Southern New Hampshire University
Shane Gerdes
Professor Newport
Controllership
October 16, 2022
For this assignment, I chose to analyze the company, American Airlines. American Airlines is
one of the major airlines based in the United States and is headquartered in Fort, Worth, Texas.
The company employs over 100,000 individuals and flies hundreds of millions of passengers to
their desired destinations yearly
American Airlines last released an 8K on October 11, 2022, a 10Q on July 21, 2022, and their
last 10K filing was on February 22, 2022. The fiscal year end for this entity is on December 31.
20XX.
Numbers for financial accounts are in millions..
Current Ratio - Current Assets vs. Current Liabilities (2021) -- CA (17,336) / CL (19,006),
17335/19,006= 0.91
Return on Assets -- Net Income vs. Total Assets (2021) -- NI (-1,993) / TA (66,467), (-
1,993)/66,467= -0.03
Return on Equity -- Net Income vs. Avg Shareholder's Equity -- NI (-1,993) / AVGSE ((-7340+-
6,664)/2)= (-7,002), (-1,993/-7,002) = -0.28
Southern New Hampshire University
A current ratio is a liquidity measure of an entity's ability to pay their short-term obligations and
others due within the year. With a current ratio of 0.91 for American Airlines, this measure
suggests that if operation were to suddenly stop, the liquidation of their assets will be equivalent
to pay off 91% of their acquired debt. A preferable current ratio is one that is over 1. This would
show the company's ability to rid itself of any debt and possibly maintain a gain on the overall
investment. The return on assets ratio is a financial ration indicating the profitability of a
company. It is a measure between the company's net income and its total assets. The comparison
signifies the profit the business is earning atop its expenses for their assets used in company
operations. American Airlines reported a net loss in 2021 and therefore owned a return of assets
ratio (ROA) of -0.03. The company is not earning enough revenue to generate a net income and
thus results in a negative ROA ratio. American Airlines must find a way to lower expenses or
generate additional revenue to increase their ROA to at least be over 0. Most often, a return on
assets ratio of 5% or higher is considered good. Lastly, American Airlines return on equity ratio
calculates to -0.28. The negative value signifies negative retained earnings and failure to perform
to expectations. In this case, all stakeholders are losing on their investments and won't see
dividends or any distributions. A company's equity indicates its worth and it is important for a
company to generate enough sales while maintaining affordable expenses. This will ensure the
company and its investors will at least make their investment back and possibly distribute
dividends to shareholders. With this ratio being -0.28, it is clear American Airlines and its
investors are losing on their stake in the company.
Numbers in millions
Southern New Hampshire University 2020
2021
Revenue (net)
29,882
Revenue (net)
17,337
COGS (operating expenses)30,941
COG