CASE STUDY: DATA AND ACCOUNTING APPLICATIONS- Student Version

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Delta_Air_Lines_Financial_Statements.xlsx
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Ratios

Dec. 31, 2017 Dec. 31, 2016 Dec. 31, 2015 Dec. 31, 2014
LIQUIDITY RATIOS
Current ratio (times) 0.42 0.49 0.52 0.54
Quick ratio (times) 0.27 0.35 0.31 0.33
Average payment period (days) 183.41 181.43 151.15
ASSET MANAGEMENT RATIOS
Total asset turnover (times) 0.77 0.77 0.77 0.75
Fixed asset turnover (times) 1.55 1.63 1.77 1.84
Average collection period (days) 19.65 18.80 19.36 20.77
Inventory turnover (times) 6.26 9.89 17.27 21.85 Fuel Only
FINANCIAL LEVERAGE RATIOS
Total debt to total assets 73.90% 76.03% 79.58% 83.68%
Equity multiplier (times) 3.83 4.17 4.90 6.13
Interest coverage (times) 15.44 17.92 16.22 3.39
PROFITABILITY RATIOS
Operating profit margin 14.82% 17.54% 19.17% 5.47%
Net profit margin 8.67% 11.03% 11.12% 1.63%
Operating return on assets 11.47% 13.56% 14.68% 4.08%
Return on total assets 6.71% 8.53% 8.52% 1.22%
Return on equity 25.72% 35.59% 41.71% 7.48%

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($) $ in Millions Dec. 31, 2017 Dec. 31, 2016 Dec. 31, 2015 Dec. 31, 2014
Current Assets:
Cash and cash equivalents $ 1,814 $ 2,762 $ 1,972 $ 2,088
Short-term investments 825 487 1,465 1,217
Accounts receivable, net of an allowance for uncollectible accounts of $12 and $15 at December 31, 2017 and 2016, respectively 2,377 2,064 2,020 2,297
Hedge margin receivable 119 925
Fuel inventory 916 519 379 534
Expendable parts and supplies inventories, net of an allowance for obsolescence of $113 and $110 at December 31, 2017 and 2016, respectively 413 372 318 318
Hedge derivatives asset 1,987 1,078
Prepaid expenses and other 1,499 1,247 796 701
Total current assets 7,844 7,451 9,056 9,158
Property and Equipment, Net:
Property and equipment, net of accumulated depreciation and amortization of $14,097 and $12,456 at December 31, 2017 and 2016, respectively 26,563 24,375 23,039 21,929
Other Assets:
Goodwill 9,794 9,794 9,794 9,794
Identifiable intangibles, net of accumulated amortization of $845 and $828 at December 31, 2017 and 2016, respectively 4,847 4,844 4,861 4,603
Deferred income taxes, net 935 3,064 4,956 7,595
Other noncurrent assets 3,309 1,733 1,428 926
Total other assets 18,885 19,435 21,039 22,918
Total assets 53,292 51,261 53,134 54,005
Current Liabilities:
Current maturities of long-term debt and capital leases 2,242 1,131 1,563 1,184
Air traffic liability 4,888 4,626 4,503 4,296
Accounts payable 3,674 2,572 2,743 2,622
Accrued salaries and related benefits 3,022 2,924 3,195 2,266
Frequent flyer deferred revenue 1,822 1,648 2,581 2,772
Fuel card obligation 1,067 431 1,635 1,580
Other accrued liabilities 1,858 1,907 1,306 2,127
Total current liabilities 18,573 15,239 17,526 16,847
Noncurrent Liabilities:
Long-term debt and capital leases 6,592 6,201 6,766 8,477
Pension, postretirement and related benefits 9,810 13,378 13,855 15,138
Frequent flyer deferred revenue 2,296 2,278 2,246 2,602
Other noncurrent liabilities 2,111 1,878 1,891 2,128
Total noncurrent liabilities 20,809 23,735 24,758 $ 28,345
Commitments and Contingencies
Stockholders' Equity:
Common stock at $0.0001 par value; 1,500,000,000 shares authorized, 714,674,160 and 744,886,938 shares issued at December 31, 2017 and 2016, respectively 0 0 0 $ 0
Additional paid-in capital 12,053 12,294 12,936 12,981
Retained earnings 9,636 7,903 5,562 3,456
Accumulated other comprehensive loss (7,621) (7,636) (7,275) (7,311)
Treasury stock, at cost, 7,476,181 and 14,149,229 shares at December 31, 2017 and 2016, respectively (158) (274) (373) (313)
Total stockholders' equity 13,910 12,287 10,850 8,813
Total liabilities and stockholders' equity $ 53,292 $ 51,261 $ 53,134 $ 54,005

Consolidated Statements of Oper

Consolidated Statements of Operations - USD ($) $ in Millions 12 Months Ended
Dec. 31, 2017 Dec. 31, 2016 Dec. 31, 2015 Dec. 31, 2014
Passenger:
Mainline $ 29,105 $ 28,105 $ 28,898 $ 28,688
Regional carriers 5,714 5,672 5,884 6,266
Total passenger revenue 34,819 33,777 34,782 34,954
Cargo 729 668 813 934
Other 5,696 5,194 5,109 4,474
Total operating revenue 41,244 39,639 40,704 40,362
Operating Expense:
Salaries and related costs 10,436 10,034 8,776 8,120
Aircraft fuel and related taxes 5,733 5,133 6,544 11,668
Regional carriers expense 4,503 4,311 4,241 5,237
Depreciation and amortization 2,235 1,902 1,835 1,771
Contracted services 2,184 1,991 1,848 1,749
Aircraft maintenance materials and outside repairs 1,992 1,823 1,848 1,828
Passenger commissions and other selling expenses 1,787 1,710 1,672 1,700
Landing fees and other rents 1,528 1,490 1,493 1,442
Passenger service 1,067 907 872 810
Profit sharing 1,065 1,115 1,490 1,085
Aircraft rent 351 285 250 233
Other 2,249 1,986 2,033 2,513
Total operating expense 35,130 32,687 32,902 38,156
Operating Income 6,114 6,952 7,802 2,206
Non-Operating Expense:
Interest expense, net (396) (388) (481) (650)
Miscellaneous, net (17) 72 (164) (484)
Total non-operating expense, net (413) (316) (645) (1,134)
Income Before Income Taxes 5,701 6,636 7,157 1,072
Income Tax Provision (2,124) (2,263) (2,631) (413)
Net Income $ 3,577 $ 4,373 $ 4,526 $ 659
Basic Earnings Per Share (usd per share) $ 4.97 $ 5.82 $ 5.68 $ 0.79
Diluted Earnings Per Share (usd per share) 4.95 5.79 5.63 0.78
Cash Dividends Declared Per Share (usd per share) $ 1.02 $ 0.68 $ 0.45 $ 0.30

Consolidated Statements of Cash

Consolidated Statements of Cash Flows - USD ($) $ in Millions 12 Months Ended
Dec. 31, 2017 Dec. 31, 2016 Dec. 31, 2015 Dec. 31, 2014
Cash Flows From Operating Activities:
Net income $ 3,577 $ 4,373 $ 4,526 $ 659
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 2,235 1,902 1,835 1,771
Hedge derivative contracts (7) (342) (1,366) 2,186
Deferred income taxes 2,071 2,223 2,581 414
Pension, postretirement and postemployment payments greater than expense (3,302) (717) (1,013) (723)
Equity investment earnings (1) (160) (35) 758
Changes in certain assets and liabilities: 268
Receivables (328) (147) (56) 106
Fuel inventory (397) (140) 155
Hedge margin (5) 81 806 (302)
Prepaid expenses and other current assets (57) (26) (102) 62
Air traffic liability 262 123 207 172
Frequent flyer deferred revenue 192 45 (301) (922)
Profit sharing (51) (383) 734 58
Accounts payable and accrued liabilities 992 285 (201) 174
Other, net (33) 88 157 (238)
Net cash provided by operating activities 5,148 7,205 7,927 264
Property and equipment additions: (36)
Flight equipment, including advance payments (2,704) (2,617) (2,223) 276
Ground property and equipment, including technology (1,187) (774) (722) 4,947
Purchase of equity investments (1,245) 0 (500)
Purchase of short-term investments (925) (1,707) (998) (1,662)
Redemption of short-term investments 584 2,686 739 (587)
Other, net 111 257 (251) 0
Net cash used in investing activities (5,366) (2,155) (3,955) (1,795)
Cash Flows From Financing Activities: 1,533
Payments on long-term debt and capital lease obligations (1,258) (1,709) (2,558) 0
Repurchase of common stock (1,677) (2,601) (2,200) 0
Cash dividends (731) (509) (359) 48
Fuel card obligation 636 211 (340) (2,463)
Payments on hedge derivative contracts (244) (451) (71)
Proceeds from hedge derivative contracts 20 291 429 (2,928)
Proceeds from long-term obligations 2,454 450 1,038 (1,100)
Other, net 70 58 (27) (251)
Net cash used in financing activities (730) (4,260) (4,088) (41)
Net (Decrease) Increase in Cash and Cash Equivalents (948) 790 (116) 0
Cash and cash equivalents at beginning of period 2,762 1,972 2,088 0
Cash and cash equivalents at end of period 1,814 2,762 1,972 1,020
Supplemental Disclosure of Cash Paid for Interest 390 385 452 60
Non-Cash Transactions: (3,240)
Treasury stock contributed to our qualified defined benefit pension plans 350 350 0 (756)
Flight and ground equipment acquired under capital leases 261 86 111 2,844

Consolidated Statements of Stoc

Consolidated Statements of Stockholders' Equity - USD ($) shares in Millions, $ in Millions Total Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock
Beginning balance at Dec. 31, 2014 $ 8,813 $ 0 $ 13,621 $ 2,816 $ (7,311) $ (313)
Beginning balance (shares) at Dec. 31, 2014 845 20
Consolidated Statements of Stockholders' Equity (Deficit)
Net income 4,526 4,526
Dividends declared (359) (359)
Other comprehensive income (loss) 36 36
Shares of common stock issued and compensation expense associated with equity awards (Treasury shares withheld for payment of taxes) [1] 16 76 $ (60)
Shares of common stock issued and compensation expense associated with equity awards (Treasury shares withheld for payment of taxes) (shares) [1] 1 1
Stock options exercised 18 18
Stock options exercised (shares) 2
Stock purchased and retired (2,200) (779) (1,421)
Stock purchased and retired (shares) (48)
Ending balance at Dec. 31, 2015 10,850 $ 0 12,936 5,562 (7,275) $ (373)
Ending balance (shares) at Dec. 31, 2015 800 21
Consolidated Statements of Stockholders' Equity (Deficit)
Net income 4,373 4,373
Change in accounting principle 95 95
Dividends declared (509) (509)
Other comprehensive income (loss) (361) (361)
Shares of common stock issued and compensation expense associated with equity awards (Treasury shares withheld for payment of taxes) [1] 65 105 $ (40)
Shares of common stock issued and compensation expense associated with equity awards (Treasury shares withheld for payment of taxes) (shares) [1] 2 1
Stock options exercised 32 32
Stock options exercised (shares) 3
Treasury stock, net, contributed to our qualified defined benefit pension plans 343 204 $ 139
Treasury stock, net, contributed to our qualified defined benefit pension plans (shares) (8)
Stock purchased and retired (2,601) (983) (1,618)
Stock purchased and retired (shares) (60)
Ending balance at Dec. 31, 2016 12,287 $ 0 12,294 7,903 (7,636) $ (274)
Ending balance (shares) at Dec. 31, 2016 745 14
Consolidated Statements of Stockholders' Equity (Deficit)
Net income 3,577 3,577
Dividends declared (731) (731)
Other comprehensive income (loss) 15 15
Shares of common stock issued and compensation expense associated with equity awards (Treasury shares withheld for payment of taxes) [1] 68 107 $ (39)
Shares of common stock issued and compensation expense associated with equity awards (Treasury shares withheld for payment of taxes) (shares) [1] 1 1
Stock options exercised 28 28
Stock options exercised (shares) 2
Treasury stock, net, contributed to our qualified defined benefit pension plans 343 188 $ 155
Treasury stock, net, contributed to our qualified defined benefit pension plans (shares) (8)
Stock purchased and retired (1,677) (564) (1,113)
Stock purchased and retired (shares) (33)
Ending balance at Dec. 31, 2017 $ 13,910 $ 0 $ 12,053 $ 9,636 $ (7,621) $ (158)
Ending balance (shares) at Dec. 31, 2017 715 7