Sia Operational Efficiency Analysis
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Operational Efficiency Analysis
Assets Turnover Ratio: SIAs recorded significantly lower asset turnover ratio compared to the industry average and its competitors, showing that SIA is relatively ineffective in utilising its assets in generating sales.
Receivables Turnover: With a lower receivables turnover ratio than the industry, SIA should consider reviewing its credit policies to ensure timely collection of imparted credit that is not earning interest for the firm.
Profitability Analysis
Sales: SIAs revenue has been increasing for the last 2 years since FYE2005. However, this growth has slowed down from double digit growth to 8.6% recently. This is not a concern as SIA is still considered as one of the more profitable companies in the industry as shown in its Net Income and Operating profit ratios. With the new addition of A380s they will also be able to charge higher prices.
Return on Assets/Equity/Invested Capital: SIAs ROA is 4 times above industry average and significantly higher than its competitors. Its ROE and ROIC is also significantly higher than the industry. All 3 ratios have surpassed Cathay recently. This shows SIA managements capability in providing high returns