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Delta Airlines Financial Ratios

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The first company I have decided to analyse is the corporation American Airlines. Their first flight was on April 15th 1926, where Charles Lindbergh flew a mail route carrying mail and cargo. After eight years of flying mail routes, the airline began to form into what it is today. Over the years they have changed operations from flying mail routes to flying passenger routes and have grown their operations to be one of the largest carriers in the world, they boast flights to 350 destinations in 50 countries. (American Airlines 18th march). The primary operations of American Airlines would be the sale of their tickets for their flights. They would also benefit from the sale of in-flight beverages, snacks and duty-free items. American Airlines also carry cargo from mail services such as Fed-Ex and UPS. The …show more content…

By using this information, we can compute liquidity in terms of current ratio. This is computed by dividing current assets by current liabilities. In 2016, Delta airlines had a current ratio of 0.49. In 2017 delta had current assets of $7,844,000, and current liabilities $18,573,000, therefore the current ratio in 2017 is 0.42. From 2016 to 2017 Delta Airlines current ratio slightly decreased. Delta Airlines having a current ratio of less than one means that Delta cannot meet to pay obligations if they came apparent. The second liquidity measure I will be using is the acid-ratio test. This is equated by adding cash and accounts receivables minus short term investments divided by current liabilities. In 2016 Delta had an acid-test ratio of 0.43, and in 2017 they had 0.35. Companies are expected to have a ratio of at least 1.0, which means they have enough existing liquid assets to cover their bills, in this case Delta airlines have not got enough liquid assets to cover their bills. For example, in 2017 Delta would be able to pay back 35 cents for every one

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Their current ratio improved from 1.59 to 2.44 which shows the ability to cover current liabilities has improved. Massachusetts Stove Company strategically made decisions to not only increase their current assets quickly but also managed their liabilities to keep them from growing out of control. This means that the company could cover current liabilities at any time relatively easily with their cash, receivables, or other current assets. In terms of the market, Massachusetts Stove Company does have the demand of 220,000 active prospects they could try to sell stoves too if a dire need arose for quick cash. Management even brought their quick ratio to 1.08.

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= 1.47 Big Lots have a current ratio of 1.47 which is larger than 1 and indicates that they would have adequate funds available to pay their short-term obligations. With Big Lots having a current ratio of $1.47 for each dollar in current liabilities would indicate that they are maintaining their total current assets favorably to cover their current liabilities that are due

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Companies all over the globe will experience some sales and profit decrease. Home Depot in the growing housing industry benefited greatly from the houses being built. The accounting concept portrayed in this situation for home depot is called operating leverage. Operation leverage is when managers view a small change in revenue and magnify it to dramatic changes in revenue (Edmonds, Tsay, & Olds, 2011). With a decrease in the market for construction materials, Home Depot is experiencing a 3% decrease revenue and a 21% decrease in profitability.

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property was $1.7 billion on December 31, 2014 and $1.6 billion on December 31, 2013. Residual values for owned aircraft, engines, spare parts and simulators are generally 5% to 10% of the cost. Accounts Receivables Accounts receivable is the funds Delta Airlines Inc. is entitled to because of services or goods it has provided to its travelers. Per the 10K report Delta Air Lines Inc. accounts receivable primarily consist of amounts due from credit card companies for the sale of passenger airline tickets, customers of our aircraft maintenance and cargo transportation services and other companies for the purchase of mileage credits under the SkyMiles Program. Delta Air Lines Inc. provided an allowance for uncollectible accounts equal to the estimated losses expected to be incurred based on historical chargebacks, write-offs, bankruptcies and other specific analyses.

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Airlines are constantly under pressure, due to unprecedented schedules, competition and flight planning. Everything must be on time to make a dollar at the end of the day, and American Airlines is no different. Since 1934, American Airlines has been owned by the AMR Corporation and headquarter in Dallas, Texas. The airlines competes with all airlines throughout North America, the Caribbean, Latin America, Europe, and the Pacific (NTSB, 1999).

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