Problem: Calculate and compare in tabular form the key financial ratios for the three airlines: American Airlines, Southwest and AirTran Airways for 2009.
a. Profitability ratios
i. Gross profit margin
ii. Net profit margin
iii. Return on assets
iv. Return on stockholder's equity
b. Liquidity ratios
i. Current ratio
ii. Quick ratio
iii. Working capital
c. Leverage ratios
i. Debt to asset ratio
ii. Debt to equity ratio
d. Other important financial measures
i. Price to earnings ratio
ii. Market to book value ratio
Based on the evaluation of the above ratios discuss the financial performance of the three airlines. Compare in tabular form the following operating performance characteristics for the three airlines and discuss the relative strengths and weaknesses between the three carriers.
1. Passenger revenue yield per RPM (Revenue Passenger Mile)
2. Operating revenue yield per ASM (Available Seat Mile)
3. Operating expenses per ASM
4. Load factor