In early-2019, Delta Airlines had total assets worth $24.8 billion, debt of $12.8 billion, and cash of $5.5 billion. Delta also had annual revenues of $38.9 million. However, United Airline had total assets of $28.8 billion, debt of $2.7 billion, cash of $2.9 billion, and annual revenues of $18.6 million. a) compare the leverage ratio for Delta Airlines and United Airlines. b)The company with the higher leverage ratio will be less profitable and therefore this will have a negative impact on that company’s share price. Do you agree with this statement? Give reasons.
In early-2019, Delta Airlines had total assets worth $24.8 billion, debt of $12.8 billion, and cash of $5.5 billion. Delta also had annual revenues of $38.9 million. However, United Airline had total assets of $28.8 billion, debt of $2.7 billion, cash of $2.9 billion, and annual revenues of $18.6 million. a) compare the leverage ratio for Delta Airlines and United Airlines. b)The company with the higher leverage ratio will be less profitable and therefore this will have a negative impact on that company’s share price. Do you agree with this statement? Give reasons.
Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter3: Analysis Of Financial Statements
Section: Chapter Questions
Problem 14P: The Jimenez Corporation’s forecasted 2020 financial statements follow, along with some industry...
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In early-2019, Delta Airlines had total assets worth $24.8 billion, debt of $12.8 billion, and cash of $5.5 billion. Delta also had annual revenues of $38.9 million. However, United Airline had total assets of $28.8 billion, debt of $2.7 billion, cash of $2.9 billion, and annual revenues of $18.6 million.
a) compare the leverage ratio for Delta Airlines and United Airlines.
b)The company with the higher leverage ratio will be less profitable and therefore this will have a negative impact on that company’s share price. Do you agree with this statement? Give reasons.
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