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Analysis of Investments
Difficulty: Advanced
Investment Accounting Policy
Cash and Cash Equivalents and Short-Term Investments
Short-term, highly liquid investments with maturities of three months or less when purchased are classified as cash and cash equivalents. Investments with maturities of greater than three months, but not in excess of one year, when purchased are classified as short-term investments. Investments with maturities beyond one year when purchased may be classified as short-term investments if they are expected to be available to support Delta’s short-term liquidity needs. All short-term investments are classified as either available-for-sale or held-to-maturity, and realized gains and losses are recorded using the specific identification method.
Source: 10-K (filing date: 2018-02-23).
Adjustment to Net Income (Loss): Mark to Market Available-for-sale Securities
Delta Air Lines Inc., adjustment to Net Income
USD $ in millions
| 12 months ended | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | |
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| Add: Net change in investments | |
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| Net income (adjusted) | |
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Based on: 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-13), 10-K (filing date: 2016-02-05), 10-K (filing date: 2015-02-11), 10-K (filing date: 2014-02-24).
Adjusted Ratios: Mark to Market Available-for-sale Securities (Summary)
Delta Air Lines Inc., adjusted ratios
Based on: 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-13), 10-K (filing date: 2016-02-05), 10-K (filing date: 2015-02-11), 10-K (filing date: 2014-02-24).
| Ratio | Description | The company |
|---|---|---|
| Adjusted net profit margin | An indicator of profitability, calculated as adjusted net income divided by revenue. | Delta Air Lines Inc.’s adjusted net profit margin improved from 2015 to 2016 but then deteriorated significantly from 2016 to 2017. |
| Adjusted ROE | A profitability ratio calculated as adjusted net income divided by shareholders’ equity. | Delta Air Lines Inc.’s adjusted ROE deteriorated from 2015 to 2016 and from 2016 to 2017. |
| Adjusted ROA | A profitability ratio calculated as adjusted net income divided by total assets. | Delta Air Lines Inc.’s adjusted ROA improved from 2015 to 2016 but then deteriorated significantly from 2016 to 2017. |
Delta Air Lines Inc., Ratios: Reported vs. Adjusted
Adjusted Net Profit Margin
Based on: 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-13), 10-K (filing date: 2016-02-05), 10-K (filing date: 2015-02-11), 10-K (filing date: 2014-02-24).
2017 Calculations
1 Net profit margin = 100 × Net income ÷ Operating revenue
= 100 × ÷ =
2 Adjusted net profit margin = 100 × Adjusted net income ÷ Operating revenue
= 100 × ÷ =
| Ratio | Description | The company |
|---|---|---|
| Adjusted net profit margin | An indicator of profitability, calculated as adjusted net income divided by revenue. | Delta Air Lines Inc.’s adjusted net profit margin improved from 2015 to 2016 but then deteriorated significantly from 2016 to 2017. |
Adjusted Return on Equity (ROE)
Based on: 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-13), 10-K (filing date: 2016-02-05), 10-K (filing date: 2015-02-11), 10-K (filing date: 2014-02-24).
2017 Calculations
1 ROE = 100 × Net income ÷ Stockholders’ equity
= 100 × ÷ =
2 Adjusted ROE = 100 × Adjusted net income ÷ Stockholders’ equity
= 100 × ÷ =
| Ratio | Description | The company |
|---|---|---|
| Adjusted ROE | A profitability ratio calculated as adjusted net income divided by shareholders’ equity. | Delta Air Lines Inc.’s adjusted ROE deteriorated from 2015 to 2016 and from 2016 to 2017. |
Adjusted Return on Assets (ROA)
Based on: 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-13), 10-K (filing date: 2016-02-05), 10-K (filing date: 2015-02-11), 10-K (filing date: 2014-02-24).
2017 Calculations
1 ROA = 100 × Net income ÷ Total assets
= 100 × ÷ =
2 Adjusted ROA = 100 × Adjusted net income ÷ Total assets
= 100 × ÷ =
| Ratio | Description | The company |
|---|---|---|
| Adjusted ROA | A profitability ratio calculated as adjusted net income divided by total assets. | Delta Air Lines Inc.’s adjusted ROA improved from 2015 to 2016 but then deteriorated significantly from 2016 to 2017. |