Caruso Airlines Incorporated is a privately owned commercial airline servicing short-haul routes in Western Canada. Caruso has

Question:

Caruso Airlines Incorporated is a privately owned commercial airline servicing short-haul routes in Western Canada. Caruso has operated successfully and profitably for five years. It is now considering expanding its fleet of 10 aircraft by adding 15 new aircraft in order to service its existing routes more efficiently. Caruso would pay for the expansion with a combination of internally generated funds and a new bank loan. Discuss the effects of Caruso's expansion on the company's
(a) Business and operations,
(b) Rate of return on assets and asset turnover.
Financial Statements
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