Accounting memo help?

American Airlines has just announced that it will file for Chapter 11 (reorganization) bankruptcy. The economy, fuel prices, and other factors have brought them to this point. Their biggest competitor, United Airlines, filed for Chapter 11 bankruptcy in 2002 and was mostly unprofitable until 2010. Will American Airlines be able to emerge from their reorganization as a profitable corporation?

Review the latest annual reports (10-K’s) for American Airlines (parent company is AMR Corporation). and United Airlines (parent company is United Continental Holdings, Inc.) in order to compare the following:

• Current Ratio

• Debt to Total Assets Ratio

• Profit Margin Ratio

In a memo, please review their 10-K’s to obtain the financial information necessary to compute the ratios above. After reporting these for both companies, provide your opinion as to whether or not American Airlines will be profitable in the future. This should be done based on a comparison of all 3 ratios provided.

American Airlines ticker symbol is AMR. The ticker symbol for United’s parent company is UAL. To look up a company’s financial information, you must use the following so information is consistent:

➢ SEC EDGAR Database - is the address to start your search. Click on “Search for Company Filings”, then on the first bullet point. It’s probably easiest to search by CIK or Ticker Symbol provided above. Once you see the company’s filings, it is more efficient to enter “10-K” under Filing Type to filter the results. The top filing will be the latest Annual Report (10-K) and should have a filing date of 2011-02-16 for AMR and 2011-02-22 for UAL (This is the 2nd filing instead of the 1st. Do not use the 10-K/A listed at the top).

Full points will be rewarded thank you! (:

1 Answer

  • Alexis
    Lv 4
    8 years ago
    Favorite Answer

    Um I am not going to research this for you, you need to look up what items go in these formulas and then go to the database and do the calculations. It is not that hard honey.

    Ill give you a hint current ratio = current assets/ current liabilities

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