Airlines Companies A and B are airline companies. One firm is a major airline that flies both domestically and internationally and offers additional services including

Airlines

Companies A and B are airline companies. One firm is a major airline that flies both domestically and internationally and offers additional services including travel packages and airplane repair. The company owns a refinery to supply its own jet fuel as a hedge to fuel-price volatility. In 2008, this company merged with one of the largest airline carriers in the United States.

The other company operates primarily in the United States, with some routes to the Caribbean and Latin America. It is the leading low-cost carrier in the United States. One source of operating efficiency is the fact that the company carries only three different aircraft in its fleet, making maintenance much simpler than for legacy airlines that might need to service 20 or 30 different aircraft models. This companys growth has been mostly organicit expands its routes by purchasing new aircraft and the rights to fly into new airports.

Only company A and B

Which financial ratios can you derive from these or other items on the balance sheet, and what do these ratios tell us about how the companies are performing relative to each other?

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2/16/2019 Chegg: Case Studies in Finance Newspaper Pharmaceuticals Power Assets Cash & ST estments 10 5 15 14 41 10 18 35 10 25 Current Assets-Other Current Assets Total Not Property Pant &Equipment 42 Long-Term Markotable Secunties0 Goodwil &Intangbles 14 3 31 84 19 46 3 23 62 1334 S6 39 o 6419 19 85 26 21 Assets-Total 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 Labilities & Equity % Accourts Payable Debt in Current Liabises Current Libie-Other Current Liabilities-Total Long-Term Deb 3 1223 17 28 24 62 22 50 13 36 15 66 29 59 29 34 71 4 753 (59 34 54 12 41 159 Stockholders Equity Total Liabilities &Equity 100 100 100 100 100 100 00 100 00 100 00 100 100 100 00 100 100 100 100 100 100 100 1 100 100 100 100 100 100 100 100 100 Finance Diw. Operaing Exp hterent Expense-rinance Diviston Gross Proft 61 2 40 31 (22) (1 77 76 9233 36 0 @6) (12) (12) (23) 45 (26) (33) (1) (19) R R&D Exp Depreciation& mort Other Operaang Expense Eantg,beforehteestandTses16 19 32 16 30 6 13 47 12 25191814 Net Interest Expense 0 034) (2 18 17 29 16 31 447()14 8 15 Extraord. Rem & Account Change o Mnority Int in Earmings Net Income 19 10 23 5304(7) ) 12 1.20 1.10 0.95 095 0.95 120 1.15 1.15 1.15 0.95 1.15 0.75 1.15 150 105 100 100 10.9 24.2 34.0 12.8 22.0 59.8 24.0 34.9 mmf 18.3 22.9 27.2 9.7 nmf 19.2 3.9 2.4 4.2 3950 28 0.3 nnt 27 0.8 5.5 61 1.8 1.2 .5 64 7.9 00 88.2 0.0 21.8 00 0.0 29.5 41.8 (39 0.0 88.7 91.5 0.0 0.0 197.5 Dividend Payout ) 052 0.60 064 201 1130 043 1.53 3.17 104 153 99 3.4 108 1.04 031 044 041 1.35 090 245 0.72 037 1.45 2.82 0.62 103 063 2.49 0.77 a30 Current Ratio Asset Management Inventory Turmover Recelvables Turnover 370 05.4 5.9 0.5 628 3.9 109.7 mmf n 61.2 2.1 1.6 17.6 4.6 7.7 165 43.3 13.0 25.3 136 53 88 9.3 4.3 9 S.8 9.3 179 11.7 1.9 1.0 2.2 24 08220 0.6 14.1 244.8 2.6 2.5 06 2.5 5541 Howod Assets Turnover Total Debt/Total Assets LTDetShareholders. Eqty(9 624 435 95.2 0.1 448 00 262 n 29,3 0.0 S01.9 S4.6 292.5 2 G1.532a9 96 629 6.0 28.5 589 291 474 159.0 657 45.7 87.7 S9.0 83.0 242 79.5 887 136 10.0 6.5 m972 nnt 4 81 2 nmf 1.7 232 1.9 741 4g 10.2 DuPont Analysis Net Profit Mergn%) 11.1 10.6 19.0 10.] 22.8 3.5 4.9 30.1 4,06)029 12.1 2.0 15.3 0.5 42 Asset Turmover 0.8 0.3 15 09 .1 0.3 24 06 1.00.3060.4 0.5 Return on Equity EXHIBIT 6.1 I Common-Sized Financial Data and Ratios Data sources: S&P Research Insight, Capital IQ, and Value Line Investment Survey. 46.0 23.6 19.7 219 46.2 5.8 2.9 m 8.1 (4.8) (5.0 16.1 n2 10.4 4.9 36.2 ot a meaningful figure Airlines Companies A and B are airline companies. One firm is a major airline that flies both domestically and internationally and offers additional services including travel packages https://creader.chegg.com/#/books/g781 25935 3406/cfi/6/381/4/1 4/2@0:0.365 2/16/2019 Chegg: Case Studies in Finance Newspaper Pharmaceuticals Power Assets Cash & ST estments 10 5 15 14 41 10 18 35 10 25 Current Assets-Other Current Assets Total Not Property Pant &Equipment 42 Long-Term Markotable Secunties0 Goodwil &Intangbles 14 3 31 84 19 46 3 23 62 1334 S6 39 o 6419 19 85 26 21 Assets-Total 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 Labilities & Equity % Accourts Payable Debt in Current Liabises Current Libie-Other Current Liabilities-Total Long-Term Deb 3 1223 17 28 24 62 22 50 13 36 15 66 29 59 29 34 71 4 753 (59 34 54 12 41 159 Stockholders Equity Total Liabilities &Equity 100 100 100 100 100 100 00 100 00 100 00 100 100 100 00 100 100 100 100 100 100 100 1 100 100 100 100 100 100 100 100 100 Finance Diw. Operaing Exp hterent Expense-rinance Diviston Gross Proft 61 2 40 31 (22) (1 77 76 9233 36 0 @6) (12) (12) (23) 45 (26) (33) (1) (19) R R&D Exp Depreciation& mort Other Operaang Expense Eantg,beforehteestandTses16 19 32 16 30 6 13 47 12 25191814 Net Interest Expense 0 034) (2 18 17 29 16 31 447()14 8 15 Extraord. Rem & Account Change o Mnority Int in Earmings Net Income 19 10 23 5304(7) ) 12 1.20 1.10 0.95 095 0.95 120 1.15 1.15 1.15 0.95 1.15 0.75 1.15 150 105 100 100 10.9 24.2 34.0 12.8 22.0 59.8 24.0 34.9 mmf 18.3 22.9 27.2 9.7 nmf 19.2 3.9 2.4 4.2 3950 28 0.3 nnt 27 0.8 5.5 61 1.8 1.2 .5 64 7.9 00 88.2 0.0 21.8 00 0.0 29.5 41.8 (39 0.0 88.7 91.5 0.0 0.0 197.5 Dividend Payout ) 052 0.60 064 201 1130 043 1.53 3.17 104 153 99 3.4 108 1.04 031 044 041 1.35 090 245 0.72 037 1.45 2.82 0.62 103 063 2.49 0.77 a30 Current Ratio Asset Management Inventory Turmover Recelvables Turnover 370 05.4 5.9 0.5 628 3.9 109.7 mmf n 61.2 2.1 1.6 17.6 4.6 7.7 165 43.3 13.0 25.3 136 53 88 9.3 4.3 9 S.8 9.3 179 11.7 1.9 1.0 2.2 24 08220 0.6 14.1 244.8 2.6 2.5 06 2.5 5541 Howod Assets Turnover Total Debt/Total Assets LTDetShareholders. Eqty(9 624 435 95.2 0.1 448 00 262 n 29,3 0.0 S01.9 S4.6 292.5 2 G1.532a9 96 629 6.0 28.5 589 291 474 159.0 657 45.7 87.7 S9.0 83.0 242 79.5 887 136 10.0 6.5 m972 nnt 4 81 2 nmf 1.7 232 1.9 741 4g 10.2 DuPont Analysis Net Profit Mergn%) 11.1 10.6 19.0 10.] 22.8 3.5 4.9 30.1 4,06)029 12.1 2.0 15.3 0.5 42 Asset Turmover 0.8 0.3 15 09 .1 0.3 24 06 1.00.3060.4 0.5 Return on Equity EXHIBIT 6.1 I Common-Sized Financial Data and Ratios Data sources: S&P Research Insight, Capital IQ, and Value Line Investment Survey. 46.0 23.6 19.7 219 46.2 5.8 2.9 m 8.1 (4.8) (5.0 16.1 n2 10.4 4.9 36.2 ot a meaningful figure Airlines Companies A and B are airline companies. One firm is a major airline that flies both domestically and internationally and offers additional services including travel packages https://creader.chegg.com/#/books/g781 25935 3406/cfi/6/381/4/1 4/2@0:0.365

Step by Step Solution

There are 3 Steps involved in it

Step: 1

To analyze the financial performance of Companies A and B from the balance sheet and provided ratios we can consider the following key financial ratio... blur-text-image