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Financial Analysis on Air China Limited
- 1 Soochow University
* Author to whom correspondence should be addressed.
Abstract
The outbreak of COVID-19 has caused a significant decline in the aviation service industry's operating conditions due to the decrease in people's travel volume. This study conducts a fundamental performance analysis of Air China, in comparison with China Southern and China Eastern Airlines, using critical accounting analysis and data disclosed in the 2021 annual financial statements. The analysis includes liquidity, solvency, efficiency, and return on investments, providing a measurement of the potential of Air China in the Chinese civil aviation industry in the post-pandemic era. The study provides suggestions for investors based on the value of Air China. The results of the analysis show that Air China has maintained good liquidity with a current ratio of 0.51, indicating that the company can meet its short-term liabilities. Solvency analysis indicates that the company has a debt-to-equity ratio of 1.05, which is lower than China Southern and China Eastern Airlines, indicating that Air China has less financial risk. The efficiency analysis shows that Air China has a better asset turnover ratio than its peers, indicating better management of its assets. Return on investment analysis indicates that Air China has a better return on equity than other two competitors, indicating a higher potential for investor returns. Overall, the study suggests that Air China has the potential to perform well in the Chinese civil aviation industry in the post-pandemic era. Investors should consider Air China as a viable investment option, given its good liquidity, solvency, efficiency, and return on investment.
Keywords
airline industry, fundamental analysis, financial valuation
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Cite this article
Ma,J. (2023). Financial Analysis on Air China Limited. Advances in Economics, Management and Political Sciences,31,40-47.
Data availability
The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.
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Volume title: Proceedings of the 7th International Conference on Economic Management and Green Development
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