ABSTRACT
Net cash flows for financial appraisal are normally stated in constant or base year prices. Financial planning is the process whereby an airline’s corporate goals, and the strategies designed to meet those goals, are translated into numbers. Budgets help the coordination between the various parts of the airline. Short to medium-term financial planning is generally described as budget planning and control. The management of an airline’s capital can be divided into short-term working capital management and longer term capital budgeting. Control will also be exercised through the cash and working capital budgets. The appropriate level of working capital is determined by the levels of current assets and current liabilities. The way in which an airline’s assets are financed involves a trade-off between risk and profitability. The average settlement period is calculated by expressing the trade debtors’ amount on the balance sheet date in terms of the numbers of days’ sales.
