Question

Choose two (2) set of financial statements of two companies of UAE for the same latest financial year from similar industries, which are publicly available (online), and:

1. Recognize and describe the main items in the Income Statement, Statement of owner’s equity, and the Statement of Financial Position (Balance Sheet).   

2. Compare and contrast the Asset/Liability/Equity/Revenue/Expenses between the two set of financial statements.

3. Outline the possible reasons for the differences of the above items in the two companies’ financial statements (use table and diagram as needed).   

Answer 1

Here are the Two Aviation Giants of UAE The emirates and Air Arbia

Income Statement of both companies show an increase in operating cost which shows that the cost of running an airline like petroleum, airport taxation, Maintainance and repairs have increased in UAE .

The finance cost of bpth companies have increased which means company is paying heavy intrest on bank borrowing, Utilisastion fees or is lossing out money on net foreign exchange loss.

Though profits of emirates have fallen due to an increase in finanace cost but we can see an increase in revenue on both aviation giants which shows out a positive impact over the industry

Owner's Capital

Though the capital of both companies remain same but there are some massive changes in reserves which shows an overall increase in Owner's equity. Both companies are focusing on creating well reserves in retained which the firm may seek at the time of urgency of funds. Though it can be also used to reduce the cost of issuing the external equity.

Balance Sheet

Cash in Hand of Air Arbia has increased which shows the company is mainatining the higher liquidity while there have been some decrease in cash in Hand due to decrease in profits as compared to last year.

Non- Current Assets While Emirates have invested heavily in property plant & equipment which shows an increase in Non- Current Assets while Air Arbia have invested in advancment of new aircraft and right of use of asset. Both companies have an net increase in Non - Current Assets which is ultimately a proftiable part of any investor.

Non - Current Liabilities- Finance lease liabilities have decreased in Air Arbia which ultimately decreases it's overall leverage ratio while there has been increase in borrowings in Emirates Group which increases the financial cost of the company and the results of the same is shown with increase in finance cost in Income Statement which decreases the profits.

Current Liabilities - Current liabilities have decreased in Emirates group due to decrease in short term borrowings and trade payables while there has been increase in Current Liablities for Air Arbia due to increase in operations of the company.

But the overall, Liabilities shows a decrese in Emirates Group due to massive decrease in Current Liablities while there is increase in Current Liablities have added an increase in liablities column of Air Arbia.

Conculsion :

While the earning per share has decreased in Emirates but its overall revenue has increased and with my mind of expansion they have borrowed money and have relevant assets and Reserves to pay for it the company looks in good posistion for future endeavours.

Air Arbia have made into profits this year from the losses made in last year. They do have reduced there non- current liabilites while keeping cash in hand and assets intact or increased in numbers for future purposes.

Both companies have managed to keep their capital intact despite having some major changes in reserves which shows their value towards their equity shareholder's. The overall Aviation Industry saw a positive increase in Financial Year 2018-19.