Case Study 1. Dupont Analysis

Using the Dupont method to evaluate company profitability:

Singapore Airlines during the global financial crisis

Some basic information about Singapore Airline, Ltd (SIA):

• Founded in 1947, flagship airline of Singapore

• Member of Star Alliance (United Airlines, Air Canada, Air China, Lufthansa, South African Airways, Swiss Air, Turkish Airlines, and 20 other airlines)

• Ranks among the top airline in the world

• Main competitor: Cathay Pacific

Given that Singapore Airlines has performed very well before the financial crisis, you are wondering how this company performed during the financial crisis period, therefore you implemented the Dupont method to study the profitability of this company by using the financial statements below at the Fiscal Year End (FYE) of 2008.

Besides, you also searched financial data of six other airlines in the Asia-Pacific region: Air China, Korean Air, Malaysian Airlines, Thai Airways, Quantas Airways, and Air New Zealand.

Q1. Try to complete the numbers at the bottom to show the Profit Margin, Asset Turnover, ROA, financial leverage and ROE for year 2008. (30 points)

Table 1. Financial data for Singapore Airline and other six competitors

	Singapore Airline 3/31/08 (SGD)	Air China 12/31/07 (CNY)	Korean Air 12/31/07 (KRW)	Malaysia Airlines 12/31/07 (MYR)	Thai Airways 12/31/07 (THB)	Quantas Airways 6/30/08 (AUD)	Air New Zealand 6/30/08 (NZD)
Income statement (million)
Sales	15,973	1,082	8,811,989	14,630	199,921	15,627	4,667
Net Income	2,049	4,046	12,893	851	4,368	969	218
Balance sheet (million)
Current assets	8,313	9,831	1,981,953	7,095	65,229	5,616	2,112
Property, plant and equipment	16,474	61,692	10,869,686	2,061	207,153	12,341	2,534
Other assets	1,728	19,777	2,292,065	906	7,893	1,743	377
Total assets	26,515	91,300	15,143,704	10,062	280,275	19,700	5,023
Current Liabilities	5,868	27,106	3,647,746	5,256	97,551	7,604	1,707
Long-term debt/other	5,522	33,580	7,095,936	871	114,974	6,365	1,739
Total liabilities	11,390	60,686	10,743,682	6,127	212,525	13,969	3,446
Stockholders' equity	15,125	30,614	4,400,022	3,935	67,750	5,731	1,577
Total liabilities and equity	26,515	91,300	15,143,704	10,062	280,275	19,700	5,023
Calculate the following financial ratios for Singapore Airlines in year 2008, and show your answers below with calculation process:
Profit Margin	Net Profit Margin = Net Income/Sales Net Profit Margin = (2049)/(15973) Net Profit Margin = 12.8% (.1282)
Asset turnover	Asset Turnover = Net Sales/Average Total Assets
ROA
Financial leverage
ROE