The attached Excel file contains financial statements-income statements and balance sheets - for two companies operating...

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The attached Excel file contains financial statements-income statements and balance sheets - for two companies operating major airlines - United Airlines Holdings, Inc. (ticker: UAL) and Spirit Airlines Inc. (ticker: SAVE) for the most recent four years (2019-2022), at least. The information was obtained from the Securities and Exchange Commission (SEC) Edgar database of corporate filings, from annual reports (10-K) of the two companies. Some accounts were aggregated for your convenience. The most recent fiscal year end for both firms is December 2022. Part 1: Calculate primary financial ratios of the two firms, including: 1) Profitability ratios 2) Efficiency ratios, including working capital ratios (Days of Receivables Outstanding, Days of Sales in Inventories, Days of Payables Outstanding) 3) Short-term solvency ratios 4) Long-term solvency ratios Part 2: Analyze most recent financial performance of the two firms, and answer the following questions: What happened to Return on Equity during the period? If Return on Equity changed, what were the financial causes of that change, judging from the income statement, balance sheet, and the ratios which you calculated above? Part 3: Do recent trends and current financial state of each of these two firms raise any concerns for the future? If so, why? Part 4: Which company - in your understanding - is enjoying better financial performance over the last four years? In which respects/why? Problem 2: Prepare forecasts of the financial statements (income statement and balance sheet) for United Airlines Holdings, Inc. (ticker: UAL) and Spirit Airlines Inc. (ticker: SAVE) for the next fiscal year (2023). Assume the most recent (as of 2022 fiscal year financial statements) ratios of main accounts (in the income statement and asset side of the balance sheet) to sales remain largely the same. Make your best belief assumptions about sales growth for each of the two firms for the next year (2023). You can assume pre-pandemic level of sales growth, use the average sales growth from 2019 until 2022 as your prediction for 2022 2023 growth, or propose an assumption of your own. Make sure the balance sheet is balanced. Question A: What are expected earnings of each company in the subsequent fiscal year (2023)? Question B: How much external capital would each company need in the subsequent fiscal year (2023)? Spirit IS Spirit BS Consolidated Statements Of Oper 12 Months Ended $ in Thousands Operating revenues: Total operating revenues Operating expenses: Aircraft fuel Salaries, wages and benefits Landing fees and other rents Depreciation and amortization Aircraft rent Maintenance, materials and repairs Other operating Total operating expenses Operating income (loss) Other (income) expense: Interest expense Loss on extinguishment of debt Capitalized interest Interest income Other (income) expense 12 Months Ended Dec. 31, 20 Dec. 31, 20/Dec. 31, 20/Dec. 31, 20 Dec. 31, 20 Dec. 31, 2017 5068447 3230775 1810022 3830536 3323034 2643552 United IS 139905 0 -22818 -20083 4818 909834 251028 256275 214677 1929969 913945 431000 993478 939324 1251225 1065461 865019 719635 347268 315999 313090 297211 282428 246601 187820 159502 1355564 288930 278588 225264 176727 196359 182609 177641 205852 111227 143575 129078 110439 139748 663269 615038 478089 5667364 3287649 2317784 3329489 2972120 2258727 -56874 -507762 384825 -598917 501047 350914 Special charges, non-operating Total other (income) expense Income (loss) before income taxes -700739 Provision (benefit) for income taxes -146589 Net loss -554150 155611 331630 -18998 -5374 577 101822 463446 -520320 -47751 -472569 United BS 134520 0 -15995 -6314 211 101350 -12471 -25133 875 0 83777 -9841 -19107 752 90357 145938 204976 49227 112422 64621 -620184 436426 -191484 101171 -428700 335255 155749 615581 527959 180655 140152 57302 -13793 -8736 366 0 35139 349686 -65836 415522 Spirit IS Spirit BS Consolidated Balance Sheets - U.Dec. 31, 20:Dec. 31, 20:Dec. 31, 20: Dec. 31, 2019 $ in Thousands Current assets: Cash and cash equivalents 1572857 1535220 1967463 Accounts receivable, net 197276 128828 42940 Prepaid expenses and other current as328850 178443 345577 Total current assets 1993983 1842491 2355980 Property and equipment: Flight equipment Ground property and equipment Less accumulated depreciation Total property and equipment Operating lease right-of-use assets United IS 226843 Deferred gains and other long-term lidB70 Shareholders' equity: 4326515 4356523 4177631 3730751 521802 384928 334167 291998 -1098819 -884858 -680230 -492447 3749498 3856593 3831568 3530302 2699574 1950520 1417823 1369555 741719 758112 9184774 7043412 890421 8540025 Other long-term assets Total assets Current liabilities: Accounts payable 75449 44952 28454 Air traffic liability 429618 382317 401966 Current maturities of long-term debt, 468881 final8948ses 384197 Current maturities of operating leases1 88296 158631 133791 Other current liabilities 393614 373521 556330 480754 1596581 1275602 1342022 1112044 Total current liabilities Long-term debt and finance leases, 12200A7ent 1396-8788 3066635 1960453 Operating leases, less current maturities5619 1751351 1248519 1218014 Deferred income taxes 375472 439894 469292 47742 52060 22277 Unite Total shareholders' equity 1571651 2114035 Total liabilities and shareholders' equit84774 8540025 1084278 73807 227358 1385443 793454 8398825 43601 315408 258852 120662 2249695 2261332 8398825 7043412 Spirit IS Spirit BS Statements of Consolidated Ope 12 Months Ended $ in Millions Operating revenue: Total operating revenue Operating expense: Aircraft fuel Salaries and related costs Landing fees and other rent Depreciation and amortization Interest expense Interest income 12 Months Ended Dec. 31, 20 Dec. 31, 20 Dec. 31, 20;Dec. 31, 20 Dec. 31, 20 Dec. 31, 2017 44955 13113 5755 11466 9566 2576 2416 2456 2485 Aircraft rent 252 228 Aircraft maintenance materials and out if repairs 1316 Other operating expenses 10602 3890 Total operating expense 42618 25656 Operating income (loss) 2337 -1022 Nonoperating income (expense): Total nonoperating expense, net Income (loss) before income taxes Income tax expense (benefit) Net income (loss) -1778 298 105 Interest capitalized Unrealized gains (losses) on investments,20et Miscellaneous, net United IS 8 -1347 990 253 737 24634 -1657 36 80 -34 40 -1535 -2557 -593 -1964 15355 43259 3153 9522 2127 2488 198 858 United BS 3368 21714 -6359 -1063 50 71 -194 -1327 -2463 -8822 -1753 -7069 8953 12071 2543 2288 288 1794 11021 38958 4301 -731 133 85 153 -27 -387 3914 905 3009 41303 9307 11458 2449 2165 433 1767 10495 38074 3229 -670 101 65 -5 -72 -581 2648 526 2122 37784 6913 10941 2310 2096 621 1856 9429 34166 3618 -626 7740 57 -100 -595 3023 880 2143 Spirit IS Spirit BS United IS Unite Consolidated Balance Sheets (UAH) - USDec. 31, 20 Dec. 31, 20/Dec. 31, 20 Dec. 31, 2 $ in Millions Current assets: Cash and cash equivalents 16459 18443 11938 Receivables, less allowance for credit losses (202801$11; 202663-$28) 1295 1798 1728 1567 20058 21834 14800 Prepaid expenses and other Total current assets Operating property and equipment: Flight equipment Other property and equipment Purchase deposits for flight equipment Total operating property and equipment Less Accumulated depreciation and amortizan10481 Total operating property and equipment, net 34448 Operating lease right-of-use assets 3889 Other assets: Total Goodwill, intangibles, and other assets Total assets Current liabilities: Accounts payable Advance ticket sales Current maturities of long-term debt Other current liabilities Total current liabilities Long-term debt Long-term obligations under operating leases Tota her liabilities and deferred credits 42775 9334 2820 54929 Total stockholders' equity Total liabilities and stockholders' equity 8963 67358 3395 7555 2911 6131 19992 28283 4459 77: 6896 67358 39584 8764 2215 50563 -18489 32074 4645 9622 68175 2562 6354 3002 6386 18304 30361 5152 9329 5029 68175 38218 8511 1166 47895 -16429 31466 4537 8745 59548 1595 4833 1911 4386 12725 24836 4986 041 5960 59548 494 136- 188 819 3542 792 136 4470 -1453 3017 475 948 5261 270 481 140 600 1493 1314 494 805 1153 5261 The attached Excel file contains financial statements-income statements and balance sheets - for two companies operating major airlines - United Airlines Holdings, Inc. (ticker: UAL) and Spirit Airlines Inc. (ticker: SAVE) for the most recent four years (2019-2022), at least. The information was obtained from the Securities and Exchange Commission (SEC) Edgar database of corporate filings, from annual reports (10-K) of the two companies. Some accounts were aggregated for your convenience. The most recent fiscal year end for both firms is December 2022. Part 1: Calculate primary financial ratios of the two firms, including: 1) Profitability ratios 2) Efficiency ratios, including working capital ratios (Days of Receivables Outstanding, Days of Sales in Inventories, Days of Payables Outstanding) 3) Short-term solvency ratios 4) Long-term solvency ratios Part 2: Analyze most recent financial performance of the two firms, and answer the following questions: What happened to Return on Equity during the period? If Return on Equity changed, what were the financial causes of that change, judging from the income statement, balance sheet, and the ratios which you calculated above? Part 3: Do recent trends and current financial state of each of these two firms raise any concerns for the future? If so, why? Part 4: Which company - in your understanding - is enjoying better financial performance over the last four years? In which respects/why? Problem 2: Prepare forecasts of the financial statements (income statement and balance sheet) for United Airlines Holdings, Inc. (ticker: UAL) and Spirit Airlines Inc. (ticker: SAVE) for the next fiscal year (2023). Assume the most recent (as of 2022 fiscal year financial statements) ratios of main accounts (in the income statement and asset side of the balance sheet) to sales remain largely the same. Make your best belief assumptions about sales growth for each of the two firms for the next year (2023). You can assume pre-pandemic level of sales growth, use the average sales growth from 2019 until 2022 as your prediction for 2022 2023 growth, or propose an assumption of your own. Make sure the balance sheet is balanced. Question A: What are expected earnings of each company in the subsequent fiscal year (2023)? Question B: How much external capital would each company need in the subsequent fiscal year (2023)? Spirit IS Spirit BS Consolidated Statements Of Oper 12 Months Ended $ in Thousands Operating revenues: Total operating revenues Operating expenses: Aircraft fuel Salaries, wages and benefits Landing fees and other rents Depreciation and amortization Aircraft rent Maintenance, materials and repairs Other operating Total operating expenses Operating income (loss) Other (income) expense: Interest expense Loss on extinguishment of debt Capitalized interest Interest income Other (income) expense 12 Months Ended Dec. 31, 20 Dec. 31, 20/Dec. 31, 20/Dec. 31, 20 Dec. 31, 20 Dec. 31, 2017 5068447 3230775 1810022 3830536 3323034 2643552 United IS 139905 0 -22818 -20083 4818 909834 251028 256275 214677 1929969 913945 431000 993478 939324 1251225 1065461 865019 719635 347268 315999 313090 297211 282428 246601 187820 159502 1355564 288930 278588 225264 176727 196359 182609 177641 205852 111227 143575 129078 110439 139748 663269 615038 478089 5667364 3287649 2317784 3329489 2972120 2258727 -56874 -507762 384825 -598917 501047 350914 Special charges, non-operating Total other (income) expense Income (loss) before income taxes -700739 Provision (benefit) for income taxes -146589 Net loss -554150 155611 331630 -18998 -5374 577 101822 463446 -520320 -47751 -472569 United BS 134520 0 -15995 -6314 211 101350 -12471 -25133 875 0 83777 -9841 -19107 752 90357 145938 204976 49227 112422 64621 -620184 436426 -191484 101171 -428700 335255 155749 615581 527959 180655 140152 57302 -13793 -8736 366 0 35139 349686 -65836 415522 Spirit IS Spirit BS Consolidated Balance Sheets - U.Dec. 31, 20:Dec. 31, 20:Dec. 31, 20: Dec. 31, 2019 $ in Thousands Current assets: Cash and cash equivalents 1572857 1535220 1967463 Accounts receivable, net 197276 128828 42940 Prepaid expenses and other current as328850 178443 345577 Total current assets 1993983 1842491 2355980 Property and equipment: Flight equipment Ground property and equipment Less accumulated depreciation Total property and equipment Operating lease right-of-use assets United IS 226843 Deferred gains and other long-term lidB70 Shareholders' equity: 4326515 4356523 4177631 3730751 521802 384928 334167 291998 -1098819 -884858 -680230 -492447 3749498 3856593 3831568 3530302 2699574 1950520 1417823 1369555 741719 758112 9184774 7043412 890421 8540025 Other long-term assets Total assets Current liabilities: Accounts payable 75449 44952 28454 Air traffic liability 429618 382317 401966 Current maturities of long-term debt, 468881 final8948ses 384197 Current maturities of operating leases1 88296 158631 133791 Other current liabilities 393614 373521 556330 480754 1596581 1275602 1342022 1112044 Total current liabilities Long-term debt and finance leases, 12200A7ent 1396-8788 3066635 1960453 Operating leases, less current maturities5619 1751351 1248519 1218014 Deferred income taxes 375472 439894 469292 47742 52060 22277 Unite Total shareholders' equity 1571651 2114035 Total liabilities and shareholders' equit84774 8540025 1084278 73807 227358 1385443 793454 8398825 43601 315408 258852 120662 2249695 2261332 8398825 7043412 Spirit IS Spirit BS Statements of Consolidated Ope 12 Months Ended $ in Millions Operating revenue: Total operating revenue Operating expense: Aircraft fuel Salaries and related costs Landing fees and other rent Depreciation and amortization Interest expense Interest income 12 Months Ended Dec. 31, 20 Dec. 31, 20 Dec. 31, 20;Dec. 31, 20 Dec. 31, 20 Dec. 31, 2017 44955 13113 5755 11466 9566 2576 2416 2456 2485 Aircraft rent 252 228 Aircraft maintenance materials and out if repairs 1316 Other operating expenses 10602 3890 Total operating expense 42618 25656 Operating income (loss) 2337 -1022 Nonoperating income (expense): Total nonoperating expense, net Income (loss) before income taxes Income tax expense (benefit) Net income (loss) -1778 298 105 Interest capitalized Unrealized gains (losses) on investments,20et Miscellaneous, net United IS 8 -1347 990 253 737 24634 -1657 36 80 -34 40 -1535 -2557 -593 -1964 15355 43259 3153 9522 2127 2488 198 858 United BS 3368 21714 -6359 -1063 50 71 -194 -1327 -2463 -8822 -1753 -7069 8953 12071 2543 2288 288 1794 11021 38958 4301 -731 133 85 153 -27 -387 3914 905 3009 41303 9307 11458 2449 2165 433 1767 10495 38074 3229 -670 101 65 -5 -72 -581 2648 526 2122 37784 6913 10941 2310 2096 621 1856 9429 34166 3618 -626 7740 57 -100 -595 3023 880 2143 Spirit IS Spirit BS United IS Unite Consolidated Balance Sheets (UAH) - USDec. 31, 20 Dec. 31, 20/Dec. 31, 20 Dec. 31, 2 $ in Millions Current assets: Cash and cash equivalents 16459 18443 11938 Receivables, less allowance for credit losses (202801$11; 202663-$28) 1295 1798 1728 1567 20058 21834 14800 Prepaid expenses and other Total current assets Operating property and equipment: Flight equipment Other property and equipment Purchase deposits for flight equipment Total operating property and equipment Less Accumulated depreciation and amortizan10481 Total operating property and equipment, net 34448 Operating lease right-of-use assets 3889 Other assets: Total Goodwill, intangibles, and other assets Total assets Current liabilities: Accounts payable Advance ticket sales Current maturities of long-term debt Other current liabilities Total current liabilities Long-term debt Long-term obligations under operating leases Tota her liabilities and deferred credits 42775 9334 2820 54929 Total stockholders' equity Total liabilities and stockholders' equity 8963 67358 3395 7555 2911 6131 19992 28283 4459 77: 6896 67358 39584 8764 2215 50563 -18489 32074 4645 9622 68175 2562 6354 3002 6386 18304 30361 5152 9329 5029 68175 38218 8511 1166 47895 -16429 31466 4537 8745 59548 1595 4833 1911 4386 12725 24836 4986 041 5960 59548 494 136- 188 819 3542 792 136 4470 -1453 3017 475 948 5261 270 481 140 600 1493 1314 494 805 1153 5261

Answer rating: 100% (QA)

Here are the detailed calculations for the financial ratios for United Airlines and Spirit Airlines for the years 20192022 Part 1 1 Profitability Ratios United Airlines Return on Assets ROA Net Income ... View the full answer