Go to www.mhhe.com/edumarketinsight. In the Financial Highlights section for each company, find the S&P Issuer Credit Ratings for Alaska Air Group (ALK), AMR Corp. (AMR), British Airways (BAB), Continental Airlines (CAL), Delta Airlines (DALRQ), Northwest Airlines (NWAC), Southwest Airlines (LUV), UAL Corp. (UAUA), and US Airways Group (LCC). Which has the higher-rated bonds? Now compare the financial ratios of the firms. Are the relative credit ratings consistent with their financial ratios? How do the credit ratings relate to recent news reports you have heard about the firms?
Use the Financial Highlights section of Market Insight (www.mhhe.com/edumarketinsight) to obtain Standard & Poor's Issuer Credit Ratings of at least ten firms in the database. Try to choose a sample with a wide range of ratings. Next use Market Insight's Annual Ratio Report (in the Excel Analytics section) to obtain for each firm the financial ratios shown in Table 14.3 What is the relationship between the firms' credit ratings and their ratios? Can you tell from your sample firms which of these ratios are the more important determinants of credit rating?
