EasyJet: Financial Management Homework Essay Sample

How Companies Can Manage Events with a Global Impact

Global disruptions like the Covid-19 pandemic have a dramatic effect on global trade and often come as a shock to businesses. The appropriate response for companies typically involves building organizational resilience to anticipate current challenges as well as anticipate and address disruptions in the future.

How EasyJet Could Ensure Survival

To ensure its survival during lockdowns and travel bans, EasyJet could take every step necessary to reduce costs, conserve cash burn, enhance liquidity, and ensure it is best positioned for a return to business. For example, EasyJet could shrink its fleet through leases, sell its old assets, and access a government-corporate finance scheme to boost its balance sheet.

Why EasyJet Used Each of the Mentioned Financing Sources

Some of the reasons why EasyJet might have opted to use a government financing facility as one of its financing methods include; lower interest rates, less stringent credit requirements, and more flexibility in paying off the debt (Morrell, 2007). Additionally, tapping shareholders for money (equity financing) does not need to be repaid.

EasyJet Earning Per Share (EPS) and Gearing Ratio

EasyJet’s EPS (Diluted) for the twelve months ended in Sep. 2018 and 2019 were €90.2 and €87.8 respectively. Therefore, each share received 90.2 and 87.8 euros for 2018 and 2019 respectively. This means the company had more profits to distribute to its shareholders in 2018 than in 2019. Financial gearing could be considered the most relevant ratio for stakeholders because it reflects a company’s creditworthiness and financial risk (Mishra, 2019). In 2019, EasyJet’s gearing ratio was 44%, an increase of 14% compared to 2018 (Figure 1). However, since the gearing ratio is under 50%, EasyJet was still considered a lower geared company and depended more on equity. A significant reason for this development is the increase in debt, EasyJet started spending millions to offset its expenses (EasyJet, 2019). A strongly geared corporation is more likely to experience financial difficulties (Männasoo et al, 2018). This would affect several stakeholders, such as shareholders.

 Gearing-ratio
Figure 1. Gearing-ratio

EasyJet’s mid-level gearing ratio seems to have provided stability. EasyJet even became an FTSE100 member in December 2019 (Sharemagazine, 2019). On contrary, EasyJet’s decreasing EPS gave a poor indication of the health of the company, which destabilizes shareholders’ returns (Morrell, 2007b). Therefore, this allowed it to review its liquidity position, which confirms its actions in the quarter 3 report.

Reference List

Mishra, S. and Bansal, R. (2019). ‘Credit rating and its interaction with financial ratios: A study of BSE 500 companies’. In Behavioral Finance and Decision-Making Models (pp. 251-268). IGI Global.

Männasoo, K., Maripuu, P. and Hazak, A. (2018). ‘Investments, credit, and corporate financial distress: Evidence from Central and Eastern Europe’, Emerging Markets Finance and Trade, 54(3), pp. 677-689.

Corporate.easyjet.com, EasyJet Annual Report, and Accounts. (2019). Web.

Morrell, P., (2007). ‘Airline finance and aircraft financial evaluation: evidence from the field.’ In Conference conducted at the 2007 ATRS World Conference.

Magazine, S., News, M., and EasyJet could return to FTSE 100 next month, D., 2019. easyJet could return to FTSE 100 next month, Shares Magazine. Sharesmagazine.co.uk. Web.

Child’s Development And Education: Negative Effects Of Poverty

Poverty is one of the critical factors impacting a child’s evolution, and it also affects knowledge acquisition. This aspect might promote undesired outcomes, moreover, there is a high risk of the emergence of potentially dangerous changes in children’s everyday activities and interactions. Because these issues are too critical, they should be considered when analyzing the impact of poverty on children. Some adverse effects of poverty on a child’s development and education are poor performance academically, stagnant physical development, and behavioral issues.

First of all, because of low income in families, children might demonstrate poor academic performance. Having no access to sufficient resources, they might demonstrate low school grades. Moreover, parents might devote little attention to such children, and they might suffer from a lack of care. At the same time, low-income households do not have the resources to afford educational materials, and children suffer from it.

Moreover, as far as low-income families are limited in finances, they fail to support the appropriate physical development of a child. The lack of money impacts the living environment, and children fail to acquire the necessary physical features. Moreover, the food might also be inappropriate, and children can fail to acquire muscles. If it occurs, adolescents face a higher risk of acquiring complications.

Finally, children from low-income families have specific behavioral issues. The levels of aggression might be high, and they can become violent. Additionally, low-income families might be characterized by problematic relations between their members, and children might suffer from psychological pressure. Because of the rise of abusive practices, adolescents can start using them when interacting with others. At the same time, although such children might avoid acquiring negative features, the risk of misconduct remains high.

Altogether, poverty might have such negative effects on children as poor performance academically, stagnant physical development, and behavioral issues. Because of these factors, adolescents face a high risk of problems in the future. Moreover, the lack of attention linked to poverty remains a serious issue, and children suffer from it. For this reason, it is critical to devote attention to the problem; otherwise, there is a high risk of adverse outcomes among children.

Freedom Of Speech: Restrictions In Social Networks

I think that freedom of speech in today’s democratic society is important. The core value of the United States as a stable state is the ability of citizens to express their views, defend their rights, and demonstrate their approval or disapproval of the actions of the government on an equal footing. In addition, the richest and most successful countries have a high level of democratic institutions and civil society development. Everyday democracy worldwide faces challenges that may affect it, adapting it to certain events and phenomena. Pandemics, wars, and terrorism force governments to make certain adjustments to the level of freedom of speech, so some restrictions are sometimes useful. One such example is Ukraine, where in recent days, the armed forces have gone on a counteroffensive and are liberating territory. The General Staff has temporarily restricted media activities in areas of active fighting so as not to put the lives of military personnel in danger.

In the U.S., the problem of restricting freedom of speech has touched on social networks. I could argue that actions by the federal government to influence free speech on Facebook, Twitter, and other such networks are acceptable, but only if they are related to national security. The FBI could use the incident of terrorist recruitment of suicide bombers via the Internet to obtain the data of accounts that show suspicious activity (Interpol, 2022). At the same time, in my opinion, it is unacceptable to prohibit the transfer of all personal user data to intelligence agencies or to ban accounts for showing civic or political positions since these fundamental rights are the foundation of a democratic state. It seems to me that in the U.S., there is almost no problem with the authorities or social networks controlling information or public debate. It is because there are so many independent sources of information in the country, including big influential broadcasters like CNN, which cooperate with the government but are not part of it.

On the other hand, social networks retain their status as a forum for discussion, where people write posts expressing their personal opinions and political parties post their political programs. However, sometimes questionable reputational stories happen, as in the case of the vaccine campaign, where the White House and big social networks discredited certain sources of information. Civil society protested, and the government made concessions, so freedom of speech in the U.S. is perfectly safe despite some problems.

Reference

Interpol (2022). Analyzing social media.

error: Content is protected !!