Question: Ferland Air Ltd Ferland is a regional airline in western
Ferland Air Ltd. (Ferland) is a regional airline in western Canada. The company started up to provide air service to communities across the region and expanded quickly to meet the demand for service. Ferland borrowed heavily to finance the expansion but in recent years its growth has been more controlled and it hasn't needed to borrow. You are a financial analyst for a bank. You have been asked to prepare a report that examines Ferland's financial situation to assess how the company is financed (the amount of debt and equity) and evaluate its use of leverage. Your bank has been asked to consider whether it would provide financing for a possible expansion. Ferland is considering borrowing one to two million dollars so it can service some new centres and would like to know whether the balance sheet can support additional loans. Summarized liabilities and shareholders' equity from the last five years' balance sheets are provided below:
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