Ryanair Capital Structure

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Debt/Equity Ratio

Ryanair are not dependent on their stakeholder’s investments for internal transactions such as new aircrafts, fuel etc. Since Ryanair’s debt to equity ratio is lower than the international benchmark which most companies try to follow investors view it as a safe investment. This insinuates that the investors want to fund operations because the company is performing very well. Thus, Ryanair does not need to seek out extra debt financing due to their performance over the last couple of years.

Interest Cover

Ryanair’s ability to meet its interest costs out of current earning is an indicator of its long term solvency. Ryanair’s operating profit covers its interest many times and this is regarded as a satisfactory risk by long term creditors. Ryanair’s increased to 4.47 in 2016 from 2.34 in 2015 this indicates that the company is making more than enough money to pay its interest obligations with some extra earnings left over to make the principle payments. This is very good as banks and creditors look for an interest cover of at least 1.5 times of their current interest payable before handing out any loans. Ryanair’s figures for 2015 and 2016 show that the company is extremely liquid and should have no problems getting a loan if they were to expand their aircraft fleet or business.

Stock Market Measures

Earnings per share (EPS)

In 2016 Ryanair’s EPS nearly doubled from 62.59 in 2015 to 116.26. A trend in EPS shows investors how well their investment has been performing over the last year. This momentous jump shows that the company is more profitable and has more profits to distribute to its shareholders. The shareholders can take the EPS figure and compare it to other years or business to see just how well Ryanair are performing.

Price Earnings ratio (P/E)

This ratio is used to show investors how long it would take to recover the share price, based on the company’s current earnings. The investors can view Ryanair’s future earning ability by looking at the market price of the share. Ryanair’s P/E may have decreased from 1.01 years in 2015 to 0.72 years in 2016, however this is still quite high which indicates that Ryanair is expected to increase its profits in the future.

Dividend per share (DPS)

From 2015 to 2016 Ryanair’s DPS increased from 1.67 cents to 3.95 cents indicates that the company is performing well in its current market condition and is financially stable. If Ryanair reinvest their profits into the company instead of paying out their dividends can potentially produce higher dividends in the long term. Ryanair doubled its DPS which implies Ryanair’s management team is confident in the company's future profits.

Dividend Yield

This shows Ryanair’s returns to investors in the form of dividends as a result of share investment. This is not Ryanair’s complete earnings for the reason that total earnings are rarely paid out and instead are used to build up the company’s reserves for future needs. Ryanair’s dividend yield decreased by approximately 20% from 2015 to 2016. The airplane industry rarely return its dividends, so even the smallest dividend might produce a high dividend yield ratio for Ryanair.