American Airlines, Inc. “. . . our airline operates an average of nearly 6,700 flights per day to nearly 350 destinations in more than 50 countries through hubs and gateways in Charlotte, Chicago, Dallas/ Fort Worth, London Heathrow, Los Angeles, Miami, New York, Philadelphia, Phoenix, and Washington, D.C. In 2018, approximately 204 million passengers boarded our flights.”

Exxon Mobil Corporation “was incorporated in the State of New Jersey in 1882. Divisions and affiliated companies of ExxonMobil operate or market products in the United States and most other countries of the world. Their principal business involves exploration for, and production of, crude oil and natural gas and manufacture, trade, transport and sale of crude oil, natural gas, petroleum products, petrochemicals and a wide variety of specialty products.”

Rite Aid Corporation “is the third largest retail drugstore chain in the United States based on both revenues and number of stores. As of March 2, 2019, we operated 2,469 stores in 18 states across the country.”

United Parcel Service, Inc. “. . . we are the world’s largest package delivery company, a leader in the U.S. less-than-truckload industry and a premier provider of global supply chain management solutions. . . . We deliver packages each business day for 1.5 million shipping customers to 9.1 million receivers (“consignees”) in over 220 countries and territories. In 2018, we delivered an average of 20.7 million pieces per day. . .”

Each company received a different rating from Standards & Poor’s (S&P). In descending order, the ratings for these companies were AA+, A, BB–, and CCC+, as of January 2020. All dollar amounts are in millions.

Required
Determine which credit rating was assigned to which company. Write a memorandum explaining the rationale for your decisions. The logic you present to support your conclusions is more important than correctly matching the companies with their ratings.

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American Air 2017 2018 ExxonMobil 2017 2018 Rite Aid 2017 2018 UPS 2017 2018 Operating Income before Taxes $ 4,058 2,656 18,674 30,953 (44) (589) 7,148 6,019 Cash Flow from Current Operations Ratio $ 4,744 0.61 3,533 0.48 30,066 0.82 36,014 0.84 511 1.37 (166) 1.68 1,479 1.22 12,711 1.15 Debt-to- Times Assets Interest Return-on- Ratio Earned Assets Ratio 0.92 3.93 0.04 1.00 2.78 0.02 0.44 32.07 0.06 0.43 41.41 0.06 0.82 7.16 0.11 0.84 (0.51) (0.06) 0.98 16.78 0.11 0.94 10.95 0.00