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Financial statements and ratios

I am looking for American airlines

current ratio.

Return on sales

Eeturn on sales

Earming per share

Debt Ratio

price earnings ratio

and state the company solvency, liquidity and profitability

Solution Preview

The following info was obtained from the 2004 American Airlines annual report:

Current Ratio = Current Assets / Current Liabilities
CR = 4,971 / 7,018
CR = 0.71

An indication of a company's ability to meet short-term debt obligations; the higher the ratio, the more liquid the company is. Current ratio is equal to current assets divided by current liabilities. If the current assets of a company are more than twice the current liabilities, then that company is generally considered to have good short-term financial strength. If current liablities exceed current assets, then the company may have problems meeting its short-term obligations.

Return on Sales = Net Income Before Interest & Tax / Sales
ROS = -144 / 18,645
ROS = -0.0077
This measure is helpful to management, providing insight into how much profit is being produced per dollar of sales.

Earnings Per Share = Net Income - Dividends on Preferred Stock / Avg Outstanding Shares
EPS = 18,645 / 3,900
EPS = 4.74
This is the single most popular variable in dictating a share's price. EPS indicates the profitability of a company. It is also a major component of the price-to-earnings valuation ratio

For example, assume that a company has a net income of $25 million. If the company paid out $1 ...

Solution Summary

The financial statements and ratios for the return on sales are determined.