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Delta Air lines, one of the world’s largest airlines, provides passenger and cargo services throughout the United States and the world
Delta Air lines, one of the world’s largest airlines, provides passenger and cargo services throughout the United States and the world. Delta reported the following financial data on million) for the year ended December 31, 2008:
Net cash flows from operating activities $(1,707)
Cash and cash equivalents, December 31, 2008 4,255
a. Determine the monthly cash expenses. Round to one decimal place
b. Determine the ratio of cash to monthly cash expenses. Round to one decimal place
c. Based on your analysis, do you believe that Delta will remain in business?
Expert Solution
a. $142.3 ($1,707/12)
b. 29.9 months ($4,255/$142.3)
c. Delta Air Lines reported a positive cash flow for the first and second quarters of 2009 and a small negative cash flow for the third quarter of 2009. In addition, Delta Air Lines has various financing agreements that allow it to access additional cash as necessary. Thus, it would appear that Delta Air Lines will continue to operate into the near future.
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