Uniqlo

PRESENTATION:

ROA: Both companies do not efficiently manage their assets and thus have no return in 2012.

ROE: Since both companies are not profitable in 2012, there is no return on equity.

Current ratio: United is in a better shape than American Airlines, but both airlines do not cover their current obligation/liabilities. Therefore, they are not financially healthy.

Debt to equity ratio: For AMR, this indicates that it is completely financed by liabilities/debt. T assets are dominantly financed by debt, which has significantly increased from 2011 to 2012.

Because airlines are in the service industry and thus do not manufacture anything, there are no costs of goods sold. Therefore, the ratio is not applicable.

Even though both companies collect their account receivables fairly quickly- 13-15 days, they have to dedicate a substantial portion of their cash flow from operations to payments on their indebtedness and other obligations (financing activities), thereby reducing the funds available for other purposes like investing activities.

Due to the reduced liquidity shown by their current ratios, both companies are volatile to fluctuations in the demand (political, environmental and economic factors) and costs (fuel prices)

AMR:

Even though there is almost 2,000 million dollars net loss in 2011 and 2012, AMR also has net increase in cash with $194 million dollars and $115 million dollars respectively. Compare with 2011, the cash flow from both operating activities and investing activities have almost same amount in up trend. This implies the company has improved their operation behavior and enhanced their liquidity

UAL- Cash Flows Activities - 2012 Compared to 2011

Operating Activities

This decrease was primarily due to 1.5 billion reduction in net income in 2012, which was largely offset by an increase in advance ticket sales and receivables.

Investing Activities

United’s capital expenditures in 2012 related to upgrades to existing aircraft...