40 Points)

1. Below are several financial statement items for fiscal year 2019 for two airline companies, United Airlines, an international "hub-and-spoke" carrier, and Southwest Airlines, a US domestic "point-to-point" carrier. Use the financial information to answer the questions a), b) and c) below.

	United	Southwest
Net income	$ 3,009	$ 2,300
Sales	43,259	22,428
Average assets	50,818	26,069
Average stockholders equity	10,787	9,843

1. Calculate each companys return on assets (ROA) and return on equity (ROE). Comment on any differences you observe.

2. Disaggregate the ROA for each company into profit margin (PM) and asset turnover (AT). Explain why one of the companies has a higher ROA than the other - is it because of PM or AT or both? Explain the business reasons why this could be.

3. Disaggregate the ROE for each company using the full, traditional Dupont analysis, including ROA as disaggregated in b). Comment on any differences you observe, and explain the business reasons why this could be.

Bonus question (10 points):

Corporate governance receives considerable attention since the collapse of Enron. What is meant by corporate governance? What are the primary means by which sound corporate governance is achieved?

What are some additional sources of information beyond the financial statements to assess a companys corporate governance?