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Pia Performance

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Comparative Efficiency Analysis of State Owned Enterprise (PIA) Versus Private Sector Enterprise (Shaheen Airlines); A Study of financial perspective

PROBLEM STATEMENT:

Financial Analysis Benefits

The analysis of financial data employs various techniques to emphasize the comparative and relative importance of the data presented and evaluates the position of the firm. These techniques include ratio analysis, common-size analysis, study of the differences in components of financial statement among industries, review of descriptive material, and comparisons of the results with other types of data. The information derived from these types of analyses should be blended to determine the overall financial position.

➢ Liquidity ratios measure a firm’s ability to meet its current obligations. They may include ratios that measure the efficiency of the use of current assets. ➢ Borrowings capacity (leverage) ratios measure the degree of protection of supplies of long-term funds. ➢ Profitability ratios measure the earning ability of a firm. ➢ Investors are interested in a special group of ratios, in addition to liquidity, debt, and profitability ratios. ➢ Cash flow ratios can indicate liquidity, borrowing capacity.

Analysis

Financial analysis consists of the quantitative and qualitative and qualitative aspects of measuring the relative financial position among firms and among industries. Analysis can be done in different ways, depending on the type of the firm or industry and specific needs of the user. Financial statements will vary by size of firm and among industries.

Financial statement analysis is a judgmental process. One of the primary objectives is identification of major changes (turning points) in trends, amounts, and relationships and investigation of the reasons underlying those changes. Often, a turning point may signal an early warning of a significant shift in the future success or failure of the business. The judgment process can be improved by experience and by the use of analytical tools.

The financial analysis of both the companies (PIA & Shaheen Air Lines) for three years will be analyzed in these followings aspects of analysis:

➢ Horizontal Common-size ➢ Vertical Common-Size ➢ Ratio Analysis (Liquidity, Leverage, Profitability & Cash Ratios)

AIMS AND OBJECTIVES:

➢ The basic aim is to find whether the private companies are having much of the financial efficiency in the market as compared to the state owned companies. ➢ To analyze the effects of independent variables (Net Sales, Companies Expenses and Customer Satisfaction & Loyalty) on dependent Variable (Company’s Profitability). ➢ The primary objective is identification of major changes (turning points) in trends, amounts, and relationships and investigation of the reasons underlying those changes. ➢ The company’s ability to meets its short-term and long-term obligations.

THEORETICAL FRAMEWORK:

Independent Variables Dependent Variable

STUDY ORGANIZATIONS:

Shaheen Airlines

Shaheen Air was founded in December 1993 and in just 10 months on account of its professional service, exceptional performance, customer support and expertise in aviation, on October 25, 1994, it was accorded the status of Second National Carrier of Pakistan. Since then Shaheen Air has been in a perpetual pursuit of excellence in operations and services. Since June 2004, under the new management of TAWA International Inc. of Canada, utmost priority was accorded to achieve the sole objective of making it a leading customer focused regional and international airline (http://www.shaheenair.com/sai1/Aboutus.html).
Shaheen Airlines undertakes domestic as well as international flights. Its international destinations are Abu Dhabi, Dubai and Doha from major cities of Pakistan, i.e. Islamabad, Lahore and Peshawar. Cargo is handled through an independent agency, Shaheen Airport Cargo Services (www.shaheenair.com/sail/company.html).
Pakistan International Airlines
Pakistan International Airlines PIA can trace its beginnings to the days when Pakistan still was not a nation. In 1946, Muhammed Ali Jinnah, also known as Quaid-e-Azam, realized the need for an airline network for the forming country. He called upon the help of an experienced industrialist Mirza Ahmad Ispahani (www. free encyclopedia\PIA\Pakistan International Airlines - Wikipedia, the free encyclopedia.htm).
Pakistan International’s biggest asset is Pakistan, an attractive tourist wonderland. Wide-open spaces, lush green fields, the world's largest collection of limitless mountain chains and peaks, lakes and rivers on the same mammoth scale, Pakistan's natural attractions have few equals. For the world's people, Pakistan presents a totally different face of Mother Nature. An offbeat, exciting place, coupled with the traditional warm hospitality of its friendly people.
Due to passenger demand, the airline increased its fleet before the end of the 1940s. The government of Pakistan, realizing the operation was failing economically, asked the airline to merge into a new national airline that the government was planning. As jaded tourists worldwide hunt for new settings and experiences, PIA has been playing the role of linking places and bringing people closer, from the four continents of the world. PIA has played a pivotal role in opening up the county's natural and historical riches by air linking then with the national and international mainstream (http://www.8bestsites.com/Flight-Pakistan/22/JE7HI94A/).
SAMPLING:

Questionnaire: The questionnaire consists of 7-8 questions regarding the customer satisfaction and loyalty will be filled of both the companies. The sample of customers will be 30 each of both the companies.

Interviews: Interviews from the top management and financial managers of both the companies regarding their opinions about the current and future outlook of their financial trend and position. The sample will be of 3 managers from the each company.

LIMITATIONS OF THE RESEARCH

There is a time constraint for submission of this report time available may not be sufficient for a large-scale financial analysis. The sample size of 30 customers each is also very small as compared to the scope of project.

The number of interviews is limited to 3 because the managers and the executives in companies have time constraints as well.

FUTURE SCOPE AND RESEARCH

This analysis will be reported to the companies so that they may take help from the analysis and recommendations of the project.

This project will also be a starting point for the MBA thesis in which it can be further extended.

PROJECT PROPOSAL

Comparative Efficiency Analysis of State Owned Enterprise (PIA) Versus Private Sector Enterprise (Shaheen Airlines); A Study of Financial Perspective

-----------------------

Net Sales

Company Expenses

Customer Satisfaction
& Loyalty

Company’s Profitability…...

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