Question

($ Millions)	JetBlue Airways	Southwest Airlines
Total liabilities, 2017	$                 4,947	$                    13,973
Total current liabilities, 2017	$                 2,395	$                       6,905
Total liabilities, 2016	$                 5,310	$                    14,845
Total current liabilities, 2016	$                 2,214	$                       6,844
Total assets, 2017	$                 9,781	$                    25,110
Total current assets, 2017	$                 1,206	$                       4,815
Total assets, 2016	$                 9,323	$                    23,386
Total current assets, 2016	$                 1,403	$                       4,498
Revenue, 2017	$                 7,015	$                    21,171
Net income, 2017	$                 1,147	$                       3,488

(Please show work so I can learn how to do it)

c.) For each company, compute net income as a percentage of revenue in 2017.              

d.) For each company, calculate working capital and current ratio for 2017 and 2016. How did they change from 2016 to 2017 (improve or worsen)? What may have caused those changes?    

Answer 1

	Jet Blue Airways	SouthWest Airlines
Net Income	$                   1,147,000,000	$              3,488,000,000
Revenues	$                   7,015,000,000	$            21,171,000,000
Net Income as a Percentage of Revenue[(Net Income / Revenues)*100]	16.35%	16.48%
Working Capital(Current Assets - Current Liabilities)
Current Assets for 2017	$                   1,206,000,000	$              4,815,000,000
Current Liabilities for 2017	$                   2,395,000,000	$              6,905,000,000
Working Capital for 2017	$                  -1,189,000,000	$             -2,090,000,000
Current Assets for 2016	$                   1,403,000,000	$              4,498,000,000
Current Liabilities for 2016	$                   2,214,000,000	$              6,844,000,000
Working Capital for 2016	$                     -811,000,000	$             -2,346,000,000
Current Ratio(Current Assets / Current Liabilities)
Current Assets for 2017	$                   1,206,000,000	$              4,815,000,000
Current Liabilities for 2017	$                   2,395,000,000	$              6,905,000,000
Current Ratio for 2017	0.50	0.70
Current Ratio(Current Assets / Current Liabilities)
Current Assets for 2016	$                   1,403,000,000	$              4,498,000,000
Current Liabilities for 2016	$                   2,214,000,000	$              6,844,000,000
Current Ratio for 2016	0.63	0.66
Conclusion
As we can see that the Working capital and Current ratio of Jet Blue Airways has worsen in 2017 as compared to 2016 which may have happened due to some liquidity
problems like the company could not operate at 100% due to which cashflow from operations could not be generated which results into liquidity crunch.
In case of SouthWest airlines the liquidity position has slightly improved as the Working capital and Current ratio in 2017 has improved as compared to 2016.
But in can be concluded that both the company's liquidity is in danger as the working capital is negative and the current ratio is less than 1. Thus both companies
need to improve there liquidity position.