Select one of the following companies: Southwest Airlines Delta Airlines United

Question

Select one of the following companies:

Southwest Airlines
Delta Airlines
United Airlines
AirTran
Continental Airlines

Go to http://money.com or http://finance.yahoo.com and enter the company symbol and then find the financial statements. For your company, analyze the liability section of the balance sheet. For each liability, write a short description. Use information from the notes to help you. Then, calculate the debt-to-equity ratio for the current year with the available information. What tentative conclusions can you draw about the debt position of your airline? Do owners or creditors have more claims on the company’s assets? How can you tell? What types of financial risks apply to your company?

Explanation / Answer

Delta Airlines

Liabilities are evenly distributed in long and short term.Miscellaneous liabilties covers the higher part in liablities section and company prefers non convertible debenture for external finacing.

Debt-Equity Ratio=42.28/10.85

=3.896777

Standard Ratios should be 2:1 the debt equity ratio is at higher side thats means liabilities are more on Company.

Creditors have more claims on the company’s assets we can tell looking out the figures in the financial Statement and By debt equity ratio.

Credit Risk apply to our company.

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