TASK 3: Dynamic Air Co is an international airline which flies to destinations all over the South East Asia.

    (9,200)            (10,200)

Cash generated from operations                    18,480             24,310

The following information is also relevant:

Dynamic Air Co had exactly the same flight schedule in 2017 as in 2016, with the overall number of flights and destinations being the same in both years.

In April 2018, Dynamic Air Co had to renegotiate its licenses with four major airports, which led to an increase in the prices Dynamic Air Co had to pay for the right to operate flights there. The licenses with these major airports are due to expire in December 2018, and Dynamic Air Co is currently in negotiation with these airports.

Required:

(a) Calculate the following ratios for the years ended 31 December 2016 and 2017:

1.    Operating profit margin;

2.    Return on capital employed;

1. Net asset turnover;

4.    Current ratio;

1. Interest cover;
2. Gearing (Debt/Equity).

Note: For calculation purposes, all loan notes should be treated as debt.

(b) Comment on the performance and position of Dynamic Air Co for the year ended 31 December 2017. Note: Your answer should highlight any issues which Dynamic Air Co should be considering in the near future.