Westjet Analysis Paper

A main measurement of any company's solvency is their particular debt- to-asset ratio. " This rate indicates the proportion of total possessions that are loaned by financial debt. ” (text) If this kind of ratio is high what this means is a greater funding risk. In 2007 WestJet's debt-to-asset rate was 68. 2%, it decreased in 2008 to 66. 9%. This means they are really financing many assets with equity in 2008 when compared with 2007. When we compare this kind of ratio to Air Canada we see a telling story. In 2007 Air Canada's debt-to-asset rate was 77. 8%, however in 2008 it rose to 91. 6% mainly as a result of a rise in current financial obligations. This demonstrates Air Canada is depending greatly about debt to finance their assets. When comparing both, it is obvious that WestJet's financing strategy is less risky as well that WestJet's percentage was even more consistent in 2007 and 2008.

In order to get a total look at WestJet's financial efficiency we need to break from the key four financial statements and show at a number of industry certain indicators. The first signal is Revenue per Available Seat Mile (RASM). This is actually the total revenue divided by simply total visitor capacity. WestJet's RASM to get 2008 is 14. 88 cents up from 16. 62 cents in 2007. It has grown year after year since 2004. Air Canada's RASM to get 2008 is 17. 9 cents up from of sixteen. 9 mere cents in 3 years ago. This makes perception based on WestJet's low cost technique.

The 2nd key sign is the Cost per Readily available Seat Mile (CASM). This is simply the operating expense divided by total guest ability. In 2008 WestJet's CASM was 13. 17 pennies up by 12. thirty four cents in 2007. These types of numbers are very low when compared with Air Canada's CASM of 17. being unfaithful cents in 2008 and 16. several cents in 2007. This suggests that WestJet does a better job of controlling expenditures than Surroundings Canada.

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