Financial ratio analysis is a core skill for students taking finance and accounting degrees, however students often struggle to translate theory into practice. If you need a complete university assignment help with a practical company analysis and use ratio analysis, this guide is for you! The following solution is a complete, solved ratio analysis of two famous New Zealand companies, Air New Zealand and Fonterra, tailored to Accountancy students. The downloadable Excel spreadsheet, with all numbers and formulas in place, removes any confusion when interpreting your analysis, makes completing a complex assignment possible, and increases the understanding of the material.
What is meant by Financial Ratio Analysis?
Financial ratio analysis is a quantitative tool to measure the financial health, performance and efficiency of the company. The analysis involves a process whereby a multitude of metrics are computed from financial statements to assess the company's efficacy.
Key Categories of Financial Ratios
Liquidity Ratios: Measure the company's ability to meet short-term obligations
Profitability Ratios: Assess how effectively the company generates profit from operations
Solvency Ratios: Evaluate the company's capacity to meet long-term debt commitments
Efficiency Ratios: Determine how well the company utilizes its assets and manages liabilities
Why Air New Zealand and Fonterra?
Both firms span different sectors of the New Zealand economy and therefore allow Finance students to make interesting comparisons. Air New Zealand is in the services and transport sector while Fonterra, as the world's largest dairy exporter, represents manufacturing and is involved with export industries. This diversity enables students to see the need for different financial assessment approaches based on varied business models.
Essential Financial Ratios Covered in This Analysis
Liquidity Ratios
1. Current Ratio
The current ratio measures a company's ability to pay short-term obligations with current assets.
Formula: Current Assets ÷ Current Liabilities
A ratio above 1.0 indicates the company has more current assets than current liabilities, suggesting healthy short-term financial health.
2. Quick Ratio (Acid Test)
A more conservative liquidity measure that excludes inventory from current assets.
Formula: (Current Assets - Inventory) ÷ Current Liabilities
This ratio is particularly important for Business students studying working capital management.
Profitability Ratios
1. Net Profit Margin
Shows the percentage of revenue that translates into actual profit.
Formula: (Net Profit ÷ Revenue) × 100
2. Return on Equity (ROE)
Evaluates the return generated on shareholders' equity investment.
Formula: (Net Income ÷ Shareholders' Equity) × 100
This metric is crucial for Management students understanding shareholder value creation.
Solvency Ratios
1. Debt-to-Equity Ratio
Assesses the proportion of debt financing relative to equity financing.
Formula: Total Debt ÷ Total Equity
2. Interest Coverage Ratio
Determines how easily a company can pay interest expenses on outstanding debt.
Formula: EBIT ÷ Interest Expense
What's Included in the Excel Download?
Comprehensive Spreadsheet Features
Our downloadable Excel workbook provides:
Pre-formatted financial statements for both Air New Zealand and Fonterra with 2025 data
Automated ratio calculations with built-in Excel formulas visible and editable
Comparative analysis charts showing visual performance trends
Industry benchmark comparisons to contextualize results
Color-coded interpretation guides for easy understanding
Editable templates allowing customization for different companies
Formula explanations in comment boxes for learning purposes
How Students Benefit
This resource is specifically designed for Finance, Business, and Management students who need to:
Complete accounting and finance assignments with confidence
Understand real-world application of theoretical concepts
Prepare comprehensive case study analyses
Develop presentations with professional financial visualizations
Study for examinations with practical, solved examples
Air New Zealand vs Fonterra: Industry Context
Air New Zealand - Aviation Sector
Business Model: Passenger and cargo air transportation
Key Financial Characteristics:
High fixed costs and capital-intensive operations
Seasonal demand fluctuations
Significant fuel price exposure
Currency exchange rate sensitivity
Critical Ratios: Operating margin, debt-to-equity, and asset turnover are particularly important for airlines due to expensive fleet assets and high operational costs.
Fonterra - Dairy Manufacturing
Business Model: Dairy collection, processing, and global distribution
Key Financial Characteristics:
Commodity price fluctuations
Working capital management challenges
Inventory considerations for perishable goods
Export revenue dependency
Critical Ratios: Inventory turnover, current ratio, and profit margins are essential for understanding Fonterra's performance due to seasonal production cycles and commodity price sensitivity.
Student Success Tips: Mastering Ratio Analysis
Step-by-Step Assignment Approach
Research the company's industry: Understand the business model and competitive landscape
Gather consistent financial data: Ensure all data comes from the same accounting period
Calculate systematically: Work through ratios category by category
Interpret with context: Compare against industry benchmarks and historical trends
Draw strategic conclusions: Link financial metrics to business performance and strategy
Common Mistakes to Avoid
Mixing financial data from different accounting periods
Ignoring industry-specific context when interpreting ratios
Over-relying on a single ratio instead of comprehensive analysis
Neglecting qualitative factors that impact financial performance
Failing to show calculation methodology and formula logic
2025 Financial Trends and Updates
Current Market Dynamics
Air New Zealand in 2025 shows recovery in international travel demand, ongoing fleet modernization investments, and increased focus on sustainability initiatives affecting capital allocation decisions.
Fonterra demonstrates global dairy market stabilization, supply chain resilience improvements following recent disruptions, and strategic diversification into value-added products.
Understanding these current trends helps students provide relevant, updated analysis in their assignments rather than using outdated information.
Practical Application for Your Academic Success
Course Alignment
This ratio analysis resource aligns perfectly with typical university courses including:
Financial Accounting introductory and intermediate levels
Corporate Finance
Financial Statement Analysis
Strategic Management
Managerial Economics
Career Skills Development
Beyond academic success, this resource helps develop career-ready skills:
Excel proficiency: Master advanced formulas and financial modelling techniques
Critical thinking: Evaluate business performance through quantitative analysis
Communication: Present complex financial information clearly
Decision-making: Support strategic recommendations with data-driven insights
Download Instructions
What You Receive
File Format: Microsoft Excel compatible with Excel 2016 and later
Compatibility: Also works with Google Sheets and LibreOffice Calk
Content: 8 comprehensive worksheets with 2025 financial data
Support: All formulas visible and editable for learning purposes
Using the Template
Simply download the file, enable editing in Excel, and navigate through the tabs for each company. The "Instructions" sheet provides detailed guidance, while the "Comparative Analysis" sheet offers side-by-side evaluation of both companies.
Conclusion
Learning how to do a financial ratio analysis is an essential skill for all business students that a comprehensive Air New Zealand and Fonterra analysis can serve as the ideal real life practice tool for. Bridging the theory studied in a classroom and applying it in the real world will help enhance and consolidate the knowledge areas students must engage with at school. The comprehensive workbook made available via an excel solved download for 2025 will be the ideal learning medium to gain a professional-grade workbook for any assignments you are completing for Accountancy courses, or searching for additional University Assignment Help to help your grades, with immediate value to you in clearer methodology and techniques based on industry standards.