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Compute Delta airline's debt to equity ratio at year end. How does it compare to the...

Compute Delta airline's debt to equity ratio at year end. How does it compare to the industry? What does this tell you about the company? (reference required to support the answer)

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Answer #1

debt to equity ratio = long term debt / total stockholders' equity

Delta airline's debt to equity ratio 2017 = 20836/13889 = 1.50 (Delta Air Lines, 2017)

The CSIMarket Company report states the debt to equity ratio of airline industry by the end of quarter ending on setpember 2017 was 0.13 (CSIMarket Company, 2017). Comparing delta airline debt to equity ratio to industry ratio, it seems that the debt to equity ratio of the company is very high. this indicates that the proportion of debt is very high in total capital structure of the company. This possesses business and finanical risk.

References:

Delta Air Lines, 2017. http://ir.delta.com/news-and-events/news/news-release-details/2018/Delta-Air-Lines-Announces-December-Quarter-and-Full-Year-2017-Profit/default.aspx

CSIMarket Company, 2017. https://csimarket.com/Industry/industry_Financial_Strength_Ratios.php?ind=1102

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