Q2: Squair Co is an international airline which flies to more than 226 international destinations in 118 countries. Squair Co experienced rapid initial growth but in recent years the company has been facing a range of difficulties and challenges. The following are the key financial data and information for recent years ending 31 December

The following information is relevant:

The numbers of flights operated by Squair Co has remained the same in 2015 and 2016.

It is expected that there will be an increase in cost of license charged by three major airports at the beginning of 2017.

The licenses with five more major airports are due to expire in Dec 2017.

Required:

Prepare a report for the top management. In your report you should

Critically analyze and discuss the recent financial performance and financial conditions of Squair Co and highlight areas of concern for the future (9 marks)

State clearly any limitations and assumptions that you made in your calculations. (3marks)

Marks will be awarded for Professional format, structure and presentation of the report. (2 marks)

Squair Co	2016	2015	Industry average
Net profit margins	8%	12%	10%
Total Asset Turnover (TAT)	0.78	0.74	0.77
Return on Assets (ROA)	6.2%	8.7%	7.6%
Debt ratio	54%	80%	48%