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