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The current report mainly reflected on analysing the business performance of both Iberia Plc and Air Berlin Plc which operates in airline industry. It has been observed that due to poor economic condition of Eurozone, both the airline firms faced decline in their performance as per their reported financial results. The financial ratios of the companies have been calculated considering financial data of last three years (2012, 2013 and 2014) for analysing the financial condition. From the analysis, it has been found that Iberia has a better position than Air Berlin. However, it is required that both the firms have to improve their performance for sustainable growth in the future. The non-financial performance depicted that Iberia has good employee retention rate in comparison to Air Berlin. Introduction Financial analysis of an organisation is undertaken by the management for assessing the financial performance of the business over the period. It enables the firm to understand their position among the competitors and in the market (Nankervis, Miyamoto and Taylor, 2005). In this particular study, two organisations would be analysed based on their audited data. One is Air Berlin Plc which is a budget carrier and another is Iberia Plc which is a traditional national carrier. Therefore, evaluation of financial ratios shall be performed to make comparative analysis. Also, some non-financial measures would be considered to assess the performance of both the firms. Financial Measure 1. Profitability Ratios It is used by the firms for assessing the ability of the firm in generating earnings in comparison to incurred costs or expenses (Thukaram, 2007). a. Net Profit Ratio It can be observed from the above table that both the companies are not able to generate enough sales that can boost their net income. In the year 2014, Iberia made a sale of €4122 million (Iberia, 2015). In comparison, Air Berlin generated €4160 million revenue. Despite of slight increase in the sales value, the net profit ratio of Air Berlin is in a negative side in comparison to Iberia. The trend of the ratio shows that Air Berlin is facing higher loss and Iberia’s performance has improved in 2014 than previous years (Air Berlin, 2015). However, the rate of performance rise is very less and also reduced turnover, high tax and interest amount might have affected its earnings. Therefore, it can be indicated that both the firms being a part of Eurozone has suffered high drop in their net sales thereby leading to decrease in net profit. b. Return on Shareholder’s Equity The above ratio is calculated to measure the profitability of the company by using shareholder’s equity (Khan and Jain, 2011). From the above results, it can be discussed that the investments done by the shareholders of Iberia do not show a positive return. In 2014, the company generated loss by investing the shareholder’s investment in different resources. Due to this, the firm was not able to generate income. However, in preceding years, particularly 2012, the shareholders of Iberia saw a 191% return on their investment (Iberia, 2013). The trend depicts that the rate of return has massively gone down and it is assumed that it would decrease further as the company is not able to utilise the shareholders’ investment. On the other hand, in spite of decline in net income and fall in shareholders’ investment, Air Berlin managed to generate return in 2013 in comparison to 2012 (Air Berlin, 2014). However, in 2014, the return on equity has gone down but the company has been able to generate return. Therefore, it can be pointed that Air Berlin has been quite successful in accumulating profit in contrast to Iberia.

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