Investment decision based on Ratio analysis:-
Ratios | Formula | 2017 | 2016 | |||
( Amount in $) | Percentage | ( Amount in $) | Percentage | |||
Liquidity ratios | ||||||
Current ratio | current assets \ current liabilities | 1206/2395 | 50% | 1403/2214 | 63% | |
Quick ratio | (current assets - inventory)\ Cu. Liabilities | (1206-55)/2395 | 48% | (1403-47)/2214 | 61% | |
Activity ratios | ||||||
Total Asset Turnover ratio | Sales \ Total Assets | 7015/9781 | 72% | 6632/9323 | 71% | |
Profitability Ratios | ||||||
Operating profit margin | operating profits \ Sales | 1000/7015 | 14% | 1312/6632 | 20% | |
Net profit margin | Net Profit \ Sales | 1147/7015 | 16% | 759/6632 | 11% | |
Earning per share | 3.49 | 2.32 | ||||
Return on assets | Earnings available for common stakeholders | 1147/9781 | 12% | 759/9323 | 8% | |
Total assets | ||||||
Comparative statement of ratios | |||
Ratio | 2017 | 2016 | % change |
Current ratio | 50% | 63% | -13% |
Quick ratio | 48% | 61% | -13% |
Asset Turn over ratio | 72% | 71% | 1% |
operating profit ratio | 14% | 20% | -6% |
Net profit ratio | 16% | 11% | 5% |
Earning per share | 3.49 | 2.32 | 1.17 |
Return on assets | 12% | 80% | -68% |
All the ratios are showing negative changes as compared with previous year. so, its better not to invest in Jet Blue airways.
The only positive change or increase in Net profit and Earnings per share is due to income tax benefit in the year 2017 and not by operating revenues.
Cash flows from Operating Activities are also declined from $1632 to $1398. It is also showing a decline in operations of Jet Blue Airways.
Answer :- NO
Would you recommend an investment in this Jet Blue company? (YES or NO)
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