Qantas Airways: Corporate Finance- Report Writing Assignment

Internal Code: MAS1574

Report Writing Assignment:

Task:

1.Calculate the weighted average cost of capital (WACC) for Qantas.
2.For the year ended June 2016 Qantas paid more than $500m to buy back shares. Explain possible reasons for Qantas to follow such a course of action?

  • Record underlying profit before tax: $1.53 billion, up 57%
  •  Record statutory profit before tax: $1.42 billion, up 80%
  •  Record results for Qantas Domestic, Qantas International, Jetstar Group, Qantas Loyalty
  • Near-doubling of earnings per share: 49c, up 24c
  • Return on invested capital: 23%, up 6.5 points
  • Operating cash flow: $2.8 billion, up 38%
  • Net free cash flow: $1.7 billion
  • $500m shareholder return: fully-franked 7c per share ordinary dividend and on market share buy-back
  • Additional cash bonus totalling $75 million for 25,000 non-executive employees
  • Continued investment in aircraft cabins and wi-fi
source 1. http://www.qantasnewsroom.com.au/media-releases/qantas-group-full-year-result-2016/
source 2. http://investor.qantas.com/FormBuilder/_Resource/_module/doLLG5ufYkCyEPjF1tpgyw/fil e/full-year-results/preliminaryFinalReport16.pdf
Source 3. https://www.qantas.com.au/infodetail/about/investors/2015AnnualReport.pdf

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