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Income statements "by nature" and analysis of company performance - an application to U.S. Airlines Companies

Author

Listed:
  • C. Richard Baker

    (School of Business - Adelphi University)

  • Yuan Ding

    (CEIBS - Europe International Business School)

  • Hervé Stolowy

    (GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique)

Abstract

Since September 11, 2001; and during the ensuing economic slowdown, U.S airline companies have experienced significant financial difficulties, including bankruptcies and near bankruptcies on the part of several major carriers. In an economic setting where U.S. airlines are struggling to achieve or maintain profitability, it is important for accountants, auditors and financial analysts to be able to analyze the relative performance of airline companies. In the airline industry, income statements are normally prepared "by nature" rather than "by function". This differs from the usual presentation found in the income statements of most American companies. This case demonstrates how to perform a comparative financial statement analysis when an income statement is prepared "by nature", by applying a tool called the "Statement of Intermediate Balances". The three companies studied in this case are United Airlines, Delta Air Lines and Southwest Airlines.

Suggested Citation

  • C. Richard Baker & Yuan Ding & Hervé Stolowy, 2003. "Income statements "by nature" and analysis of company performance - an application to U.S. Airlines Companies," Working Papers hal-00591686, HAL.
    • Handle: RePEc:hal:wpaper:hal-00591686
    as

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    Keywords

    financial statement analysis; income statement format; income statement by nature; income statement by function; statement of intermediate balances;
    All these keywords.

    JEL classification:

    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

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