Delta Air Lines, Inc., is one of the largest airlines in the United States. It has operated on the verge of bankruptcy for several years. Exhibit 5.17 presents selected financial data for Delta Air Lines for each of the five years ending December 31, 2000, to December 31, 2004. Delta Air Lines filed for bankruptcy on September 14, 2005. We recommend that you create an Excel spreadsheet to compute the values of the ratios and the Altman's Z-score in Requirements a and b, respectively.

REQUIRED
a. Compute the value of each the following risk ratios.
(1) Current ratio (at the end of 2000-2004) (2) Operating cash flow to current liabilities ratio (for 2001-2004) (3) Liabilities to assets ratio (at the end of 2000-2004) (4) Long-term debt to long-term capital ratio (at the end of 2000-2004) (5) Operating cash flow to total liabilities ratio (for 2001-2004) (6) Interest coverage ratio (for 2000-2004)
b. Compute the value of Altman's Z-score for Delta Air Lines for each year from 2000 to 2004.
c. Using the analyses in Requirements a and b, discuss the most important factors that signaled the likelihood of bankruptcy of Delta Air Lines in 2005.

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Exhibit 5.17 Financial Data for Delta Air Lines, Inc. (amounts in millions, except per-share amounts) (Problem 5.16) For Year Ended December 31, 2003 2004 2002 2001 2000 Sales $15,002 $14,087 $13,866 $13,879 $15,657 Net income (loss) before interest and taxes $(3,168) $(432) $(1,337) $(1,365) $1,829 Interest expense $824 $757 $665 $499 $380 Net income (loss) $828 $(5,198) $(773) $(1,272) $(1,216) Current assets $3,606 $4,550 $3,902 $3,567 $3,205 Total assets $21,801 $25,939 $24,720 $6,455 $23,605 $6,403 $21,931 $5,245 Current liabilities $5,941 $12,507 $6,157 Long-term debt $11,040 $9,576 $7,781 $5,797 Total liabilities $27,320 $26,323 $23,563 $19,581 $16,354 Retained earnings (deficit) Shareholders' equity Cash flow provided by operations Common shares outstanding Market price per share $(4,373) $844 $1,639 $2,930 $4,176 $(5,519) $(384) $1,157 $4,024 $5,577 $(1,123) $142 $225 $236 $2,898 123.2 123.0 139.8 123.5 123.4 $7.48 $11.81 $12.10 $29.26 $50.18