mba 5220 type the answers only question number 4 needs to be answered there are 2 question number 4's below

please type the answer and answer both number 4 questions and number 3

analysis" on page 55. 2. See "liquidity analysis" on page 47. 3. Limitations of industry average ratios are discussed on page 7 4. Use "pro forma sources and uses of funds statement on page 86 and rules about "Sources and Uses of Funds (Funds Flow) Statement on page 13 of word lecture notes. The amount of dividend paid is $38 which is determined as follows: Earnings after tax ($80)-changes in retained earnings (714 -672) + dividend paid. Total sources and uses are supposed to be $444 respectively, This sources and uses of funds statement will tell you that the airline violated the matching principle which is the maturity structure ofassets and liabilities 5. Think about both major solutions and minor solutions. 090 PANT STUDIES One and decide compartition and you will find esmorompetitor coding AA American Airline and UXLA Fonech of the three max win the Sodick Income Statement Short and Flow arthe bottom of the letband de pana Calculate the motoriquidity Jarage acties, and profitability for each o the verf the reci mujor airlines and text it as the day average compare achatrine's performances against the industry average and eval their finandal motion the three makaratings ato those maior player in the Beld Case Study 1 Ratio Analysis Hende Wing for one of the largest alles in the Unithe and coveredical Nuctuations characteristic of the side A Califomia. Since its establishment in 1917, the company has artone industry, its sales and profitability for the The fallare of Branilf Airlines reflected the wrou pro ity because of business slowdown, deregulation of our strike, higher fuel costs, and intensified competition. Expand Adulted in an increasingly trained working at Artwearline had dropped considerably since its expansion program reddin Exhibits 1,2 and 3) for W. tion Pri Exhibit 3 Industry Average Ratios Ratios Current ratio Quick ratio Average collection penod Asset amover Debt ratio Time interest earned Profit margin on sales Return on investment Return on net worth Industry 35 150 times 300 day 12 times 15.6 percent 10 times 400 percent 150 percent 3.73 pont QUESTIONS Calculate the appropriate ratios of liquidity leverage, activity, and profitability for Wellington 2. What would happen to net working capital Wellington Airlines ed S10 million cash to pay off $10 million long-term debt in 19867 What would hap pen to net working capital if Wellington Airlines used $10 million cash to buy Inventory in 1956 3. List and disctis cautions which entst be taken in using industry average ration 4. Prepare Wellington's funds flow statement and the explain why the company encountered an increasingly strained working capital position s Discuss how to solve the airline's most pressing problem Internet Questions Go to http://finance yahoo.com. Enter ticker symbol DAL and you will find various information about Delta Airlines Inc 3 Puerto Meine Myla or change in theatre industry Mince Congrated the Ale Transportation Regulatory Reform ActCATRRA) in 1978 The ATRRA, and to the Baderal Avon Act of 1958 deregulated the airline industry with competition and facilitated the entry of 72 Into the main efore 1978 the Civil Aeronautics Board (CAD) hadde other thing and authories for airlines Under the 1975 legislation, the CASA phased out by the end of the dusty management felt such a move would facilitate growth Weldon Wellington Alle added several ties to its routes shortly after the deregulation punhada number of new airplanes meetits expanded routes and replaced airplane The Warplanes were mostly financed by short-terin bank lain fare and route competition from other trunk came the industry s deregulation from prostrated by the expansion. However the aftline encountered 1978 aucht Wingen wie huge fred costs and expensive labor agreement, New ragional com free of such come overheid were able to offer lower , the downtum depresant pawenget trallic thereby cousinga glut of airline capacity Exit 2 Wellington Airlines Income Statement for Year Ended June 30,1956 fin millions of dollars) Operation even Passenger 51.830 Preleht 95 Other 35 Televes $1.960 Operation esperes Flying operations Maintenance Equipment and passenger services Promotion and sales Smeral and administrative Depreciation Total operating expenses Operating income 662 212 524 209 52 84 1,742 Interest per Earnings before tax To Earning after te $218 58 $160 80 580 Expert Q&A Done mesta olgep Le 58 Ne Case Study 1 RATIO ANALYSIS WELUNGTON AIRLINES My wy DMSAT CA indiyo depois tiene folyet which ended on June Wellington Alde het so 10 SOD Cash Accounts Manor and applies Total Geplant and equipment Lected depende Netplant and equipment Total Accounts payable Nosa Actual Total Long-term debet Common stock Retained in 83%93MISE EASE IS MAMA TH Totalt and he was Expert Q&A Done AAAAA mall dh y todos. Furth Wellington A Statement for 16 w dottan SU Oh TO . Option Fy 662 pempre 209 Gelative Deprecation 4 Tale 5160 Case Study 1 RATIO ANALYSIS Expert Q&A Done Case Studyante dua ANTH yo htud hadded 1.2 and Industry Ration Curtis Quick Average collection period Autover Debetto Time ind Profit margin on Return on investment Rotum en net worth QUESTIONS Calculate the appropriaturation of lading for Wellington 2 What would happen to be working WA million cash to pay off 10 min fondo wheth pen to networking capital online 30 inventory in 1986 1 List and decis caution which they Prepare Wellington'fund flow the pain why muntered an increasingly trained ang apps Discuss how to solve the airline's most pro Internet Questions Go to http://tinanon yahoo.com Internet, and you vidited vaisinformation about Del Alelines in 390 PART 2: CASE STUDIES Continental Airlines) 2 On the left-hand side panel, click "Competitors and you will find Delta Ale fines major competitors including AAL (American Airlines) and UAL (United 3 For each of the three major airlines in the US, click "Income Statement Balm ance Short" and "Cash Flow at the bottom of the left-hand side panel to tra Calculate the ratio of liquidity leverage, activity, and profitability for each ot 5. Calculate the average of the three major airlines and treat it as the industry 6 Compare each airline's performances against the industry averages and evalu their financial information the three major airlines average ate those major players in the field 390 PART 2: CASE STUDIES Continental Airlines) 2 On the left-hand side panel dick "Competitors and you will find Delta Ale lines major competitorsincluding AAL (American Airlines) and UAL (United ance Short" and "Cash Flow at the bottom of the left-hand side panel to extra For each of the three major airlines in the US, click "Income Statement Bal Calculate the ratios of liquidity, leverage, activity, and profitability for each of Calculate the average of the three major airlines and treat it as the industry 6 Compare each airline's performances against the industry averages and evals their financial information the three major airlines average ate those major players in the field analysis" on page 55. 2. See "liquidity analysis" on page 47. 3. Limitations of industry average ratios are discussed on page 57. 4. Use "pro forma sources and uses of funds statement on page 86 and rules about "Sources and Uses of Funds (Funds Flow) Statement on page 13 of word lecture notes. The amount of dividend paid is $38 which is determined as follows: Earnings after tax ($80)=changes in retained earnings (714-672) + dividend paid. Total sources and uses are supposed to be $444 respectively. This sources and uses of funds statement will tell you that the airline violated the matching principle which is the maturity structure of assets and liabilities. 5. Think about both major solutions and minor solutions. Case Study 1 RATIO ANALYSIS WELLINGTON AIRLINES Melissa Myers is the new treasurer of Wellington Airlines She graduated from a major university in Delaware with a M.B.A. in Finance Aftet five years of experience with of the big eight CPA firms in New York, she joined the accounting staff of Midwest Airlines and served in a variety of accounting and finance positions for ten years. She ssumed the position of treasurer at Wellington Airlines on May 3, 1956. One of her first mponsibilities is to analyze the company financial condition shortly after the airline's fiscal year, which ended on June 30, 1986 Echibit 1 Wellington Airlines Balance Sheets as of June 30, 1985-1986 tin millions of dollars) 1985 $12 182 Cash Accounts receivable Maintenance and supplies inventory Total current assets Gross plant and equipment Less: accumulated depreciation Net plant and equipment Total assets Accounts payable Notes payable Accruals Total current liabilities Long-term debt Common stock Retained earnings $120 1.680 700 990 $1.400 563 1986 $42 140 210 5392 2,072 784 1.288 51.680 576 280 84 28 $175 273 280 $406 280 280 714 $1.680 672 $1,400 Total liabilities and net worth 387 365 PK 2 Case Sno Hilling Angeles ender the air The fa Indust contro phaned out by the end of 1985 had ne for the 1979 Meli Morchange in the aire industry Nince Congrenacted the Air Transportation Regulatory Reform Act (ATRRA) in 1978. The ATRRA, This among other things competition and facilitated the entry other to the Federal Aviation Act of 1958 deregulated the airline industry gently nes into the marketplace before 1978 the Cvil Aeronautics Board (CAB) hade Before and authorized routes for airlines Under the 1978 legislation, the CABWE Wellington Airlines added several cities to its routes shortly after the deregulation of the industry be management felt such a move would facilitate growth. Wellington alla The Wallanes were mostly financed by short-term bank loans to be paid purchased a number of new airplanes to meet its expanded routes and replaced fare and route competition from other trunk carriers. The industry's deregulation in from prodits greated by the expansion. However, the airline encountered substantial 1978 caught Wellington with huge fixed costs and expensive labor agreements New Mogianal carrier free of such cumber one overhead, were able to offer low et profitably but Wellington's ability to do so was strained. Furthermore, the concen downtur depressed passenger traffic thereby causing a glut of airline capacity. Exhibit 2 Wellington Airlines Income Statement for Year Ended June 30, 1986 (in millions of dollars) Operation revenues Passengers $1,830 Freight 95 Other 35 Total revenues $1,960 Operation expenses Flying operations Maintenance Equipment and passenger services Promotion and sales General and administrative Depreciation Total operating expenses Operating income 662 212 523 209 52 84 1.742 Interest expense Earnings before tax Tex Earning after tax $218 58 $160 80 $80 3 Case Study 1: Ratio Analysis 39 A California. Since its establishment in 1917the company hasily weath for one of the largest airlines in the United Sule, she is to and vedical fluctuations characteristic of the live industry, thats with rest of theatre industry. Its sales and profitability for the year y declined The failure of Branit Airlines lected the serious problems facing the entide industry because of business slowdown, deregulations of the industry the trafic Aadresulted in an increasingly trained working capital position for Wington. Profits rolex strike higher fuel costs, and intensified competition. Expanding operations se chibits 1, 2 and 3) for the airline had dropped considerably since its expansion program started early in Ratios Current ratio Quick ratio Average collection period Asset tumover Debt ratio Times interest eamed Profit margin on sales Return on investment Return on net worth Tahibit Industry Average Ratios Industry 3.5 150 Smes 30.0 day 120 tones 15.0 percent 4.10 times 4.00 percent 450 percent 873. peront QUESTIONS 1. Calculate the appropriate ratios of liquidity leverage, activity, and profitability for Wellington 2. What would happen to net working capital if Wellington Airlines used $10 million cash to pay off $10 million long-term debt in 1986? What would hap- pen to net working capital if Wellington Airlines used $10 million cash to buy inventory in 1986 3. List and discuss cautions which must be taken in using industry average ratios 4. Prepare Wellington's funds flow statement and then explain why the company encountered an increasingly strained working capital position 5. Discuss how to solve the airline's most pressing problema Internet Questions 1 Go to http://finance.yahoo.com. Enter ticker symbo, DAL, and you will find various information about Delta Airlines Inc. 3 Case Study 1: Ratio Analysis 39 A California. Since its establishment in 1917the company hasily weath for one of the largest airlines in the United Sule, she is to and vedical fluctuations characteristic of the live industry, thats with rest of theatre industry. Its sales and profitability for the year y declined The failure of Branit Airlines lected the serious problems facing the entide industry because of business slowdown, deregulations of the industry the trafic Aadresulted in an increasingly trained working capital position for Wington. Profits rolex strike higher fuel costs, and intensified competition. Expanding operations se chibits 1, 2 and 3) for the airline had dropped considerably since its expansion program started early in Ratios Current ratio Quick ratio Average collection period Asset tumover Debt ratio Times interest eamed Profit margin on sales Return on investment Return on net worth Tahibit Industry Average Ratios Industry 3.5 150 Smes 30.0 day 120 tones 15.0 percent 4.10 times 4.00 percent 450 percent 873. peront QUESTIONS 1. Calculate the appropriate ratios of liquidity leverage, activity, and profitability for Wellington 2. What would happen to net working capital if Wellington Airlines used $10 million cash to pay off $10 million long-term debt in 1986? What would hap- pen to net working capital if Wellington Airlines used $10 million cash to buy inventory in 1986 3. List and discuss cautions which must be taken in using industry average ratios 4. Prepare Wellington's funds flow statement and then explain why the company encountered an increasingly strained working capital position 5. Discuss how to solve the airline's most pressing problema Internet Questions 1 Go to http://finance.yahoo.com. Enter ticker symbo, DAL, and you will find various information about Delta Airlines Inc. PART 2: CASE STUDIES 990 2 On the left hand side panel click "Competitors and you will find Delta Ale ines major competitors, including AAL (American Airlines) and UAL (United ance Share and Cash Flow at the bottom of the left-hand side panel to extract For each of the three major airlines in the US, click "Income Statemental Continental Airlines, their financial information. calculate the ratio of liquidity, deverage, activity, and profitability for the Calculate the average of the three major airlines and treat it as the industry 6 Compare each airline's performances against the industry averages and eval averagon The ate those major players in the field ant lin th th 0295