Question: Question 3. Compare and contrast the financial performance and position of these two firms. Better performance over the period 2018-2022? Which firm manages its assets

Question 3.

  • Compare and contrast the financial performance and position of these two firms.

  • Better performance over the period 2018-2022?

  • Which firm manages its assets and costs more efficiently?

Ratios

2.1. Liquidity

  • American Airlines

20182019202020212022Current Ratio3.353.283.743.503.01Quick Ratio 0.3573 0.3045 0.4953 0.7332 0.5165

  • United Airlines
20182019202020212022Current Ratio3.543.524.683.723.37Quick Ratio 0.3885 0.4223 1.0199 1.0964 0.9111

2.2. Solvency/Capital Structure

  • American Airlines

20182019202020212022Solvency Ratio Debt/Assets2.102.231.491.101.41

  • United Airlines

20182019202020212022Solvency Ratio Debt/Assets0.280.280.210.270.30

2.3. Profitability

  • American Airlines

20182019202020212022ROE-8.355-14.2881.29390.27153-0.0219ROA0.023310.0281-0.1433-0.030.002Profit Margin0.03170.03684-0.5125-0.06670.0026

  • United Airlines

20182019202020212022ROE0.210.26(1.19)(0.39)0.11ROA0.040.06(0.12)(0.03)0.01Profit Margin0.0510.070-0.460-0.0800.016

2.4. Asset management

  • United Airlines

20182019202020212022Asset turnover5.494.980.911.032.10Account Rec. Turnover27.3129.9110.3913.5623.43Inv. turnover28.5426.5619.1321.7428.65Accounts Payables turnover11.9010.5411.188.349.36

  • American Airlines

20182019202020212022Asset turnover5.165.581.561.723.21Account Rec. Turnover24.4424.5011.3918.1921.42Inv. turnover21.2517.5414.1515.5716.47Accounts Payables turnover18.2415.7419.0915.7717.46

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