Ryanair Holdings PLC (LSE: RYA) operates a low-fare scheduled passenger airline serving short-haul, point-to-point routes between Ireland,
Question:
Ryanair Holdings PLC (LSE: RYA) operates a low-fare scheduled passenger airline serving short-haul, point-to-point routes between Ireland, the United Kingdom, Continental Europe, and Morocco. The operating activities section of its statement of cash flows and a portion of the investing activities section are presented in Exhibit 9. The statement of cash flows was prepared in accordance with IFRS.
Analysts predict that as Ryanair grows in coming years, depreciation expense will increase substantially. Based on the information given, address the following:
i. Contrast reported depreciation expense to reported capital expenditures and describe the implications of future growth in depreciation expense (all else being equal) for future net income and future cash from operating activities.
ii. Explain the effects on free cash flow to equity of changes in 2012 in working capital accounts, such as inventory, accounts receivable, and accounts payable, and comment on the long-term sustainability of such changes.
Step by Step Answer:
i In the 20102012 period the amount of depreciation expense relative to the amount of capital expenditures changed significantly For example in 2012 c...View the full answer
