FINANCIAL STATEMENT ANALYSIS In order to obtain a comprehensive analysis of SIA's financial statement analysis, we have compared the 5 completed financial years (FYE) results of SIA with the average of sector and with 2 of its main competitors Cathay Pacific Airways and Qantas Airways. Cathay has closely followed SIA for years in terms of first-class cabin service and profitability. Qantas has long dominated the highly profitable Kangaroo route and is ranked 5th in the world according to the Skytrax survey. Please refer to the appendix for actual data for each analysis below. Liquidity Analysis Current Ratio: SIA's current ratio is more than 50% higher than the industry average and its competitors show SIA's strong liquidity position in meeting its short-term obligations. However, with the aggressive acquisition of 19 A380s, its current ratio is expected to decline in the coming years. This may not be a problem as the A380s are expected to bring more benefits than costs to SIA, as will be explained in the next section. Operational Efficiency Analysis Asset Turnover Ratio: SIA experienced a significantly lower asset turnover ratio than the industry average and its competitors, demonstrating that SIA is relatively ineffective at using its assets to generate sales. Receivables Turnover: With a lower receivables turnover ratio than the industry, SIA should consider reviewing its credit policies to ensure timely collection of extended credit that does not earn interest for the company. Profitability AnalysisSales: SIA's revenues have been increasing for the last 2 years since fiscal 2005. However, this growth has recently slowed from double-digit growth to 8.6%. This is no cause for concern as SIA is still considered one of the most profitable companies in the industry, as evidenced by its net profit and operating profit reports. With the new addition of A380s they will also be able to charge higher prices. Return on assets/invested capital: SIA's ROA is 4 times higher than the industry average and significantly higher than that of its competitors. Its ROE and ROIC are also significantly higher than the industry. All 3 reports recently surpassed Cathay. This demonstrates SIA management's ability to deliver high returns to its shareholders now and in the future. Capital Structure Analysis (Solvency) Debt-to-Equity Ratio: SIA's D/E ratio is significantly lower than the industry average and its competitors. It is financing its growth mostly with stocks that give it less exposure to risks associated with interest rates. Market value analysis