Question

I included all of the information the book provided. I found the textbook solution but I need help determining which numbers get plugged in to populate the answer. If I can understand how the return on equity, return on assets, ect is computed on one I can solve the remaining years/companies. I keep getting answers one over.

Question a- Compete key liquidity, solvency, and return on investment ratios for 1998 (current ratio, total debt to equity, long-term debt to equity, times interests earned, return on assets, return on equity).

I cannot determine which numbers are used to complete the equation.
on the balance sheet, mos erm, as operating leases most leases. The md rowing in allere volatile carmings Airline companies lease all types of assets- property, and operating and office equipment. Lease terms all 25 years. While many companies report some capital leases on the bal. panies are increasingly structuring their leases, long-term and short-term a condensed balance sheets and income statements along with excerpts of 1998 and 1997 annual reports for AMR (American Airlines), Delta (United Airlines) follow property, and ople many companies ir leases, long-tern with excerpts of lease notes fro the 25 years. Whangly structuring the statements alon Airlines), Delta Airlines, and oth UAL AMR DELTA 1997 1998 1998 1997 1997 1998 Balance Sheets ($ millions) Assets $ 4875 Current assets..... Freehold assets (net)............. 12,239 2147 Leased assets (net).............. Intangibles and other ......... 3.042 Total assets.... $22,303 $ 4.986 11,073 2,086 2 .714 $20,859 $ 3,362 9,022 299 1 ,9ZU $ 2,867 7,695 347 1,832 $ 2,908 10,951 2,103 2.597 1602 17 $14,603 $12,741 $18,559 $15,484 (continued

Answer 1

		AMR
Ratio	Formulae	1998
Current ratio	= Current assets / Current liabilities	=4875/(154+5485) = 0.86
Total debt to equity	= (Short term debt + Long term debt) / Shareholder equity	=(154+2436)/(3257+4729-1288) = 0.39
Long-term debt to equity	= Long term debt / Shareholder equity	=(2436)/(3257+4729+(-1288)) = 0.36
Times interests earned	= Operating income / Interest expense	=2338/372 = 6.28
Return on assets	= Net income / Total assets	=1306/22303 = 5.86%
Return on equity	= Net income / Shareholders equity	=1306/(3257+4729+(-1288)) = 19.50%
Note : Shareholders equity = Contributed capital + Retained earnings + Treasury stock