American Airlines Financial Assessment and Analysis

American Airlines Financial Assessment and Analysis
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Past financial ratios
201520142013Liquidity ratiosCurrent ratio73%88%104%Quick ratio67%80%96%201520142013Profitability ratiosGross Profit Margins58.3348.146.36Operating Profit Margin15.149.965.23Net Profit Margin18.576.76-6.86Earnings Per Share11.073.93-6.54Price-Earnings RatioLeverage ratios201520142013Debt-to-Total-Assets0.380.370.36Debt-to-Equity3.658.77-6.15201520142013Activity RatiosInventory Turnover18.321.9618.02Fixed Assets Turnover1.491.851.39Total Assets Turnover0.910.81Accounts Receivable TurnoverAverage Collection PeriodGrowth Ratios201520142013Sales40,990,00042,650,000 26,743,000Net Income7,610,0002,882,000-1,834,000Earnings Per Share11.073.93-6.54Dividends per Share0.40.20
The liquidity ratios have decreased over the three periods indicated that the company’s operating cycle is less efficient and this affects the ability to pay short-term liabilities and debts. Nonetheless, the profitability ratios have increased, and the company has reported larger profits with improved sales revenue, while the expenses have not increased substantially. The leverage ratios indicate the ability to pay long-term debts, and the debt to total assets ratio has barely increased from 0.36 to 0.38, but the company is aggressively using financial leverage compared to 2013. The activity ratios increased from 2013 to 2014, but then declining in 2015, and there is no concern as the company can maintain inventory levels without affecting business. The growth ratios have increased consistently indicating that there is no concern about the business operations.
Strategy to accomplish objectives
The strategic objective period is to improve efficiency focusing on better fleets, improved sales, increasing passenger and reducing the operating expenses. The set strategy is to increase the sales revenue by 10% on a yearly basis and combined with improved efficiency. This will increase the company’s profitability and the stakeholders are a key component of the business in order to achieve the strategic objectives. The company filed for chapter 11 bankruptcy in the past, highlighting the need to implement the strategic objectives to accelerate growth (Conaway, 2011) Additionally, the airliner will seek to improve service delivery to impact positively on the business, and this will be measured through quality indicators, while reducing costs without compromising quality and this will indicate improved efficiency. Having a larger fleet of airplanes combined with technology to ensure technology. The cas...