US Airways Financial Analysis

Working Capital Analysis


US Airways:

Working Capital: (Year: 2001) Current Ratio: (Year 2001)

(Dollars in millions)

Current Assets $ 1,775 Current Assets $1,775 = 0.58

Less current Liabilities -3,026 Current Liabilities $3,026

Working Capital $1,231

Working Capital: (Year 2000) Current Ratio (Year 2000)

Current Assets $ 2,592 Current Assets $2,592 = 0.88

Less current Liabilities -2918 Current Liabilities $2,918

Working Capital $ 326

Compare to Southwest

(Dollars in millions)

Working Capital: (Year: 2001) Current Ratio: (Year: 2001)

Current Assets $2,520,219 Current Assets $2,520,219 = 1.12

Less current Liabilities -2,239,815 Current Liabilities $2,239,185

Working Capital $281,034

Working Capital: (Year: 2000) Current Ratio: (Year: 2000)

Current Assets $831,536 Current Assets $831,536 = 0.64

Less current Liabilities -1,298,403 Current Liabilities $1,298,403

Working Capital $466,867

In 2000, US Airways had more working capital and a higher current ratio then in 2001. In 2001, the current ratio was 0.58 compared to 0.88 in 2000, and its working capital in 2001 was $1,231 compared to $326 in 2000. Since current liabilities are paid out of current assets, US Airways could not cover its debts with its working capital from 2000 or 2001. The excess of current liabilities to current assets is the working capital that can be used to continue business, buy inventory, obtain credit, or expand sales (Financial Reports, ACT 161).

The current ratio is a good indicator of a company’s ability to pay its bills and repay loans (Ratio, ACT 161). Comparison of current ratios from 2001 to 2000 reveals a decrease of current assets for each $1.00 of current liabilities. US Airways’ current ratio was 0.58 in 2001 and 0.88 in 2000. An average current ratio of the airline industry is 0.9 (See Appendix H, pp.55-56). US Airways is under the average by a significant amount. Southwest followed close US Airways in 2000 with a current ratio of 0.64, but exceeded US Airways’ ratio in 2001 by 0.54. US Airways’ current position is unfavorable in the industry.


  1. Executive Summary
  2. SWOT Analysis
  3. TOWS Diagram
  4. IFE Matrix
  5. EFE Matrix
  6. SPACE Matrix
  7. Critical Issues
  8. Courses of Action
  9. Financial Analysis

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