se the reformulated financial statements for Qantas Airways Limited to answer Questions 1, 2, 3 and 4.

1) Free Cash Flow Analysis

2) Profitability Analysis

3) Systematic Growth Valuation

4) Residual Earnings Growth Valuation

Question 1

Calculate Free Cash flow using Method 1 and Method 2 for 2018 and 2019

`

Question 2

a. Provide first and second level breakdown of the company's return on common equity (ROCE) for 2017, 2018 and 2019

b. Discuss the drivers of profitability for 2017, 2018 and 2019.

Question 3

Provide a systematic analysis of growth for 2017, 2018 and 2019

a. Calculate the following:

i. Revenue Growth

ii. Growth in Common Shareholder's Equity (CSE)

iii. Growth in Comprehensive Income

b. Calculate the components of the change in Return on Net Operating Assets (RNOA.)

i. Change in core sales PM at previous asset turnover level

ii. Change due to change in asset turnover

iii. Change due to change in unusual items

iv. Discuss the drivers of change in RNOA

c. Calculate the components of the change in Return on Common Equity (ROCE).

i. Change in RNOA

ii. Change due to change in spread at previous level of financial leverage

iii. Change due to change in financial leverage

iv. Discuss drivers of change in ROCE

d. Calculate the components of the change in Common Shareholder's Equity (CSE) as follow:

a. Change due to change in sales at previous level of asset turnover

b. Change due to change in asset turnover

c. Change in financial assets

Question 4:

Below are earnings per share for Qantas Airways Limited. The required rate of return is 5.87%. The growth rate is forecasted at a constant rate of 2%. Number of share outstanding is 1,491.00.

Required:

a) Calculate the value per share using the pro forma provided

b) In your opinion, how did the recent pandemic affect the valuation of the company?

c) Calculate the implied growth rate in RE, if the current market price of the stock is $8.12.

d) In the context of investment decision-making, what are the advantages of using the reverse-engineering approach instead of computing the intrinsic value?

Refi Reformulated Income Statement \begin{tabular}{|lrrrrr|} \hline Residual Earnings (RE) Valuation & 2020 & 2021 & 2022 & 2023 & 2024 \\ \hline \hline Comprehensive income to common & 158 & (1,141) & 816 & 1,499 & 1,627 \\ Beginning of period CSE & 3,433 & 3,591 & 2,450 & 3,266 & 3,717 \\ \hline \end{tabular} Refi Reformulated Income Statement \begin{tabular}{|lrrrrr|} \hline Residual Earnings (RE) Valuation & 2020 & 2021 & 2022 & 2023 & 2024 \\ \hline \hline Comprehensive income to common & 158 & (1,141) & 816 & 1,499 & 1,627 \\ Beginning of period CSE & 3,433 & 3,591 & 2,450 & 3,266 & 3,717 \\ \hline \end{tabular}