Student: Stanley

I need to do the final term project of my managerial accounting class.

I need to do the final term project of my managerial accounting class. There are four documents, two are the teacher's notes about the work, the term project that I made and a finished term project to guide you as to how the work should look. Who can do it for Sunday ?. Term Project Comparative Financial Statement Analysis of Ruth’s Hospitality Group and Flanigan’s Enterprises, 2016-2018 Prepared by Rene Carbonell Table of Contents I. Introduction II. Business history and future a. Industry b. Ruth’s Hospitality Group c. Flanigan’s Enterprises III. Financial Analysis a. Ratio analysis explanation i. Liquidity ratios ii. Activity ratios iii. Solvency ratios iv. Probability ratios b. Horizontal and vertical analysis i. Overview ii. Complementary application IV. Liquidity analysis a. Industry b. Ruth’s Hospitality Group c. Flanigan’s Enterprises V. Activity analysis a. Industry b. Ruth’s Hospitality Group c. Flanigan’s Enterprises VI. Solvency analysis a. Industry b. Ruth’s Hospitality Group c. Flanigan’s Enterprises VII. Profitability analysis a. Industry b. Ruth’s Hospitality Group c. Flanigan’s Enterprises VIII. Horizontal and vertical analysis IX. Comparative analysis a. Creditworthiness analysis i. Short-term ii. Long-term b. Investment attractiveness analysis. c. Recommendations and current developments X. Summary and conclusions XI. References/Biography XII. Appendices a. Analysis tables- Ruth’s Hospitality Group Income Statement b. Analysis tables- Flanigan’s Enterprises Income Statement I. Introduction According to the study or analysis of Financial Statements, it is a method of reviewing and analyzing the accounting reports (financial statements) of a company to evaluate its projected past, present or future performance. This process allows a better business or financial decision based on the results analyzed in the financial statements. It is a requirement for companies listed on the United States stock exchange, to present their financial statements to Securities and Exchange Commission (SEC). This allows the performance to be assessed over the years through the annual report presented to interested parties. As the financial statements are prepared to meet the requirements, the second step in the process is to analyze them effectively so that future profitability and cash flows can be forecast. Therefore, the main objective of the analysis of the financial statements is to use information about the company's past performance to predict how it will do in the future. Another important purpose of analyzing the financial statements is to identify potential problem areas and solve them. There may be different stakeholders in the analysis of financial statements. These can be classified into internal and external users. Internal users refer to the administration of the company that analyzes the financial statements to make decisions related to the company's operations. On the other hand, external users do not necessarily belong to the company, but they still have some kind of financial interest. These include owners, investors, creditors, government, employees, customers and the general public. Company managers, large or small, need to analyze and use the financial statements to make intelligent decisions about performance. You make the right decisions through an efficient analysis of the financial statements can be a very valuable tool for any manager or manager of any company. For example, they can measure the cost per distribution channel, or how much cash they have left, of their accounting reports and make decisions based on these analysis results. Small business owners need a lot of financial information about their operations in order to determine the profitability of the company. It helps to make decisions as if to continue operating the business, whether to improve business strategies or abandon the business altogether. People who have bought shares or shares in a company need financial information to analyze the company's performance. They use financial statement analysis to determine what to do with their investments in the company. Then, depending on how the company is doing, they will keep their shares, sell them or buy more. Creditors are interested in knowing if a company will be able to make their payments when they expire. They use the cash flow analysis of the company's accounting records to measure the liquidity of the company or its ability to make short-term payments. The governing and regulatory bodies of the state analyze the analysis of the financial statements to determine how the economy performs in general in order to plan its financial and industrial policies. Tax authorities also analyze a company's statements to calculate the tax burden that the company has to pay. Employees need to know if their employment is safe and if there is a possibility of a raise. They want to be aware of the profitability and stability of their company. Employees may also be interested in knowing the financial position of the company to see if there can be expansion plans and, therefore, career prospects for them. Customers need to know about the company's ability to serve its customers in the future. The need to know the stability of the company's operations increases if the customer (that is, a distributor or supplier of specialized products) depends entirely on the company for its supplies. II. Business history and future a. Industry The hospitality industry is a great field within the goods and services industry that includes smaller fields such as hotels and accommodation, event planning, theme parks, transportation, cruise lines and other fields within the tourism industry. Since the hotel industry is broad, it is very important to define a set of financial indexes that can be used to analyze companies throughout the industry, regardless of operations. The hotel industry will therefore have many amounts of fixed and tangible assets and, therefore, requires a very specific set of financial indexes to accurately analyze the industry and reach conclusions based on the performance of individual companies. The following are key financial reasons that an interested party can use to analyze companies within the hotel industry. The following are key financial reasons that an interested party can use to analyze companies within the hotel industry:  Liquidity Ratios provide stakeholders with information regarding a company's ability to meet its short-term financial obligations. The hospitality industry needs a high amount of working capital and has a lot of short-term financial obligations to cover, making liquidity ratios an integral part of the industry's analysis.  Financial leverage ratios give stakeholders an understanding of the long-term solvency of a firm in the hospitality industry. These ratios measure a company's ability to meet its long-term debt obligations.  Profitability ratios measure a company's level of profitability, at the gross profit, operating profit, and net profit levels. For companies in the hospitality industry, billions of dollars are generated, and many companies are long-established, meaning high profit margins should be generated at all levels. b. Ruth's Hospitality Group, Inc. is a Delaware corporation formerly known as Ruth's Chris Steak House, Inc. The Company was founded in 1965, when Ruth Fertel mortgaged her home for $ 22,000 to buy "Chris Steak House", a restaurant of 60 seats located near the New Orleans Fair Grounds race track. After a fire destroyed the original restaurant, Ruth moved her restaurant to a new facility with a capacity of 160 seats. As the terms of the original purchase prevented the use of the name "Chris Steak House" in a new restaurant, Ruth added her name to that of the original restaurant, thus creating the "Ruth’s Chris Steak House" brand. The Company began to expand in 1972, when Ruth opened a second restaurant in Metairie, located in a suburb of New Orleans. In 1976, another restaurant was opened in Baton Rouge, Louisiana, which was Ruth's first Chris Steak House, which would be owned by a franchise. In 2005, the Company and certain selling shareholders completed an initial public offering of the Company's common shares, which is currently listed on the Nasdaq Global Select Market with the symbol "RUTH". At the end of the year, specifically on December 30, 2018, there were 156 Ruth's Chris Steak House restaurants, which included 78 restaurants owned by the Company, three restaurants that operated under contractual agreements and 75 restaurants owned by franchisees, including 20 international restaurants Franchise ownership in Aruba, Canada, China, Hong Kong, Indonesia, Japan, Mexico, Singapore and Taiwan. On December 12, 2017, the entire company saw the acquisition of all the assets of six Ruth's Chris Steak House, owned by a franchise, located in Hawaii (the “Hawaiian restaurants”) as very necessary or essential $ 35.4 million cash purchase. The results of operations, financial position and cash flows of Hawaiian restaurants are included in the consolidated financial statements at the date of acquisition. The Company uses a 52 or 53 week reporting period that ends on the last Sunday of December. The period ended December 31, 2017 (fiscal year 2017) had a reporting period of 53 weeks. The periods that ended on December 30, 2018 (fiscal year 2018) and December 25, 2016 (fiscal year 2016) had a 52-week reporting period. The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States and include the financial statements of Ruth’s Hospitality Group, Inc. and its wholly owned subsidiaries. The Company adopted a strategy to provide total return to shareholders by maintaining a healthy core business, growing with a disciplined investment approach and returning excess capital to shareholders. The company strives to maintain a healthy core business by increasing sales through traffic, managing operating margins and leveraging its infrastructure. The Company is committed to disciplined growth in markets with attractive sales attributes and solid financial returns. The Company sees in its franchisee program a point of competitive differentiation and always seeks to increase its franchise-owned restaurant locations. The Company may also consider acquiring franchise-owned restaurants on good terms that it considers beneficial for both the Company and the franchisee. c. As of September 29, 2018, Flanigan's Enterprises, Inc., a Florida corporation, together with its subsidiaries, operates 26 units, which consist of restaurants, liquor stores and combined liquor / package stores that we own or have operational control over and partial ownership in; and grants a franchise of five additional units, consisting of two restaurants and three combined restaurants / liquor stores in package. Flanigan's joined Florida in 1959 and began operating as a chain of small cocktail lounges and liquor stores throughout South Florida. By 1970, he had established a chain of salons and liquor stores "Big Daddy's" between Vero Beach and Homestead, Florida. From 1970 to 1979, Flanigan's experienced an expansion of its liquor store and salon operations throughout Florida and opened clubs in five other "Sun Belt" states. In 1975, Flanigan interrupted most of its package shop operations in Florida, except in the South Florida areas of Miami-Dade, Broward, Palm Beach and Monroe counties. In 1982 he expanded the club's operations to the Philadelphia, Pennsylvania area, as a general partner of several limited partnerships that the company organized. In March 1985, Flanigan's began franchising packages of liquor stores and salons in the South Florida area. During fiscal year 1987, they began to renovate their classrooms to provide a full meal service in restaurants, and subsequently renewed and added the food service in most of their classrooms. Food sales currently represent approximately 76.4% and bar sales approximately 23.6% of total restaurant sales. Its package liquor stores emphasize high-volume businesses by providing customers with a wide variety of branded and private label products at discounted prices. Its restaurants offer alcoholic beverages and full service meals with abundant portions and reasonable prices, served in a relaxed, friendly and informal atmosphere. Flanigan carries out its operations directly and through a series of limited companies and wholly owned subsidiaries. Its subsidiaries and limited partnerships (with the exception of the limited partnership, where they are not the general partner, who owns and operates their franchised restaurant in Fort Lauderdale, Florida) are informed in a consolidated manner. Flanigan's executive officers have created an employee culture, food culture and business strategy in their company that has been critical to their success and that can be difficult to replicate under another administrative team. The company has a 52/53 week fiscal year ending on the last Saturday of September. Fiscal year 2018 ended on September 29, 2018, fiscal year 2017 ended on September 30, 2017 and fiscal year 2016 ended on October 1, 2016. III. Financial Analysis a. Ratio analysis explanation i. Liquidity ratios = Current assets/Current liabilities Ruth’s 36,352 =0.78 46,902 2018 37,045 =0.81 45,929 2017 34,420 =0.83 41,260 2016 Flanigan’s 18,768,000 =2.04 9,219,000 2018 14,573,000 =1.81 8,066,000 2017 15,151,000 =1.94 7,790,000 2016 ii. Activity ratios Inventory Turnover Ratio = Cost of Goods Sold/Average Inventory for the year Ruth’s 2018 – 35.1087 2017 – 34.7381 2016 – 37.8683 Flanigan’s 2018 – 14.121 2017 – 15.3557 2016 – 15.5629 Accounts Receivable Turnover = Annual Sales on Credit/Average Accounts Receivable Ruth’s 2018 – 23.2252 2017 – 19.1817 2016 – 18.5641 Flanigan’s 2018 – 239.4451 2017 – 215.3669 2016 – 150.389 Days of Receivable = 365 days/Account Receivable Turnover Ratio Ruth’s 2018 – 15.7157 2017 – 19.0286 2016 – 19.6616 Flanigan’s 2018 – 1.5244 2017 – 1.6948 2016 – 2.427 iii. Solvency ratios Debt ratio = Total liabilities/Total Assets Ruth’s 2018 – 0.3127 2017 – 0.3861 2016 – 0.2404 Flanigan’s 2018 – 0.2338 2017 – 0.2287 2016 – 0,1919 iv. Probability ratios Gross profit margin= Net sales – COG/ Net Sales Ruth’s 2018 – 27.8476 2017 – 27.2449 2016 – 27.432 Flanigan’s 2018 – 59.9003 2017 – 59.1461 2016 – 60.4538 Return on total assets = Net income + Interest expenses / Average total assets Ruth’s 2018 – 16.3385 2017 – 12.493 2016 – 14.8237 Flanigan’s 2018 – 8.0131 2017 – 7.2551 2016 – 8.8101 Return on equity = net income returned / shareholders’ equity Ruth’s 2018 – 46.1545 2017 – 38.0421 2016 – 38.9259 Flanigan’s 2018 – 13.0376 2017 – 11.4994 2016 – 13.6815 b. Horizontal and vertical analysis Ruth’s Operating income for fiscal year 2018 increased from fiscal year 2017 by $5.0 million to $51.7 million. Operating income for fiscal year 2018 was favorably impacted by a $37.0 million increase in restaurant sales, which was offset by increased food and beverage costs, restaurant operating expenses, marketing and advertising, general and administrative costs and depreciation and amortization expenses. The Company had a $3.9 million loss on impairment during fiscal year 2017 that did not reoccur in fiscal year 2018. Higher restaurant sales were attributable to an increase in new Company-owned restaurant sales partially offset by sales at comparable Company-owned restaurants. After-tax income from continuing operations during fiscal year 2018 increased from fiscal year 2017 by $11.4 million to $41.6 million. Income tax expense decreased $7.4 million primarily due to the passage of the 2017 Tax Act which reduced the statutory rate from 35% to 21%. Fiscal year 2018 net income increased from fiscal year 2017 by $11.5 million to $41.7 million. Operating income for fiscal year 2017 decreased from fiscal year 2016 by $877 thousand to $46.7 million. Operating income for fiscal year 2017 was favorably impacted by a $27.3 million increase in restaurant sales, which was offset by increased food and beverage costs, restaurant operating expenses, marketing and advertising, general and administrative costs, depreciation and amortization expenses and pre-opening costs. The Company also had a $3.9 million loss on impairment during fiscal year 2017. Higher restaurant sales were attributable both to an increase in comparable Company-owned restaurant sales and new restaurants. After-tax income from continuing operations during fiscal year 2017 decreased from fiscal year 2016 by $510 thousand to $30.2 million. Fiscal year 2017 net income decreased from fiscal year 2016 by $328 thousand to $30.1 million. Flanigan’s Total revenue for their fiscal year 2018 increased $6,675,000 or 6.25% to $113,497,000 from $106,822,000 for their fiscal year 2017 due to increased menu prices and increased restaurant traffic. Effective September 3, 2017 we increased certain menu prices for their bar offerings to target an increase to their total bar revenues of approximately 4.9% annually and effective September 16, 2017 we increased certain menu prices for their food offerings to target an increase to their total food revenues of approximately 4.0% annually, (the “Price Increases 2017”). We anticipate that total revenue for their fiscal year 2019 will decrease when compared to their fiscal year 2018 due to the fire at their combination restaurant/package liquor store located at 2505 N. University Drive, Hollywood, Florida (Store #19), subsequent to the end of their fiscal year 2018, which will cause this location to be closed for their entire fiscal year 2019, offset to a lesser extent by increased restaurant traffic. Fiscal year 2018 total revenue for their Store #19 was $5,333,000. IV. Liquidity analysis Ruth’s The liquidity in the company has remained stable over the last three years, cash, inventory and accounts receivable have been stable. In 2018 we have the highest availability of cash while the accounts receivable have decreased, the inventory has increased but not significantly. The principal sources of cash during fiscal year 2018 were net cash provided by operating activities and borrowings under their senior credit facility. The principal uses of cash during fiscal year 2018 were for principal repayments under the senior credit facility, capital expenditures, common stock repurchases and dividend payments. Cash flows from discontinued operations are combined with the cash flows from continuing operations within each of the categories on their statement of cash flows. In 2016 the principal sources of cash during fiscal year 2016 were net cash provided by operating activities and borrowings under their prior senior credit facility. Their principal uses of cash during fiscal year 2016 were for capital expenditures, principal repayments under their prior senior credit facility, common stock repurchases and dividend payments. Cash flows from discontinued operations are combined with the cash flows from continuing operations within each of the categories on their statement of cash flows. Flanigan’s The Liquidity has changed in the last three years favorable way. In 2018 is the year with more cash and less accounts receivable. Although the inventory and accounts payable has increased with respect to 2017 and 2016, but it has not affected the company's liquidity capacity. As of September 29, 2018, the company had cash of approximately $13,414,000, an increase of $3,529,000 from their cash balance of $9,885,000 as of September 30, 2017. Their cash increased during the first quarter of their fiscal year 2018, because the company borrowed $3.50 million from their Credit Line just prior to its conversion to the Term Loan on December 28, 2017. V. Activity analysis Inventory turnover Ruth’s Inventory turnover ratio can be defined as a ratio showing how many times a company's inventory is sold and replaced over a period. Saying this we can notice that in year 2016 was the year when the inventory was sales over 37 days approximately, even though doesn’t have a material variation during the last three years. Flanigan’s Inventory turnover ratio can be defined as a ratio showing how many times a company's inventory is sold and replaced over a period. Saying this we can notice that in year 2016 and 2017 were the years when the inventory were sales over 15 days approximately, even though doesn’t have a material variation during the last three years Accounts Receivable Turnover Receivable turnover from 2016 to 2018 prove that both companies are effectives in extending credit as well as collecting debts. Days of Receivable Ruth’s Flanigan’s has the lower of days sales in receivables from 2016 to 2018. Days sales in receivables can be defined as the average number of days it takes to collect outstanding receivable amounts from customers which is between 2 and 1 days. Although Ruth’s has between 19 and 15 days. VI. Solvency ratios Debt ratio The ratios aren’t greater than 1 showing that the debt isn’t funded by assets. In other words, the companies has more assets then liabilities. A high ratio also indicates that a company may be putting itself at a risk of default on its loans if interest rates were to rise suddenly. A lower the debt ratio, the less leverages a company is, implying greater financial risk. At the same time, leverage is an important tool that companies use to grow, and many businesses find sustainable uses for debt. In this case during the three years Flanigan’s has the lower ratio. VII. Probability ratios Gross profit margin are used to measure a company's profitability at various cost levels, including gross margin, operating margin, pretax margin, and net profit margin. The margins shrink as layers of additional costs are taken into consideration, such as the cost of goods sold (COGS), operating and nonoperating expenses, and taxes paid. Gross margin measures how much a company can mark up sales above COGS. Operating margin is the percentage of sales left after covering additional operating expenses. The pretax margin shows a company's profitability after further accounting for non-operating expenses. Net profit margin concerns a company's ability to generate earnings after taxes. Flanigan’s has the best Gross profit margin between both company current profit margin of 59% Return on total assets Profitability is assessed relative to costs and expenses, and it is analyzed in comparison to assets to see how effective a company is in deploying assets to generate sales and eventually profits. The term return in the ROA ratio customarily refers to net profit or net income, the amount of earnings from sales after all costs, expenses, and taxes. The more assets a company has amassed, the more sales and potentially more profits the company may generate. As economies of scale help lower costs and improve margins, returns may grow at a faster rate than assets, ultimately increasing return on assets. Every dollar that Flanigan’s has invested in assets generates 8.01 cents of net income. Flanigan’s is better at converting its investment into profits, compared with Ruth’s. VIII. Horizontal and vertical analysis Ruth’s Fiscal Year 2018 Compared to Fiscal Year 2017 Restaurant sales increased $37.0 million, or 9.5%, to $427.4 million during fiscal year 2018 from fiscal year 2017. The increase was attributable to a $41.1 million increase in new or relocated restaurants offset by a $4.1 million decrease from comparable Company-owned restaurants. Excluding discontinued operations, total operating weeks during fiscal year 2018 increased to 4,027 from 3,715 during fiscal year 2017. The 53rd week contributed $12.4 million in sales in fiscal year 2017. Comparable Company-owned restaurant sales increased 1.4% on a comparable 52-week basis, which consisted of an average check increase of 1.7%, and 0.3% decrease in traffic counts. Comparable restaurant sales and traffic were negatively affected by approximately 50 basis points due to the shift of the New Year’s Eve holiday into fiscal year 2019. New restaurant sales primarily increased in fiscal year 2018 due to an increase in 294 operating weeks from the acquisition of the Hawaiian Restaurants in December 2017. Franchise income increased $374 thousand, or 2.1%, to $17.9 million during fiscal year 2018 from fiscal year 2017. The increase is primarily attributable to the reclassification of $1.5 million in franchisee advertising fees due to the adoption of Topic 606 and an increase in comparable franchisee-owned restaurant sales of 1.0%. This was offset by the acquisition of the Hawaii Restaurants which decreased sales-based royalty income by $1.6 million during fiscal year 2018. Other operating income increased $138 thousand, or 2.0%, to $7.0 million during fiscal year 2018 from fiscal year 2017. Other operating income includes their share of income from managed restaurants, gift card breakage revenue and miscellaneous restaurant income. The increase in other operating income was primarily due to an increase of $106 thousand in income from restaurants operating under contractual agreements, including the new location in Reno, NV. Food and beverage costs increased $3.8 million, or 3.2%, to $120.1 million during fiscal year 2018 from fiscal year 2017. Food and beverage costs, as a percentage of restaurant sales, decreased 170 basis points to 28.1% compared to fiscal year 2017 largely due to a decrease of 8.4% in total beef costs and an increase in average check of 1.7%. Restaurant operating expenses increased $20.8 million, or 11.2%, to $206.3 million during fiscal year 2018 from fiscal year 2017. Restaurant operating expenses, as a percentage of restaurant sales, increased 75 basis points to 48.3% compared to fiscal year 2017 primarily due to an increase in occupancy expenses. Marketing and advertising expenses increased $3.9 million, or 30.8% to $16.6 million during fiscal year 2018 from fiscal year 2017. Marketing and advertising, as a percent of total revenue, increased 60 basis points to 3.7% compared to fiscal year 2017. The increase in marketing and advertising expenses during fiscal year 2018 was attributable to a planned increase in advertising in addition to the reclassification of $1.7 million in certain administrative support costs that have been historically charged to general and administrative costs. General and administrative expenses increased $4.6 million or 13.9% to $37.3 million during fiscal year 2018 from fiscal year 2017. The increase in general and administrative costs was primarily attributable to $3.5 million in incentive- based compensation costs and $906 thousand in Hawaii Restaurants acquisition and integration costs. Depreciation and amortization expense increased $3.5 million to $18.5 million during fiscal year 2018, primarily due to property additions related to new restaurants and remodel projects placed in service within the last twelve months including $2.5 million of depreciation and amortization related to the Hawaii Restaurants. Pre-opening costs remained relatively unchanged at $1.9 million in fiscal year 2018 compared to $2.0 million in fiscal year 2017. During fiscal year 2018 we incurred no loss on impairment charges, compared to fiscal year 2017, during which we recognized a $3.9 million loss on impairment of long-lived assets at a Ruth’s Chris Steak House restaurant. Interest expense increased $918 thousand to $1.7 million during fiscal year 2018 from fiscal year 2017. The increase in expense was primarily due to higher average debt balances during fiscal year 2018 compared to fiscal year 2017. During fiscal year 2018 we recognized $73 thousand of other expense. During fiscal year 2017 we recognized $53 thousand of other income. During fiscal year 2018 we recognized $8.2 million in income tax expense. The effective tax rate, including the impact of discrete items, decreased to 16.5% during fiscal year 2018 compared to 34.1% during fiscal year 2017. The effective tax rate decreased during fiscal year 2018 primarily due to the passage of the 2017 Tax Act, which was signed into law on December 22, 2017. The 2017 Tax Act significantly revised U.S. tax law, and included many changes that impacted the Company, most notably a reduction of the statutory corporate tax rate from 35% to 21%. Income from continuing operations of $41.6 million during fiscal year 2018 increased by $11.4 million compared to fiscal year 2017 due to the factors noted above. Income (loss) from discontinued operations, net of income taxes during fiscal year 2018 was income of $80 thousand compared to a loss of $108 thousand during fiscal year 2017. Discontinued operations includes the recurring revenues and expenses of closed restaurants and related income taxes. Net income was $41.7 million during fiscal year 2018 compared to $30.1 million net income during fiscal year 2017 due to the factors noted above. Fiscal Year 2017 Compared to Fiscal Year 2016 Restaurant sales increased $27.3 million, or 7.5%, to $390.4 million during fiscal year 2017 from fiscal year 2016. The increase was attributable to a $14.5 million increase in comparable Company-owned restaurant sales and $12.8 million from new or relocated restaurants. Excluding discontinued operations, total operating weeks during fiscal year 2017 increased to 3,715 from 3,489 during fiscal year 2016. The 53rd week contributed $12.4 million in sales in fiscal year 2017. Comparable Company-owned restaurant sales increased 1.0% on a comparable 53-week basis, which consisted of an average check increase of 1.0%, and flat traffic. Franchise income increased $244 thousand, or 1.4%, to $17.5 million during fiscal year 2017 from fiscal year 2016. The increase is primarily attributable to an increase in comparable franchisee-owned restaurant sales of 1.3% offset by a $90 thousand decrease in fees from new or re-located locations or ownership transfers Other operating income increased $1.3 million, or 24.5%, to $6.8 million during fiscal year 2017 from fiscal year 2016. Other operating income includes their share of income from managed restaurants, gift card breakage revenue and miscellaneous restaurant income. The increase in other operating income was primarily due to an increase of $972 thousand in income from restaurants operating under contractual agreements, including the new location in Tulsa, OK. Fiscal year 2017 gift card breakage revenue increased $326 thousand from fiscal year 2016 due to an increase in gift card sales. Food and beverage costs increased $9.3 million, or 8.7%, to $116.4 million during fiscal year 2017 from fiscal year 2016. Food and beverage costs, as a percentage of restaurant sales, increased 32 basis points to 29.8% compared to fiscal year 2016 largely due to a 4.2% increase in total beef costs. Restaurant operating expenses increased $12.4 million, or 7.2%, to $185.4 million during fiscal year 2017 from fiscal year 2016. Restaurant operating expenses, as a percentage of restaurant sales, decreased 14 basis points to 47.5% compared to fiscal year 2016 primarily due to a reduction in performance-based compensation. Marketing and advertising expenses increased $1.3 million, or 11.6% to $12.7 million during fiscal year 2017 from fiscal year 2016. Marketing and advertising, as a percent of total revenue, increased 11 basis points to 3.1% compared to fiscal year 2016. The increase in marketing and advertising expenses during fiscal year 2017 was attributable to a planned increase in advertising. General and administrative expenses increased $1.2 million or 3.8% to $32.7 million during fiscal year 2017 from fiscal year 2016. General and administrative expenses, as a percentage of total revenue decreased from 8.2% in fiscal year 2016 to 7.9% in fiscal year 2017 primarily driven by the leverage of the 53rd week in fiscal year 2017. Depreciation and amortization expense increased $1.6 million to $15.0 million during fiscal year 2017, primarily due to property additions related to new restaurants and remodel projects placed in service in fiscal years 2016 and 2017. Pre-opening costs remained relatively unchanged at $2.0 million, during both fiscal years 2017 and 2016. During fiscal year 2017 we recognized a $3.9 million loss on impairment related to the impairment of long-lived assets at a Ruth’s Chris Steak House restaurant. Interest expense decreased $333 thousand to $821 thousand during fiscal year 2017 from fiscal year 2016. The decrease in expense was primarily due to $302 thousand in lower amortization of deferred financing costs during fiscal year 2017 compared to fiscal year 2016. During fiscal year 2017 we recognized $53 thousands of other income. During fiscal year 2016 we recognized $10 thousands of other income. During fiscal years 2017 and 2016 we recognized $15.7 million in income tax expense. The effective tax rate increased to 34.1% during fiscal year 2017 compared to 33.7% during fiscal year 2016. The increase in the effective tax rate in 2017 was primarily due to the $1.1 million expense recognized related to the remeasurement of the Company’s net deferred tax assets resulting from the passage of the Tax Cuts and Jobs Act (the “2017 Tax Act”), partially offset by a 160 basis point reduction in their state income taxes. The 2017 Tax Act significantly revised many aspects of U.S. tax law, most notably reducing the statutory corporate tax rate from 35% to 21% effective January 1, 2018. Since the 2017 Tax Act was signed into law on December 22, 2017, the Company was required to remeasure its net deferred tax assets to reflect the lower tax rate at which they were expected to be realized. The revaluation of the Company’s net deferred tax assets resulted in a one-time, non-cash tax charge of $1.1 million. Income from continuing operations of $30.2 million during fiscal year 2017 decreased by $510 thousand compared to fiscal year 2016 due to the factors noted above. Loss from discontinued operations, net of income taxes during fiscal year 2017 was a loss of $108 thousand compared to a loss of $290 thousand during fiscal year 2016. Discontinued operations includes the recurring revenues and expenses of closed restaurants and related income taxes. The fiscal year 2017 loss from discontinued operations is primarily attributable to expenses related to the Mitchell’s Restaurants. The fiscal year 2016 loss from discontinued operations is primarily attributable to $842 thousand of occupancy related costs from a closed Ruth’s Chris Steak House restaurant partially offset by a $466 thousand benefit from the extinguishment of a liability related to Mitchell’s Restaurant gift cards and a $186 thousand income tax benefit. Flanigan’s Restaurant revenue generated from the sale of food, including non-alcoholic beverages, at restaurants totaled $70,545,000 for their fiscal year 2018 as compared to $66,917,000 for their fiscal year 2017. The increase in restaurant revenue from the sale of food at restaurants for their fiscal year 2018 as compared to their fiscal year 2017 is due to the Price Increases 2017 and increased restaurant traffic. Comparable weekly restaurant food sales (for restaurants open for all of their fiscal years 2018 and 2017, which consists of ten restaurants owned by us and eight restaurants owned by affiliated limited partnerships) was $1,357,000 and $1,287,000 for their fiscal years 2018 and 2017, respectively, an increase of 5.44%. Comparable weekly restaurant food sales for Company owned restaurants only was $714,000 and $679,000 for their fiscal years 2018 and 2017, respectively, an increase of 5.15%. Comparable weekly restaurant food sales for affiliated limited partnership owned restaurants only was $643,000 and $608,000 for their fiscal years 2018 and 2017, respectively, an increase of 5.76%. We anticipate that restaurant revenue from the sale of food for their fiscal year 2019 will decrease when compared to their fiscal year 2018 due to the fire at their Store #19 subsequent to the end of their fiscal year 2018, which we expect will cause this location to be closed for their entire fiscal year 2019, offset to a lesser extent by increased restaurant traffic. Fiscal year 2018 restaurant revenue from the sale of food for their Store #19 was $3,498,000. Restaurant revenue generated from the sale of alcoholic beverages at restaurants totaled $21,760,000 for their fiscal year 2018 as compared to $20,476,000 for their fiscal year 2017. The increase in restaurant revenue from the sale of alcoholic beverages from restaurants for their fiscal year 2018 as compared to their fiscal year 2017 is due to the Price Increases 2017 and increased traffic, but also partially due to the price discounts offered by the Company to promote its Joe’s Pale Ale draft beer during the second and third quarters of their fiscal year 2017. Comparable weekly restaurant bar sales (for restaurants open for all of their fiscal years 2018 and 2017, which consists of ten restaurants owned by us and eight restaurants owned by affiliated limited partnerships) was $418,000 and $393,000 for their fiscal years 2018 and 2017, respectively, an increase of 6.36%. Comparable weekly restaurant bar sales for Company owned restaurants only was $197,000 and $188,000 for their fiscal years 2018 and 2017, respectively, an increase of 4.79%. Comparable weekly restaurant bar sales for affiliated limited partnership owned restaurants only was $221,000 and $205,000 for their fiscal years 2018 and 2017, respectively, an increase of 7.80%. We anticipate that restaurant revenue from the sale of alcoholic beverages at restaurants for their fiscal year 2019 will decrease when compared to their fiscal year 2018 due to the fire at their Store #19 subsequent to the end of their fiscal year 2018, which we expect will cause this location to be closed for their entire fiscal year 2019, offset to a lesser extent by increased restaurant traffic. Fiscal year 2018 restaurant revenue from the sale of alcoholic beverages at restaurants for their Store #19 was $748,000. Revenue generated from sales of liquor and related items at package liquor stores totaled $18,559,000 for their fiscal year 2018 as compared to $16,842,000 for their fiscal year 2017, an increase of $1,717,000 or 10.19%. This increase was primarily due to increased package liquor store traffic. The weekly average of same store package liquor store sales, which includes all nine (9) Company owned package liquor stores, was $357,000 and $324,000 for their fiscal years 2018 and 2017, respectively. We anticipate that revenue generated from the sale of liquor and related items at package liquor stores for their fiscal year 2019 will increase when compared to their fiscal year 2018, but that the increase will be offset by a loss of revenue due to the fire at their Store #19 subsequent to the end of their fiscal year 2018, which we expect will cause this location to be closed for their entire fiscal year 2019, offset to a lesser extent by increased package liquor store traffic. Fiscal year 2018 revenue from sales of liquor and related items at package liquor stores at their Store #19 was $1,087,000. Operating costs and expenses, (consisting of cost of merchandise sold, payroll and related costs, occupancy costs and selling, general and administrative expenses), for their fiscal year 2018 increased $5,489,000 or 5.46% to $106,053,000 from $100,564,000 for their fiscal year 2017. The increase was primarily due to an expected general increase in food costs, offset by actions taken by management to reduce and/or control costs and expenses. We anticipate that their operating costs and expenses will increase through their fiscal year 2019 due to an expected general increase in food costs, offset by the elimination of most operating costs and expenses at their Store #19 due to the fire subsequent to the end of their fiscal year 2018, which will cause this location to be closed for their entire fiscal year 2019. Fiscal year 2018 operating costs and expenses at their Store #19 was $2,211,000. Operating costs and expenses decreased as a percentage of total sales to approximately 93.44% in their fiscal year 2018 from 94.14% in their fiscal year 2017. Gross profit for food and bar sales for their fiscal year 2018 increased to $60,172,000 from $55,786,000 for their fiscal year 2017. Their gross profit margin for restaurant food and bar sales (calculated as gross profit reflected as a percentage of restaurant food and bar sales), was 65.19% for their fiscal year 2018 and 63.83% for their fiscal year 2017. The increase in gross profit margin for food sales and bar sales was due primarily to the Price Increases 2017. We anticipate that their gross profit for restaurant food and bar sales will decrease during their fiscal year 2019 primarily to higher food costs. Gross profit for package liquor store sales for their fiscal year 2018 increased to $5,180,000 from $4,808,000 for their fiscal year 2017. Their gross profit margin (calculated as gross profit reflected as a percentage of package liquor store sales) for package liquor store sales was 27.91% for their fiscal year 2018 and 28.55% for their fiscal year 2017. We anticipate that their gross profit margin for package liquor store sales will decrease during their fiscal year 2019 due to price adjustments to remain competitive with local competitors. Payroll and related costs for their fiscal year 2018 increased $2,073,000 or 6.32% to $34,868,000 from $32,795,000 for their fiscal year 2017 due partially to payroll and related costs associated with higher restaurant sales which require additional payroll and related costs for employees such as cooks and bartenders and higher pay rates. Payroll and related costs as a percentage of total sales was 30.72% for their fiscal year 2018 as compared to 30.70% for their fiscal year 2017. We anticipate that their payroll and related costs will decrease through their fiscal year 2019 due to the elimination of most payroll and related costs at their Store #19 due to the fire subsequent to the end of their fiscal year 2018, which will cause this location to be closed for their entire fiscal year 2019. Fiscal year 2018 payroll and related costs at their Store #19 was $1,494,000. Occupancy costs (consisting of rent, common area maintenance, repairs, real property taxes and amortization of leasehold interests) for their fiscal year 2018 increased $294,000 or 5.41% to $5,726,000 from $5,432,000 for their fiscal year 2017. We anticipate that their occupancy costs will remain stable throughout their fiscal year 2019. Selling, general and administrative expenses (consisting of general corporate expenses, including but not limited to advertising, insurance, professional costs, clerical and administrative overhead) for their fiscal year 2018 increased $1,251,000 or 6.69% to $19,947,000 from $18,696,000 for their fiscal year 2017. Selling, general and administrative expenses increased as a percentage of total sales in their fiscal year 2018 to 17.57% as compared to 17.50% in their fiscal year 2017. We anticipate that their selling, general and administrative expenses will increase throughout their fiscal year 2019 due primarily to increases across all categories. Depreciation and amortization for their fiscal year 2018, which is included in selling, general and administrative expenses, increased $136,000 or 5.10% to $2,803,000 from $2,667,000 for their fiscal year 2017. As a percentage of revenue, depreciation and amortization expense was 2.47% of revenue for their fiscal year 2018 and 2.50% of revenue for their fiscal year 2017. Interest expense for their fiscal year 2018 increased $153,000 to $753,000 from $600,000 for their fiscal year 2017. The increase in interest expense, net, is due to their borrowing the available balance on their Credit Line ($3.5 million for a total amount borrowed on the Credit Line of $5.5 million) during the first quarter of their fiscal year 2018. We anticipate that interest expense will remain stable throughout their fiscal year 2019. Income taxes for their fiscal year 2018 was $1,371,000 and $1,370,000 for their fiscal year 2017. Income taxes during their fiscal year 2018 were approximately equal to their fiscal year 2017 due to a reduction of $336,000 to their deferred tax asset due to the corporate tax rate reduction, which reduction was a part of their current tax expense during the thirteen weeks ended December 31, 2017. Net income for their fiscal year 2018 increased $1,000,000 or 22.78% to $5,390,000 from $4,390,000 for their fiscal year 2017. Net income for their fiscal year 2018 increased when compared to their fiscal year 2017 primarily due higher revenue and the Price Increases 2017, offset by increased food costs and overall expenses. As a percentage of sales, net income for their fiscal year 2018 is 4.75%, as compared to 4.11% for their fiscal year 2017. Net income attributable to stockholders for their fiscal year 2018 increased $657,000 or 21.75% to $3,677,000 from $3,020,000 for their fiscal year 2017. Net income attributable to stockholders for their fiscal year 2018 increased when compared to their fiscal year 2017 primarily due to the Price increases 2017, offset by increased food costs and overall expenses. As a percentage of sales, net income for their fiscal year 2018 is 3.24%, as compared to 2.83% for their fiscal year 2017. Liquidity and Capital Resources We fund their day to day operations through cash generated from operations. As of September 29, 2018, we had cash of approximately $13,414,000, an increase of $3,529,000 from their cash balance of $9,885,000 as of September 30, 2017. Their cash increased during the first quarter of their fiscal year 2018, because we borrowed $3.50 million from their Credit Line just prior to its conversion to the Term Loan on December 28, 2017. During the second quarter of their fiscal year 2018, we paid on March 30, 2018 a dividend of $.25 per share and during the fourth quarter of their fiscal year 2018, we also purchased the real property and improvements which are contiguous to the real property we own where their franchised restaurant located at 1479 E. Commercial Boulevard, Fort Lauderdale, Florida (Store #15) operates for $550,000 cash at closing. We believe that their current cash availability from their cash on hand, positive cash flow from operations and borrowed funds will be sufficient to fund their operations and planned capital expenditures for at least the next twelve months. Capital Expenditures In addition to using cash for their operating expenses, we use cash to fund the development and construction of new restaurants and to fund capitalized property improvements for their existing restaurants. We acquired property and equipment of $5,511,000, (of which $81,000 was for the purchase of a vehicle for debt; $2,486,000 was for construction in progress; and $146,000 was deposits recorded in other assets as of September 30, 2017), during their fiscal year 2018, which amount included $446,000 for renovations to four(4) existing Company owned restaurants. We acquired property and equipment of $7,220,000, (of which $24,000 was for the purchase of a vehicle for debt; $2,419,000 was for construction in progress; and $489,000 was deposits recorded in other assets as of October 1, 2016), during their fiscal year 2017, which amount included $2.475 million for the purchase of real property, $1,272,000 for construction and redevelopment of a new package store on the same, $635,000 for the construction of a catering kitchen and $428,000 for renovations to four (4) existing Company owned restaurant and two (2) existing Company owned package liquor stores. We anticipate the cost of this refurbishment in their fiscal year 2019 will be approximately $450,000, which funds will be provided from operations. Debt As of September 29, 2018, the end of their fiscal year 2018, we had long term debt of $14,576,000, as compared to $12,398,000 as of September 30, 2017. Their long term debt increased as of September 29, 2018 as compared to September 30, 2017 due to the $3,500,000 we borrowed on their Credit Line (now included as part of the Term Loan). As of September 29, 2018, we are in compliance with the covenants of all loans with their lender. We repaid long term debt, including auto loans, financed insurance premiums and mortgages in the amount of $2,500,000 and $1,793,000 in their fiscal years 2018 and 2017, respectively. The working capital increased by 57.48% as of September 29, 2018 from September 30, 2017 primarily due to the $3,500,000 we borrowed against their Credit Line during their fiscal year 2018 prior to the Credit Line converting to the Term Loan. During their fiscal year 2018, we used working capital of approximately $2,157,000 towards the renovation of their restaurant located at 13205 Biscayne Boulevard, North Miami, Florida. We also used $550,000 to fund the purchase price of their acquisition of the real property and improvements contiguous to the real property we own where their franchised restaurant located at 1479 E. Commercial Boulevard, Fort Lauderdale, Florida (Store #15) operates. During their fiscal year 2017, we used working capital of approximately $1,272,000 to build a new building on a parcel of real property we own which is near their combination package liquor store and restaurant located at 13205 Biscayne Boulevard, North Miami, Florida, (Store #20) and re-located their package liquor store to the new building. We also used $2,475,000, ($2,000,000 of which was drawn on their Credit Line), to fund the purchase price of their acquisition of the vacant real property which is contiguous to the real property we own where their new package liquor store located at 13185 Biscayne Boulevard, North Miami, Florida, (Store #20P) and their restaurant located at 13205 Biscayne Boulevard, North Miami, Florida (Store #20R) operate. We also used $635,000 for the construction of a catering kitchen adjacent to their restaurant located at 2600 Davie Boulevard, Fort Lauderdale, Florida. IX. Comparative analysis Creditworthiness is how a lender determines that you will default on your debt obligations, or how worthy you are to receive new credit. The creditworthiness is what creditors look at before they approve any new credit to you. Creditworthiness is determined by several factors including the repayment history and credit score. Some lending institutions also consider available assets and the number of liabilities you have when they determine the probability of default. Both company can be attractive to investors’ but Flanigan’s is more attractive in general. XII. Appendices Ruth’s Table page 36 Income Statement 2018-2016 Table page 43 Vertical Income Statement 2018-2016 Table page 75 Balance Sheet 2018-2017 Table Page 76 Income Statement 2018-2016 Flanigan’s Table page 66 Balance Sheet 2018-2017 Table Page 68 Income Statement 2018-2017 Term Project Comparative Financial Statement Analysis of Spirit Airlines and Jet Blue, 2015-2017 ACC 770- Managerial Accounting I. Introduction II. Business History and Future a. Industry b. Spirit Airline c. JetBlue III. Financial Analysis a. Ratio analysis explanation i. Liquidity ratios ii. Activity Ratio iii. Solvency Ratio iv. Profitability Ratio b. Horizontal and Vertical Analysis i. Overview ii. Complementary application IV. Liquidity Analysis a. Industry b. Spirit Airlines c. JetBlue V. Activity Analysis a. Industry b. Spirit Airlines c. JetBlue VI. Solvency Analysis a. Industry b. Spirit Airlines c. JetBlue VII. Profitability Analysis a. Industry b. Spirit Airlines c. JetBlue VIII. Horizontal and Vertical Analysis IX. Comparative Analysis a. Creditworthiness analysis i. Short-term ii. Long-term b. Investment attractiveness c. Recommendations X. Summary and conclusions XI. References/ Bibliography XI. Appendices Introduction: The report is the partial requirement of Managerial Accounting course. The objective is analyzing and comparing two companies of same industry for the purpose of forming sensible decision bases on financial statements, historical data and market news about its standing. The report has analyzed and compared Spirit airline and JetBlue Airline. The scope of the report is to see the trends of industry thereby, analyze companies position in terms of industry. Moreover, past analysis also provide an assistance in forming recommendations and insight of the particular company. The methodology of entire report is mainly on ratio calculations and its interpretations. Then it provides brief summary of evaluating short term and long term creditworthiness along with the investment attractiveness. The future of airline industry is slightly unpredictable for the perspective of investment, because demand for air tickets is increasing but demand for stocks has decreased overtime. Business History, Overview and Future Industry History and Overview: Since the birth of flight in 1903, air travel has emerged as a crucial means of transportation for people, products and animals. The hundred-plus years following the invention of the first aircraft have brought about a revolution in the way people travel. The airline business is a major industry, relied upon by millions not only for transportation but also as a way of making a living. In early years, flying was considered a risk endeavor. In 1925, a development of an act “Air Mail Act” bring much revolution in airline industry by allowing the postmaster to contract with private airlines to deliver mail. Shortly thereafter, the Air Commerce Act gave the Secretary of Commerce power to establish airways, certify aircraft, license pilots, and issue and enforce air traffic regulations. The first commercial airlines included Pan American, Western Air Express and Ford Transport Service. Within 10 years, many modern-day airlines, had emerged as major players. In 1938, Civil Aeronautics Board, commonly called CAB was established. This board served numerous functions, the two most significant being determining airlines' routes of travel and regulating prices for passenger fares. And further in 1958, the Federal Aviation Agency came in to being, now known as the Federal Aviation Administration (FAA), to manage safety operations, and resulting disbandment of CAB as FAA took control of its operations and now evolved with numerous functions in current era. Such as, aircraft and airmen safety and certifications along with providing repair stations, airport compliances, air traffic control and airmen and aircraft trainings and testing. Airline Industry is benefiting from growing income level in the country, allowing people to fly to their destinations in short span of time. Growth in tourism is also a major strength for the industry resulting increase in number of domestic and international air travelling. Air travel has continued to grow over time and is one of those industries that are far away from reaching their peak. This can be partly attributed to the ever growing population and the increase in the propensity of people to fly. Another major advantage of the industry is low cost growing airlines can also share similar strengths with big brand names in this industry such as safety and speed, both main attributions can easily apply to both players of the industry. Airline staff consists of highly trained personnel, which is a major strength, to any organization in the industry. Despite of the strengths, Airline industry facing mountain of problems as well. In past “9/11” impacted the industry with substantial decreased in travel business. The event greatly magnified the airlines’ issues, leading to a sharp decline in customers and significantly higher operating costs. Losses continued for years; the industry as a whole didn't return to profitability until 2006. A relatively stable period followed, although controversies arose over service quality and passenger treatment in terms of flight delays, particularly those involving planes waiting on the runway. In 2010 and 2011, the U.S. Department of Transportation issued a series of rules mandating that the airlines provide adequate modifications for passengers in extenuating circumstances. As a result, airline industry showed much improvement in safety and speed and now overall, air travel has marked safety record and has generally accepted as a safe and fast way to travel. Other problems that industry is facing such as pilot shortages, too much congestion in skies because of too many airplanes travelling at same time, environmental issue like toxic smoke or odors from plan’s engine, dramatic increase in animal related incidents, high operation cost, climate challenges like Hurricanes, passengers’ comfort and health issues (transfer of communicable diseases) and etc. Industry Future: One can predict an innovative future in the industry in terms of more customized air travel, comfort, privacy and fastest mode of travel with more airports and runways. Future seems to be more demanding however, experts predicting war on resources. For example, on fuel prices and exchanges. Several aircraft manufacturers, including Airbus, Boeing, Bombardier and Embraer, estimate the future demand for air transport in the form of revenues. The most recent estimates suggest that demand for air transport will increase by an average of 4.3% per annum over the next 20 years. That implies that demand for air travel will increase by a factor of 2.3 over the period. If this growth path is achieved, then in 2036 the air transport industry will contribute 15.5 million direct jobs and $1.5 trillion of GDP to the world economy. Spirit Airlines History and Overview: The company was founded in 1964 as Clipper Trucking Company in Michigan, and in 1974 changed its name to Ground Air Transfer, Inc. In 1983, the company started doing business as Charter One, a Detroit-based charter tour operator providing travel packages to entertainment destinations such as Atlantic City, Las Vegas and the Bahamas. In 1992, Charter One changed its name to Spirit Airlines, brought jet equipment into the fleet, and thereafter began adding scheduled passenger service to destinations such as Fort Lauderdale, Detroit, Myrtle Beach, Los Angeles and New York. Spirit relocated its headquarters to Miramar, Florida in December 1999. Expansion continued with the addition of the Chicago market, as well as coast-to-coast service to Los Angeles. In November 2001, Spirit inaugurated service to San Juan, Puerto Rico and implemented a fully-integrated Spanish language customer service plan, including a website and dedicated reservation line. May and June 2002 brought new service to Las Vegas, as well as expanded service in nearly every market. Fall of 2003 brought Spirit to Washington, DC’s Reagan National Airport and Cancun, Mexico. In fall 2004, Spirit introduced service to Santo Domingo, Dominican Republic. Transition to Low-Cost Carrier and Ultra Low Cost Carrier Investment funds managed by Oak tree gained control of Spirit after making investments in 2004 and 2005 bringing a change in business strategy and positioning of Spirit as a low-cost carrier with a focus on expanding Caribbean and Latin American routes. Several unprofitable domestic routes were closed and Fort Lauderdale-Hollywood International Airport was established as Spirit’s main base of operations. In 2006, Indigo acquired a majority stake in the airline, and Spirit began implementing its Ultra Low Cost Carrier (ULCC) business model and further expanded its Caribbean and Latin American routes. From 2005 – 2011, Spirit kept added new flights and this period is full of expansion to Bahamas, Jamaica and US Virgin Islands to Puerto Rica. In 2009, Spirit added Santiago, Dominican Republic, and Medellin and Armenia, Colombia, to its route map, along with new service from Fort Lauderdale to both Los Angeles and Las Vegas, as well as additional service in existing markets. Expansion in existing markets continued in 2010 along with new service to Barranquilla, Colombia. The company operates approximately 450 daily flights to 60 destinations in the United States, the Caribbean, and Latin America. As of December 31, 2017, the company had a fleet of 112 Airbus single-aisle aircraft comprising 31 A319s, 51 A320ceos, 5 A320neos, and 25 A321ceos. Their ULCC business model provides customers very low, unbundled base fares with a range of optional services, allowing customers the freedom to choose only the options they value. The success of the model is driven by our low cost structure, which permits them to offer very low base fares while maintaining one of the highest profit margins in the industry. They aggressively use low fares to stimulate air travel demand in order to increase passenger volume. Company strive to be recognized by our customers and potential customers as the low-fare leader in the markets we serve. Future of Spirit Airlines The two things that stand out most about Spirit Airlines are its low fares and high number of complaints. Spirit has improved on time performance and cut its complaint rate by more than half in last few years, and continue to strive for in future. According to their leadership, they will grow capacity from 4% to 6% over the next three years and their goal is to have 80% of flights arrive on time in next two years. They also report expected operating cost raise due to new pilot contract from $85 million to $90 million annually, which reduces earnings per share by about a dollar. JetBlue: Brief History and Overview: The JetBlue Airways Corporation is a low-cost airline that was founded by Utah entrepreneur David Neeleman. JetBlue’s corporate headquarters is located in Forest Hills, New York and the airline’s main hub is based on JFK airport in New York City. In the airline’s early years, it was considered to be one of the fastest growing airlines within the U.S. market. JetBlue was incorporated on August 24, 1998 and its operations commenced in early 2000. Originally, the corporation was known as New Air but in July of 1999 it changed the corporation’s name to JetBlue Airways. From the airline’s first flight, it has been able to “cater to the niche market comprising of customers that it defines as ‘underserved customers’—those looking for better features and benefits that aren’t provided by low-cost carriers and at a reasonable price that aren’t provided by network carriers” JetBlue started with two newly leased Airbus with its first route from New York to Fort Lauderdale, Florida. Within six months, company began service to Buffalo. And in a year they grew rapidly, had 300 call centers with the option of employees working at home saved company’s overhead cost with big margin. In December 2000, JetBlue announced millionth customers and third profitable month. This was considered an amazing achievement in a short period of time in airline businesses because, this was the time when start up national airlines were forced to file bankruptcy due to rising fuel prices. It reported about $100 million in revenues but no annual profit yet. By this time, the company was flying to ten destinations. In February 2001, JetBlue filled a higher percentage of its seats (79.9 percent) than any other U.S. carrier. Further, the "JetBlue" effect was credited with lower fares and increasing service at other airlines operating in New York. By June 2001, it was operating a fleet of 14 planes with 76 flights a day. It further planned to acquire a new plane every five weeks until 2008. However, Airbus was unable to deliver enough new planes in time, Jet Blue announced plan to buy as many as 48 planes for as much as $2.5 billion from Paris Air Show in June 2001. At the time, the company had another 68 planes already on order and 15 in service. The company was touted as the first airline launched from scratch in the computer age. Pilots received laptop computers. A "telemedicine" service was introduced, allowing in-flight consultation with physicians. They are first among in airlines, which aired taped shows, launched with joint venture between Harris corporation and Sextant in-flight systems. Their in-flight entertainment system boasted 24 channels of live satellite television broadcast at every seat. In June 2014, JetBlue introduced Mint, first premium-class option, on flights from New York to Los Angeles and San Francisco operated with Airbus A321-200 aircraft outfitted with 16 lie-flat seats, four of which are suites. With Mint, JetBlue introduced an alternative to outdated business class offerings. In November 2015, JetBlue expanded its highly successful Mint service on flights to the Caribbean, from New York (JFK) to Aurba and Barbados, two of its most popular Caribbean routes. It continued to expand with mint new routes between New York and Grenada and between Boston and Aruba. Jet blue become the first airline to resume commercial flights to Cuba after more than 55 years of air travel to Cuba limited to charter services. JetBlue had fled the first regularly scheduled flight from US to Cuba, left footprint for other national carriers. The low- cost carrier was one of ten U.S. airlines that received tentative approval from America’s Department of Transportation (DoT) to launch Cuban services. The two former Cold War enemies restored diplomatic ties 2016. Future of JetBlue: JetBlue is facing decline in its share return since last three years continuously, is now looking to boost earnings by expanding in three key cities and plan to sell more travel services such as car rentals and hotels. They announced a plan on Oct 2018 to broaden their revenue. This initiative would result in earnings per share of as much as $3 in 2020, that would top the $2.21 average of analysts’ estimates compiled by Bloomberg. Company is targeting a net operating profit margin of 10 percent in 2020, up from 7.3 percent this year, and a return on invested capital of as much as 13 percent compared with 8.2 percent. JetBlue said it has achieved $171 million of savings under a previously announced program to reduce structural costs by $250 million to $300 million by 2020. Financial Statements and Analysis   SPIRIT AIRLINE - Ratios Liquidity 12/31/2017 12/31/2016 12/31/2015 12/31/2014 Current Current Asset Current Liability 1.98 1.83 2.20 1.97 Quick Current Assets - Inventory Current liability 1.98 1.83 2.2 1.97 Asset Management/ Activity Ratio Average collection period Average Net Account Receivable One day Sales 16.43 12.60 5.91 4.81 Inventory turnover Cost of goods sold Average inventory N/A N/A N/A N/A Account Receivable Turn over Net Credit Sales Average net Account Receivables 22.22 56.45 75.76 85.15 Financial Leverage Debt Total Liabilities Total Assets 0.57 0.56 0.52 0.37 Times interest earned EBIT Interest Expense 9.32 17.05 57.92 40.58 Profitability Return on Net Sales Net Income Net Sales 0.16 0.11 0.15 0.12 Return on Assets Net Income + interest Expense Average total Assets 0.11 0.09 0.13 0.15 Return on stockholders' common equity Net Income - Preferred dividend Average common shareholders' equity 60086.57 37839.86 45317.14 32209.14 Earnings Per Share of common Stock Net Income - Preferred dividend Numbers of shares of common stock outstanding 6.06 3.76 4.38 3.08 Market-based/ Investment Dated 12/31/2017 12/31/2016 12/31/2015 12/31/2014 Price-to earnings Market Price per share of common Stock Earnings per share 7.38 15.39 9.1 24.7 Dividend Yield Dividend per share of common (or preferred) stock market Price per Share No Dividend N/A N/A N/A Book Value per share of common Stock Total Shareholders' equity - Preferred Equity Number of shares of common stock outstanding 26.06 20.12 17.13 13.78 JETBLUE Ratios Liquidity 12/31/2017 12/31/2016 12/31/2015 12/31/2014 Current Current Asset Current Liability 0.50 0.63 0.60 0.62 Quick Current Assets - Inventory Current liability 0.48 0.61 0.58 0.60 Asset Management/ Activity Ratio Day's sales in receivable Average Net Account Receivable One day Sales 12.75 11.48 8.76 8.53 Inventory turnover Cost of good sold Average inventory 79.44 74.55 84.44 90.42 Assets Turnover Sales Average Net Assets 0.72 0.71 0.74 0.74 Account Receivable Turn over Net Credit Sales Average net Account Receivables 28.63 31.81 41.66 42.77 Financial Leverage Debt Total Liabilities Total Assets 0.51 0.57 0.63 0.68 Times interest earned EBIT Interest Expense 11.76 12.74 9.96 3.79 Profitability Return on Net Sales Net Income Net Sales 0.16 0.11 0.11 0.07 Return on total Assets Net Income + interest Expense Average total Assets 0.13 0.09 0.09 0.06 Return on stockholders' common equity Net Income - Preferred dividend Average common shareholders' equity 286.75 189.75 169.25 100.25 Earnings Per Share of common Stock Net Income - Preferred dividend Numbers of shares of common stock outstanding 2.08 2.22 1.98 1.19 Market-based/ Investment Dated 12/31/2017 12/31/2016 12/31/2015 12/31/2014 Price-to earnings Market Price per share of common Stock Earnings per share 6.35 10.19 11.44 13.33 Dividend Yield Dividend per share of common (or preferred) stock market Price per Share No Dividend N/A N/A N/A Book Value per share of common Stock Total Shareholders' equity - Preferred Equity Number of shares of common stock outstanding 15.06 11.91 9.97 8.16 Financial Analysis Liquidity Analysis Current Ratio 2014 2015 2016 2017 Spirit airline 1.97 2.20 1.83 1.98 JetBlue 0.62 0.60 0.63 0.50 Industry 1.6 1.5 1.6 1.5 Current Ratio: It measures the ability to pay current liabilities with its current assets. Spirit Airline’s current ratio is above average than industry ratio showing positive sign in terms of meeting current liabilities. Spirit Airline has more ability to meet its current liabilities than JetBlue. In addition, Spirit Airline performance for its current ratio has increased in 2017 as compare to 2016. On contrary, Jet Blue current ratio performance has decline. Quick Ratio 2014 2015 2016 2017 Spirit Airline 1.97 2.2 1.83 1.98 JetBlue 0.6 0.58 0.61 0.48 Industry 1.1 0.9 1 0.7 Although, service industry doesn’t have much inventory but still it is worthy to measure quick ratio to see true liquidity. Inventory is least liquid asset in current assets, thereby, quick ratio shows ability to pay all current liabilities if they come due immediately. Again, Spirit Airline is above average ratio than industry and JetBlue is below average industry ratio. Spirit Airline is performing very well in terms of liquidity ratio and its performance from is consistent and improved from 2016 to 2017. On the other hand, JetBlue Quick ratio performance has declined. Activity Ratio Day’s sales in receivables 2014 2015 2016 2017 Spirit Airline 4.81 5.91 12.6 16.43 JetBlue 8.53 8.76 11.48 12.75 Industry 19.8 33.5 19.7 29.6 It shows how many day’s sales remain in account receivable. In other words, how many days it takes to collect the average level of receivables. Lower ratio indicates that companies are receiving payments faster. JetBlue and Spirit Airline both receivables are below than average, which means that, both companies are performing well in collecting their account receivables. However, JetBlue is relatively consistent in this ratio as compare to Spirit Airline. From 2014 to 2015, Spirit Airline average receivable was better than JetBlue but in 2016-2017, JetBlue improved. In a nutshell, JetBlue is better than Spirit, because it is consistent, improving and less days in account receivable in recent years. Assets Turnover 2014 2015 2016 2017 Spirit Airline 1.21 0.85 0.74 0.64 JetBlue 0.74 0.74 0.71 0.72 Industry 0.89 0.96 0.9 0.84 It measures the company’s ability to generate sales from its assets. In other words, it shows how efficiently a company can use its assets to generate sales. In general, higher is better. Spirit Airline ratio has declined from 2014 to 2017, whereas, JetBlue is relatively consistent in utilizing their assets. Both companies are performing below average that means not performing good in terms of industry averages. In comparison on both industry, JetBlue is relatively good. Moreover, Spirit Airline ratio has decline with big margin in comparison to industry which is a question mark in company’s worth for utilizing its assets. Account Receivable Turnover 2014 2015 2016 2017 Spirit Airline 42.77 41.66 31.81 28.63 JetBlue 85.15 75.76 56.45 22.2 Industry 27.26 29.14 30.69 25.85 It measures ability to collect cash from credit customers. Above, JetBlue has improved a lot in its collection. In 2017, JetBlue has performed well from industry averages and spirit airline is close to industry ratio. In general, JetBlue is good than industry averages and spirit airline. Solvency Ratio Debt Ratio 2014 2015 2016 2017 Spirit Airline 0.37 0.52 0.56 0.57 JetBlue 0.68 0.63 0.57 0.51 Industry 0.32 0.33 0.37 0.36 It indicates percentage of assets finance by debt. Both companies have more debt ratio than industry, which means that, both companies have more default risk than industry. In other words, it has more assets financed by debts as compare to industry. Spirit Airline is increasing its debt ratio whereas, JetBlue is reducing its leverage. In general, JetBlue is closer to industry averages. Time Interest Earned Ratio 2014 2015 2016 2017 Spirit Airline 40.58 57.92 17.05 9.32 JetBlue 3.79 9.96 12.74 11.76 Industry 12.66 19.56 15.67 14.33 It measures the number of times operating income can cover interest expense. The declining TIE ratio of spirit airline indicating financial trouble in meeting its liabilities. JetBlue is consistently improving but both companies are below industry ratio. In general, JetBlue is better than spirit but not good as industry is doing. Profitability Ratio Return on Net Sales 2014 2015 2016 2017 Spirit Airline 0.12 0.15 0.11 0.16 JetBlue 0.07 0.11 0.11 0.16 Industry 0.03 0.04 0.035 0.057 This ratio shows the percentage of each sales dollar earned as net income. This measure provides insight into how much profit is being produced per dollar of sales. An increasing ROS indicates that company is growing more efficiently, while a decreasing ROS could signal financial troubles. Both companies are above industry averages signaling positive sign for generating income from sales. However, spirit airline has improved from 2014 to 2015 and then its decline in 2016 and improved again in 2017. This see-saw curve showing inconsistency in its profitability. On the other hand, JetBlue is relatively consistent in its performance and it also had a tendency to improve a lot as shown in graph. Base on this scenario, one could predict JetBlue for its profitability in long-run. Return on Assets 2014 2015 2016 2017 Spirit Airline 0.15 0.13 0.09 0.11 JetBlue 0.06 0.09 0.09 0.13 Industry 0.04 0.027 0.045 0.046 ROA measures how profitable a company uses it assets. Both companies are above from averages which is a good sign. JetBlue is performing well than Spirit Airline. Spirit Airline showed a deep dip in this ratio. From 2014 to 2016, spirit airline was declining and it spike in 2017. On Contrary, JetBlue was upward trending, consistently improving. In its ROA one could recommend for JetBlue. Return on Shareholders' Common Equity 2014 2015 2016 2017 Spirit Airline 32209.1 45317.1 37839.8 60086.6 JetBlue 100.25 169.25 189.75 286.75 Industry Return on stockholder’s equity (ROSE) gauges how much is earned with the money invested by common shareholders. Spirit Airline seems upward direction, far above than JetBlue. Every $ invested by shareholder in Spirit Airline is giving multiple of 1000 times return and JetBlue is in 100s. For Investment perspective, Spirit is better. Moreover, ROE of Spirit is also higher than JetBlue. As far as stock performance is concerned, in 2017, Spirit Airline is relatively consistent in stock prices while, JetBlue seems volatile and with more swings. The average decline is stock price of JetBlue is 1.51% and Spirit decline is 0.75%. Earnings Per Share 2014 2015 2016 2017 Spirit Airline 3.08 4.38 3.76 6.06 JetBlue 1.19 1.98 2.22 3.47 Industry 5.2 7.46 0.82 -7.54 Earnings Per Share (EPS) gives the amount of net income per share of the company’s common stock. The sharp decline in airline industry’s EPS has various reasons, but major reason includes, raising oil price, and its seems that demand for seats/air tickets have risen sharply from last few years, but demand for share decline. Another news catching point is American Airline whose overall performance reduced resulting low EPS, disturbed the industry ratios. To compare both companies, Spirit Airline EPS is better than JetBlue. Investment Ratio Price to Earnings Ratio 2014 2015 2016 2017 Spirit Airline 24.7 9.1 15.39 7.38 JetBlue 13.33 11.44 10.19 6.35 Price to Earning indicates the market price of $1 of earnings. High PE ratio generally indicates high earnings but it is not necessary a better investment decision because it generally consider that stock is overvalued and soon will decline. On contrary, low PE ratio indicates stock is undervalued. Comparing JetBlue and Spirit Airline, if we look into trend, it seems like Spirit may increase in future and JetBlue will decrease. Other perspective is JetBlue is consistent and Spirit is volatile but it depends on investor if he/she is risk averse or risk taker to marginalize return. Book Value per share of common Stock 2014 2015 2016 2017 Spirit Airline 13.78 17.13 20.12 26.06 JetBlue 8.16 9.97 11.91 15.06 It indicates the recorded accounting amount for each share of common stock outstanding. Although higher gap between book value and share price indicates stock either undervalued or overvalued. Both companies’ book value is upward trending and there is a lower gap among their share price and book value, which is a positive sign for those who are risk averse. Horizontal and Vertical Analysis Spirit Airline Horizontal Analysis: Income Statement: As Shown below, total revenue from the base year of 2014 is upward trending, so as with the gross profit raise by 60% in 2017 from base year 2014. However, operating income showed a dip from base year mainly because of increasing expenses. Spirit Airline has achieved significant growth in its net income by 87% in 2017. Balance Sheet: Total Assets have an increasing trend which is mainly because of significant addition in property, plant and equipment. This signaling growth and addition in company’s net worth. In long run, these assets insulate growth in firm value. Current Assets has also increase from 2016 to 2017 signaling liquidity. On the other hand, total liabilities have significantly raised to 401.38% in 2017 which is referring to high default (credit) risk. Thereby, TIE ratio dropped sharply. This has reduced its creditworthiness both short term and long term both because there is a decreasing trend in income before tax. Spirit Airline Vertical Analysis: Income Statement: Net income portion from total revenue is 12% in 2014 and it keep on increasing from 12% to 16% in 2017. Cost of revenue is 69% in 2014 and its struggled to take it down to 64% of revenue. However, operating income is in declining trend because of increasing operating expenses. Balance Sheet (Vertical Analysis): Current assets and fixed asset are more or less equally proportionate. Whereas, equity is more than liability. This signaling either shareholders are subjected to more contribution and because of more equity, leveraging risk is lower. JETBLUE Horizontal Analysis: Income Statement: From 2014 to 2017, Revenue has an increasing trend and cost of revenue is decreasing, which insulting increasing trend of gross profit. However, operating expense has increased over time, which reduced the operating income from 258.27% on 2016 to 196.85% of revenue in 2017. Interest expense has reduced to 63.43% from 76.87% in 2016. Its net income also has an increasing trend. Balance Sheet: Its liquidity pattern has reduced significantly by 24% but net tangible assets has an increasing trend. JetBlue retained earnings has increased significantly to 358.58% in 2017 signaling long term growth and big projects implementation benefiting firm value. It has also a diminishing liabilities patterns signaling less diminishing interest expense insulating net income. JETBLUE Vertical Analysis: Income Statement: Net income pattern has increased with sufficient proportion from 2014 to 2017. It was 6.89% in 2014 and it lead to 16.35% in 2017. They have lowered their liabilities which reduced its interest expense. Its operating expense proportion has also reduced, allowing operating income to raise. Balance Sheet: Its liquidity pattern is not appealing but its net tangible assets has increased overtime. It seems, less concentration on shareholders’ equity signaling less demands for its share. They have reduced its long term liability signaling less credit risk for investors. Comparative Analysis: Creditworthiness: Short-term analysis: If an investor is seeking to invest in short-term market, then Spirit airline is a good decision. Moreover, they don’t have anything lock up in inventory but JetBlue has, which has reduced its liquidity. Spirit Airline’s liquidity is above average than industry ratio showing positive sign in terms of meeting current liabilities. Spirit Airline has more ability to meet its current liabilities than JetBlue. In addition, Spirit Airline performance for its current ratio has increased in 2017 as compare to 2016. On contrary, Jet Blue current ratio performance has decline. Long Term Analysis: Both companies have more debt ratio than industry, which means that, both companies have more default risk than industry. In other words, it has more assets financed by debts as compare to industry. Spirit Airline is increasing its debt ratio whereas, JetBlue is reducing its leverage. In general, JetBlue is closer to industry averages. Talking about TIE ratio which measures the number of times operating income can cover interest expense. The declining TIE ratio of spirit airline indicating financial trouble in meeting its liabilities. JetBlue is consistently improving but both companies are below industry ratio. In general, JetBlue is better than spirit but not good as industry is doing. Investment Attractiveness: An increasing ROS indicates that company is growing more efficiently, while a decreasing ROS could signal financial troubles. Both companies are above industry averages signaling positive sign for generating income from sales. However, spirit airline has improved from 2014 to 2015 and then its decline in 2016 and improved again in 2017. This see-saw curve showing inconsistency in its profitability. On the other hand, JetBlue is relatively consistent in its performance and it also had a tendency to improve a lot as shown in graph. Base on this scenario, one could predict JetBlue for its profitability in long-run. Measuring attractiveness in terms of return on assets. As shown in graphs above, Both companies are above from averages which is a good sign. JetBlue is performing well than Spirit Airline. Spirit Airline showed a deep dip in this ratio. From 2014 to 2016, spirit airline was declining and it spike in 2017. On Contrary, JetBlue was upward trending, consistently improving. In its ROA one could recommend for JetBlue. However, talking about return on equity, passed records shows that Spirit is returning to shareholder’s lot more than JetBlue, it also looks like that JetBlue is improving. EPS ratio of Spirit airline is also more pronounced then JetBlue. Commenting on Price to earnings ratio of both companies, High PE ratio generally indicates high earnings but it is not necessary a better investment decision because it generally consider that stock is overvalued and soon will decline. On contrary, low PE ratio indicates stock is undervalued. Comparing JetBlue and Spirit Airline, if we look into trend, it seems like Spirit may increase in future and JetBlue may decrease. Other perspective is JetBlue is consistent then Spirit. It depends on investor if she/he is risk taker or risk averse to expand returns. In a nutshell, for profitability point of view, JetBlue seems like a fast growing company than spirit. But if we see past pattern of stock performance, spirit may take the lead if it improves on above ratio. Conclusion: Both airlines are well known airlines of US. However, JetBlue’s fleet is one of the youngest and most fuel-efficient in the industry, also has some of the best amenities for a “value” airline. As a result, the company has been posting strong sales and earnings gains in recent quarters. We look for the good times to continue. JetBlue should also benefit from its efforts to continue to expand other margin-enhancing premium goods and services. While there are some risks, including considerable industry competition, along with the fact the results are highly dependent on the price of fuel, we think the positives outweigh the negatives. While the stock price is near an all-time high, investors could still see some room for price appreciation, given bright outlook. Assuming the success of its expansion plans, there could also be some appeal for longer-term investors, as well. As also discussed above, horizontal and vertical analyses of JetBlue is more pronounced and its financial statements too. On Contrary, Spirit Airline is facing trouble in its operations because of high attrition rate and diminishing sales. It has constantly increasing its cost but not the revenue. It also has limited success in its non-core business. It need to work on its financial planning and Research and development to compete with others and improve its profitability. Reference: http://ir.spirit.com/financials-filings/overview http://ir.spirit.com/financial-information/annual-reports http://ir.spirit.com/financials-filings/sec-filings https://www.nasdaq.com/symbol/save/financials?query=income-statement https://www.marketwatch.com/investing/stock/save/financials https://quotes.wsj.com/SAVE/financials https://finance.yahoo.com/quote/save/financials/ http://blueir.investproductions.com/investor-relations/financial-information/reports/annual-reports https://www.nasdaq.com/symbol/jblu/financials?query=income-statement https://finance.yahoo.com/quote/JBLU/financials/ https://www.marketwatch.com/investing/stock/jblu/financials https://quotes.wsj.com/JBLU/financials http://financials.morningstar.com/ratios/r.html?t=JBLU https://www.reuters.com/finance/stocks/income-statement/JBLU.O http://blueir.investproductions.com/~/media/Files/J/Jetblue-IR-V2/Annual-Reports/jetblue-2017-annual-report.pdf https://www.businessinsider.com/airlines-biggest-business-problems-2018-4#labor-relations-6 https://getawaytips.azcentral.com/airline-industry-swot-analysis-12208038.html https://traveltips.usatoday.com/history-airline-industry-100074.html https://aviationbenefits.org/economic-growth/the-future/ https://www.forbes.com/sites/tedreed/2018/02/07/spirit-airlines-plans-2018-growth-of-20-plus-putting-downward-pressure-on-rivals-fares/#34f2cfff2bc1 https://www.apnews.com/adbb94ef50db443b901a1ae90e2f1834 https://www.coursehero.com/file/p3pi0ik/Our-History-and-Corporate-Information-We-were-founded-in-1964-as-Clippert/ https://www.referenceforbusiness.com/history2/38/JetBlue-Airways-Corporation.html https://www.seatmaestro.com/airlines-seating-maps/jetblue-airways/history/ https://successstory.com/companies/jetblue Appendix: INDUSTRY 2014 2015 2016 2017 Solvency Median Median Median Median Quick Ratio 1.1 0.9 1 0.7 Current Ratio 1.6 1.5 1.6 1.5 Current Liabilities / Net Worth (%) 37.7 47.1 52.5 62.9 Current Liabilities / Inventory (%) 999.9 999.9 999.9 978.2 Total Liabilities / Net Worth (%) 104.3 135.9 135.3 145.6 Fixed Assets / Net Worth (%) 93.1 133.3 116.1 96 Efficiency Median Median Median Median Collection Period (days) 19.8 33.5 19.7 29.6 Sales / Inventory (times) 56.3 54.1 48.6 37.1 Assets / Sales (%) 100.3 111.7 125.9 125 Sales / Net Working Capital (times) 5.9 4.9 5.3 3.6 Accounts Payable / Sales (%) 4.2 4.5 5.8 5.8 Profitability Median Median Median Median Return on Sales (%) 3.3 4.4 3.5 5.7 Return on Assets (%) 3.9 2.7 4.5 4.6 Return on Net Worth (%) 8.3 7.1 12.8 13.2 Median INDUSTRY Variance 2015 2016 2017 Solvency 2017 2015 Median 2016 Median 2013 2014 2015 2017 Median 2013 2014 2015 2016 Quick Ratio 22.2 18.2 0.9 -11.1 1 11.1 -9.1 11.1 30 0.7 -22.2 -36.4 -22.2 -30 Current Ratio 11.8 6.3 1.5 -6.7 1.6 -5.9 0 6.7 6.3 1.5 -11.8 -6.3 0 -6.3 Current Liabilities / Net Worth (%) -17.3 -9.4 47.1 -5.4 52.5 6.9 14.8 5.4 -10.4 62.9 17.3 25.2 15.8 10.4 Current Liabilities / Inventory (%) 21.7 0 999.9 0 999.9 0 0 0 21.7 978.2 -21.7 -21.7 -21.7 -21.7 Total Liabilities / Net Worth (%) -31.5 -31.6 135.9 0.6 135.3 21.2 31 -0.6 -10.3 145.6 31.5 41.3 9.7 10.3 Fixed Assets / Net Worth (%) 5.5 -40.2 133.3 17.2 116.1 14.6 23 -17.2 20.1 96 -5.5 2.9 -37.3 -20.1 Efficiency 2017 2015 Median 2016 Median 2013 2014 2015 2017 Median 2013 2014 2015 2016 Collection Period (days) -17.3 69.2 33.5 -41.2 19.7 45 0.5 41.2 50.3 29.6 17.3 -49.5 11.6 -50.3 Sales / Inventory (times) 20.7 3.9 54.1 10.2 48.6 3.8 -13.7 -10.2 23.7 37.1 -20.7 -34.1 -31.4 -23.7 Assets / Sales (%) -53.9 -11.4 111.7 -14.2 125.9 54.8 25.6 14.2 0.9 125 53.9 24.7 13.3 -0.9 Sales / Net Working Capital (times) 32.1 16.9 4.9 -8.2 5.3 0 -10.2 8.2 32.1 3.6 -32.1 -39 -26.5 -32.1 Accounts Payable / Sales (%) -1.6 -0.3 4.5 -1.3 5.8 1.6 1.6 1.3 0 5.8 1.6 1.6 1.3 0 Profitability 2017 2015 Median 2016 Median 2013 2014 2015 2017 Median 2013 2014 2015 2016 Return on Sales (%) -2.1 -1.1 4.4 0.9 3.5 -0.1 0.2 -0.9 -2.2 5.7 2.1 2.4 1.3 2.2 Return on Assets (%) -1.2 1.2 2.7 -1.8 4.5 1.1 0.6 1.8 -0.1 4.6 1.2 0.7 1.9 0.1 Return on Net Worth (%) -3.6 1.2 7.1 -5.7 12.8 3.2 4.5 5.7 -0.4 13.2 3.6 4.9 6.1 0.4

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Due on: April 24, 2020 00:00

Posted: 6 months ago.

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