investment + Current Receivable) / Current Liabilities = (2,766,623,874) / (570,334,808) = 0.49 ATR (2012) = (Cash + Short-Term Investment + Current Receivable) / Current Liabilities = (463,133,653) / (754,207,052) = 0.61 Account Receivable Turnover ART (2011) = Net Sales / Average Account Receivable Net = 3,096,328,405 / 141510635 = 2.188 Page 24 ART (2012) = Net Sales / Average Account Receivable Net = 3,472,468,962 / 141,510,635 = 2.453 Days Sales Uncollected DSU (2011) = Account Receivable Net / Net Sales = (145672559 / 3096328405) x 365 = 0.04 x 365 = 17.172 days DSU (2012) = Account Receivable Net / Net Sales = (137,348,711 / 3,472,468,962) x 365 = 14.44 days Total Asset Turnover TAT (2011) = Net Sales / Average Total Asset = 3,096,328,405 / 2,069,797,556 = 1.49 TAT (2012) = Net Sales / Average Total Asset = 3,472,468,962 / 2,069,797,556 = 1.68 Debt-to-Equity Ratio DTE (2011) = Total Liability / Total Equity = 1,124,936,670 / 496,660,676 = 2.26 DTE (2012) = Total Liability / Total Equity = 1,403,037,688 / 1,114,960,078 Page 25 = 1.25 Time Interest Earned TIE (2011) = Income before Tax and Interest / Interest Expense = 96,933,268 / 22,301,629 = 4.3 TIE (2012) = Income before Tax and Interest / Interest Expense = 151,530,554 / 17,847,162 = 8.49 Net Profit Margin NPM (2011) = Net Income / Net Sales = 64,225,536 / 3,096,328,405 = 0.207 NPM (2012) = Net Income / Net Sales = 110,842,573 / 3,472,468,962 = 0.319 Return on Total Asset RTA (2011) = Net Income / Average Total Asset = 64,225,536 / 2,069,797,556 = 0.031 RTA (2012) = Net Income / Average Total Asset = 110,842,573 / 2,069,797,556 = 0.0535 Page 26 Price-Earning Ratio PER (2011) = Market price per Common Share / Earning per Share = 0.03 / 0.0029 = 10.3 PER (2012) = Market price per Common Share / Earning per Share = 0.04 / 0.0049 = 8.16 Page 27