AIRASIAS VISION

To be the largest low cost airline in Asia and serving the 3 billion people who are currently
underserved with poor connectivity and high fares.

AIRASIAS MISSION

To be the best company to work for whereby employees are treated as part of a big

family
Create a globally recognized ASEAN brand
To attain the lowest cost so that everyone can fly with AirAsia
Maintain the highest quality product, embracing technology to reduce cost and
enhance service levels

BALANCE SHEET
2011

2013

2014

(RM000)

(RM000)

(RM000)

2,232,731

1,380,435

1,337,849

Total Receivables, Net

493,777

454,878

362,672

Total Inventory

23,725

29,520

18,152

Prepaid expenses

278,043

276,628

320,237

Other current assets, total

368,921

781,724

494,468

Total current assets

3,397,197

2,923,185

2,533,378

Property, plant & equipment, net

9,786,030

11,292,826

12,533,535

7,334

7,334

7,334

--

--

--

283,600

394,837

422,074

ASSETS
Cash And Short Term Investments

Goodwill, net
Intangibles, net
Long term investments

Note receivable - long term

1,062,993

1,406,763

3,434,032

Other long term assets

1,191,656

1,831,149

1,733,765

Total assets

15,728,810

17,856,094

20,664,118

Accounts payable

65,134

71,899

100,227

Accrued expenses

601,014

673,099

672,901

1,126,154

1,119,436

2,274,928

599,330

707,821

1,064,197

Total current liabilities

2,391,632

2,572,255

4,112,253

Total long term debt

7,283,185

9,051,416

10,453,090

Total debt

8,409,339

10,170,852

12,728,018

Deferred income tax

Minority interest

Other liabilities, total

1,193,624

1,231,491

1,543,684

Total liabilities

10,868,441

12,855,162

16,109,027

277,991

278,106

278,297

Additional paid-in capital

1,227,935

1,229,068

1,230,941

Retained earnings (accumulated deficit)

3,353,992

3,492,903

3,037,035

Treasury stock - common

Unrealized gain (loss)

451

855

8,818

Total equity

4,860,369

5,000,932

4,555,091

Total liabilities & shareholders' equity

15,728,810

17,856,094

20,664,118

LIABILITIES

Notes payable/short-term debt

Current portion long-term debt/capital leases
Other current liabilities, total

SHAREHOLDERS EQUITY
Common stock

Other equity, total

Total common shares outstanding

2,779,908

2,781,064

2,782,974

2012

2013

2014

(RM000)

(RM000)

(RM000)

4,946,091

5,111,822

5,415,744

(3,206,584)

(3,585,826)

(3,786,925)

Depreciation/amortization

(567,176)

(597,258)

(719,497)

Unusual expense(income)

123,942

181,279

178,029

Other operating expenses, total

(269,225)

(191,831)

(233,760)

Total operating expense

(3,919,043)

(4,193,636)

(4,562,153)

Operating profit

1,027,048

918,186

853,591

79,391

112,320

121,869

Income before interest and taxes

1,106,439

1,030,506

975,460

Finance cost

(378,808)

(428,406)

(533,967)

Net operating profit

727,631

602,100

441,493

Foreign exchange gain/(losses)

116,286

(319,130)

(418,792)

Other gain on disposal of interest

118,640

78,265

Profit/(loss) before tax

962,557

361,235

22,701

Treasury shares - common primary issue

INCOME STATEMENT

REVENUE AND GROSS PROFIT

Total revenue
OPERATING EXPENSES
Cost of revenue total

Finance income

INCOME TAXES, MINORITY INTEREST AND EXTRA ITEMS

Provision for income taxes

(172,949)

889

60,135

Net income after taxes

789,608

362,124

82,836

789,608

362,124

82,836

Net income

789,608

362,124

82,836

Preferred stock dividend

(667,214)

(111,292)

Earnings available for common stockholders

122,394

250,832

82,836

28.4

13.0

3.0

Minority interest
Net income before extra. Items
Total extraordinary items

Earnings Per Share (EPS - sen)

LEVERAGE RATIO
DEBT RATIO
Debt ratio measures the proportion of total assets financed by the firms creditors. The higher
the ratio, the greater amount of other peoples money being used to generate profit (Gitman &
Zutter, 2012)

Debt Ratio

Total Liabilitie s
Total Assets

10 ,868,441
15,728,810
0.69
69.1%

Debt Ratio 2012

12,855,162
17,856,094
0.72

Debt Ratio 2013

72.0%

16,109,027
20,664,118
0.78

Debt Ratio 2014

78.0%

Analysis:
Air Asia debt ratio is very high throughout the 3-years period and increases from year-to-year
basis which in general, the company is taken a considerable high risk in order to grow.
However, looking into airline industry particularly the air travel, it is not a stable industry. Air
travel for business or leisure is one of the first elements to drop in time of economic
contraction. Besides, Air Asia has become a diversified company that not only focus its
business in airline industry, but also includes telecommunication (Tune Talk Sdn Bhd),
insurance (Tune Insurance Malaysia Berhad), and travel agency (AirAsia Go Holiday Sdn
Bhd) to name a few. According to Ahn, Denis and Denis (2006), there is a tendency that a
diversified company to have higher debt ratio and make larger investment (net cost of
capital/sales) than focused counterpart. They also pointed out that diversified company
managements decisions on investment were influenced by debt ratio and in order to
overcome the constraint of debt ratio, the company distribute liabilities throughout corporate
managers.
DEBT-TO-EQUITY RATIO
According to Heikal, Khaddafi and Ummah (2014), debt-to-equity reflects the company's
ability to meet all its obligations, which is indicated by what proportion of equity capital used to
pay the debt. The greater the ratio, the greater the loan capital that would cause the larger the debt
burden (interest cost) that must be borne by the company.

Debt - to - Equity Ratio

Total Liabilitie s
Shareholde rs' Equity

10,868,441
4,860,369
2.24

Debt - to - Equity Ratio 2012

Debt - to - Equity Ratio

2013

12,855,162
5,000,932
2.57

16,109,027
4,555,091
3.54

Debt - to - Equity Ratio 2014

TIMES INTEREST EARNED RATIO

The times interest earned ratio is a ratio that measures the companys ability to meet its
interest payments, and thus avoid bankruptcy. It also sheds some light on the companys
capacity to take on new debt (Kim & Ayoun, 2005). The higher its value, the better able the
firm is to fulfil its interest obligations

Times interest earned ratio

Earnings before interest and taxes

Interest

1,027,048
378,808
2.71

Times interest earned ratio 2012

918,186
428,406
2.14

Times interest earned ratio 2013

853,591
533,967
1.60

Times interest earned ratio 2014

EQUITY RATIO
The equity ratio measures the amount of assets that are financed by owners investments by
comparing the total equity in the company to the total assets

Equity Ratio

Total Equity
Total Assets

4,860,369
15,728,810
0.31

Equity Ratio 2012

5,000,932
17,856,094
0.28

Equity Ratio 2013

4,555,091
20,664,118
0.22

Equity Ratio 2014

REFERENCES
1. Kim, W. G., & Ayoun, B. (2005). Ratio analysis for the hospitality industry: A cross
sector comparison of financial trends in the lodging, restaurant, airline, and
amusement sectors. The Journal of Hospitality Financial Management, 13(1), 59-78.
2. Heikal, M., Khaddafi, M., & Ummah, A. (2014). Influence Analysis of Return on
Assets (ROA), Return on Equity (ROE), Net Profit Margin (NPM), Debt To Equity
Ratio (DER), and current ratio (CR), Against Corporate Profit Growth In Automotive

In Indonesia Stock Exchange. International Journal of Academic Research in Business

and Social Sciences, 4(12), 101-114.
3. Gitman, L. J., & Zutter, C. J. (2012). Study guide for Principles of managerial
finance, 13th Edition, Global Edition, Pearson Prentice Hall.
4. Ahn, S., Denis, D.J., Denis, D.K., 2006. Leverage and investment in diversified firms.
Journal of Financial Economics 79, 317-337