3. [Current liabilities. customer advances] Exhibit 10P 1 con- tains selected balance sheet data for AMR (American Airlines) and US Airways [L] for 1998 and 1999.

a. Calculate AMR's reported working capital and its current. quick, and cash ratios for both years.

b. The air traffic liability primarily reflects tickets sold in ad- vance. Discuss any differences between the air traffic liability and other liabilities.

c. Eliminate the air traffic liability and recompute the ratios in part a Discuss any differences from the ratios calculated in part

a. d. Compare US Airways short-term liquidity position with that of AMR at December 31, 1999 both as reported and after elimination of the air traffic hability

e. The chapter states that accounts such as the air traffic liability may be better viewed as indicators of future profitability than as liabilities. Discuss that view using the data in Exhibit 10P-1