8.1.4 Liquidity risk. Management of American Airlines capital and cash can affect the variability and predictability of revenue and cash flow. Liquidity risk is a measure of the company’s ability to meet short term obligations. American Airlines liquidity abilities can be examined through its current ratio, quick ratio and cash ratio.
Table 1
Liquidity Ratios for three consecutive periods: American Airlines 2016 2015 2014
Current Ratio 0.74 0.73 0.88
Quick Ratio 0.67 0.67 0.80
Cash Ratio 0.46 0.46 0.54
Liquidity ratios are used to “analyze the ability of a company to pay off both its current liabilities as they become due as well as their long-term liabilities as they become current” (My accounting course, 2017). With reference to table 1, …show more content…
System issues are one big part of the entire integration effort that will have a clear impact on other aspects of the acquisition process. As a result, the use of information technology to process CVAs and merge financial data of the two airline entities accurately. It is important that the senior management team invest in strong interim to improve the functionality of the customer’s experience during transition to maintain profit. It is also up that team to see what will be the most effective approach between just expanding the capacity of the already existing system or just shift to a brand new …show more content…
This is the most common value creating acquisition strategy. No matter how difficult it looks, it consists of reducing costs to improve margins and cash flows. The acquiring company can also help by accelerating revenue growth. Growth can be accomplished by examining American Airlines financial data. Two financial data we very distinctive despite improvements, the company has low margin and low return on invested capital compared to Delta and other big giants of the airline Industry. As a result, it will be easier for Delta to improve American Airlines performance.
8.1.7.2 Get employee “Buy In” during acquisition process. It is important to find a way to retain productive employees for both airlines during the early stage of the acquisition process. By doing so, the chances of encountering a good transition is high. It can be done by focusing on key areas and establishing the right decision as soon as
Table 1
Liquidity Ratios for three consecutive periods: American Airlines 2016 2015 2014
Current Ratio 0.74 0.73 0.88
Quick Ratio 0.67 0.67 0.80
Cash Ratio 0.46 0.46 0.54
Liquidity ratios are used to “analyze the ability of a company to pay off both its current liabilities as they become due as well as their long-term liabilities as they become current” (My accounting course, 2017). With reference to table 1, …show more content…
System issues are one big part of the entire integration effort that will have a clear impact on other aspects of the acquisition process. As a result, the use of information technology to process CVAs and merge financial data of the two airline entities accurately. It is important that the senior management team invest in strong interim to improve the functionality of the customer’s experience during transition to maintain profit. It is also up that team to see what will be the most effective approach between just expanding the capacity of the already existing system or just shift to a brand new …show more content…
This is the most common value creating acquisition strategy. No matter how difficult it looks, it consists of reducing costs to improve margins and cash flows. The acquiring company can also help by accelerating revenue growth. Growth can be accomplished by examining American Airlines financial data. Two financial data we very distinctive despite improvements, the company has low margin and low return on invested capital compared to Delta and other big giants of the airline Industry. As a result, it will be easier for Delta to improve American Airlines performance.
8.1.7.2 Get employee “Buy In” during acquisition process. It is important to find a way to retain productive employees for both airlines during the early stage of the acquisition process. By doing so, the chances of encountering a good transition is high. It can be done by focusing on key areas and establishing the right decision as soon as