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IA Summary

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Kenta Ando

on 27 April 2010

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Transcript of IA Summary

JAL in Crisis Look at this! Can they survive this? Their Options... On their own? cut costs?
change in leadership style? Merger? American Airlines? Delta Air Lines? What's their best Choice??? So... Financial Accounts :p Can they survive on their own? Profit and Loss Account records the amount of profit that the firm makes over a period of time In JAL's P&L account: Gross Profit = 263,277,000,000 yen HOWEVER Retained Profit = -63,194,000,000 yen That's a loss! BIG Looks good :) Balance Sheet a snapshot at a point in time to show how much capital a firm is using, what it is using it for, and where it has come from In JAL's balance sheet: they have a positive net asset that's good! BUT... Retained profits dropped from 41,320,000,000 yen in 2008 to yen in 2009! -21,874,000,000 Bad business management Their in debt! Liquidity Ratios Current Ratio Acid Test Ratio = current assets / current liabilities
= 487,029,000,000 / 649,897,000,000
~ 0.749 ~ acceptable value is around 2
this shows that JAL has fewer assets than liabilities In danger of debt! = (current assets - stock) / current liabilities
= (487,029,000,000 - 154,270,000,000) / 649,897,000,000
= 332,795,000,000 / 649,897,000,000
~ 0.512
~ the 'safe zone' is around 1
this shows that JAL doesnt have enough liquid assets to meet its liabilities Very dangerous! So... It's very difficult for JAL to survive on its own :( Now WHat? MERGER Choice 1 : Choice 2 : American Airlines Delta Air Lines secure jobs for workers
revenue in the SHORT TERM
already have a code sharing agreement therefore, there will be no drastic changes to the job contents
workers do not need to go through training to adapt to the new environment merger with Delta will make them the trans-pacific powerhouse
- will carry more flights to Japan than any
other airlines
Delta carried the most passengers in the world in 2009 (161,049,000 people)
more job opportunities & less possibility of downsizing
more revenue in the LONG TERM

My Conclusion Survival on its own

American Airlines Delta Air Lines Why? Because the merger with Delta has long term benefits and that is what businesses should be doing: looking into the future. The End
Full transcript