Using the information provided in the most recent SEC 10-K submission for Southw
ID: 2487598 • Letter: U
Question
Using the information provided in the most recent SEC 10-K submission for Southwest and Delta Airlines, please respond to the following requirements: Provide a comparative analysis for Southwest Airlines and Delta Airlines
Use appropriate ratios to analyze:
a. Short Term Liquidity
b. Capital Structure and Solvency
c. Asset Utilization
d. Profitability
Prepare at least two equity valuation calculations and discuss your results relative to the current market price for your company. Using the information contained in the 10-K, (Financial Statements, Disclosures and other information),
prepare a one page memo evaluating Southwest Airlines
DELTA AIR LINES INC (DAL) BALANCE SHEET
Fiscal year ends in December. USD in millions except per share data.
2015-12 2014-12
Assets
Current assets
Cash
Cash and cash equivalents 1972 2088
Short-term investments 1465 1217
Total cash 3437 3305
Restricted cash 375 305
Receivables 2139 3222
Inventories 697 852
Deferred income taxes 1736 463
Prepaid expenses 796 701
Other current assets 1987 1078
Total current assets 9056 9158
Non-current assets
"Property, plant and equipment"
"Gross property, plant and equipment" 33910 31269
Accumulated Depreciation -10871 -9340
"Net property, plant and equipment" 23039 21929
Goodwill 9794 9794
Intangible assets 4861 4603
Deferred income taxes 4956 7595
Other long-term assets 1428 926
Total non-current assets 44078 44847
Total assets 53134 54005
Liabilities and stockholders' equity
Liabilities
Current liabilities
Capital leases 1563 1184
Accounts payable 2743 2622
Taxes payable 585 594
Accrued liabilities 4501 4393
Deferred revenues 1635 1580
Other current liabilities 7084 7068
Total current liabilities 17526 16847
Non-current liabilities
Deferred taxes liabilities
Deferred revenues 2246 2602
Pensions and other benefits 13855 15138
Other long-term liabilities 8657 10605
Total non-current liabilities 24758 28345
Total liabilities 42284 45192
Stockholders' equity
Additional paid-in capital 10875 12981
Retained earnings 7623 3456
Treasury stock -373 -313
Accumulated other comprehensive income -7275 -7311
Total stockholders' equity 10850 8813
Total liabilities and stockholders' equity 53134 54005
Explanation / Answer
DELTA AIR LINES INC
a. Short term Liquidity Ratio = Quick Assets / Current Liabilities
For Year 2015 = 7563 / 17526 = 0.432
For Year 2014 = 7605 / 16847 = 0.451
Quick Assets = Current Assets - Inventory - prepaid Expenses
For Year 2015 = 9056 - 697 - 796 = 7563
For Year 2014 = 9158 - 852 - 701 = 7605
Current Liabilities
For year 2015 = 17526
For year 2014 = 16847
b. For Capital Structure & Solvancy = Debt Equity Ratio
Debt Equity ratio = Long term Debt / Sharholder Funds
Year 2015 = 8657 / 10850 = 0.798
Year 2014 = 10605 / 8813 = 1.203
Year 2015 2014
long-term liabilities 8657 10605
c. For Asset Utilization
Asset utilization is a ratio used by business analysts to determine how well a company is using its available assets to generate a profit. Asset-utilization ratios are used to determine the profitability of everything from inventory to accounts receivable, sales and total asset turnover.
d.For Profitability
A profitability ratio is a measure of profitability, which is a way to measure a company's performance. Profitability is simply the capacity to make a profit, and a profit is what is left over from income earned after you have deducted all costs and expenses related to earning the income. The formulas you are about to learn can be used to judge a company's performance and to compare its performance against other similarly-situated companies.
Types of Profitability Ratios
Common profitability ratios used in analyzing a company's performance include gross profit margin (GPM),operating margin (OM), return on assets (ROA) , return on equity (ROE), return on sales (ROS) and return on investment (ROI)
Gross Margin = Gross Profit/Net Sales * 100
Operating Margin = Operating Profit / Net Sales * 100
Return on Assets = Net Income / Assets * 100
Return on Equity = Net Income / Shareholder Investment * 100
Year 2015 2014
long-term liabilities 8657 10605
Total stockholders' equity 10850 8813Related Questions
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