The Use of Bankruptcy Forecasting Models in Teaching Applied Ratio Analysis in Investment and Financial Statement Analysis Courses

Financial ratio analysis is a topic covered in most business courses in accounting and finance, but the traditional methodology used suffers from what can be termed the cookbook approach. Students are typically assigned simple exercises at the end of chapters which involve the computation of ratios measuring liquidity, leverage, turnover, and profitability. Students are then asked to compare the calculated ratios to a given industry average. These are merely sterile exercises which fail to expose students to the application of financial analysis in real world scenarios. A more effective curriculum would incorporate a complete analysis of actual firms, using sophisticated techniques which have been proven to be more effective in assessing financial strength

THE PROBLEMS CAUSING THE REAL ESTATE CRASH - A LEGAL, ETHICAL AND MORAL PERSPECTIVE

The collapse of the “real estate bubble” has caused the financial devastation of personal wealth, not only in this country, but around the world. Its effects are still with us as world economies try to grow and return to normalcy in late 2014. It is critical that we understand the events that led to the bubble, and the legal and ethical standards that were violated allowing it to become so inflated. Those that don’t know history are doomed to repeat its mistakes, as it is often said. Investors didn’t learn that from the DOTCOM bubble burst in 2000, and it took just a few short years after that bubble popped to repeat mistakes behind that bubble. There were two primary causes of the boom/bust in real estate. The first was the necessary condition and the second were the sufficient conditions that came into play once the necessary condition was in place. The necessary condition was the repeal of the Glass Steagall Act of 1933. The sufficient conditions were many. They included fraud in the origination of mortgages, fraudulent real estate appraisals, the use of ARM and Option ARM contracts deceptively sold to naïve investors, the proliferation of exotic mortgage products, the securitization food chain designed in some cases to hide the risk of packages of mortgages, biased bond ratings by Moody’s and Standard & Poor’s, the abject failure of regulators and the Securities and Exchange Commission (SEC) to intervene, overleverage by home buyers and my investment banks, and the immoral use of drugs and sex on Wall Street. This paper will examine these conditions in detail

Have the Major U.S. Air Carriers Finally Turned the Corner? A Financial Condition Assessment

Rare prior to the deregulation of the airline industry, air carrier bankruptcies became rather endemic in the period 1982-2005. Since 1982, over 175 airlines have filed under the bankruptcy codes. This number includes eight of the carriers that were formerly referred to as “trunk carriers,” now known as “Majors.” Major carriers are defined as those with annual revenues exceeding $1.0 billion. The purpose of this paper is to analyze the recent performance of these carriers using a statistical model specifically designed to predict the likelihood of financial stress for airlines. The paper will also update past research in this important industry to demonstrate the very precarious nature of profitability. The major reasons for the improvement of the industry’s profitability will be briefly discussed. The analysis will show that the current financial condition of the industry has improved significantly due to increased concentration and the market domination of some carriers, very low fuel costs facing the carriers, and the record low interest rates resulting from the Federal Reserve’s easy monetary policy. the industry may still be fragile or vulnerable to changes in these input factors

An Assessment and Measurement of Risks in the International Airline Industry: A Study of the ICAO Carriers Over the Period, 1990-2013

A prior study by one of the authors (Gritta, et. al. 2006) published in the Journal of the Transportation Research Forum, examined the extent of operating, financial, and total leverage facing the major U.S airlines, those carriers with total revenues of $1.0 billion or more. The study found that the vast majority of the carriers were highly leveraged at both the operating and financial levels and that this resulted in highly unstable profitability and increased the dangers of bankruptcy. The global airline industry has always been highly cyclical and somewhat fixed-cost driven. Airlines are thus high in what financial analysts refer to as operating leverage. In addition, the many airlines have followed aggressive debt strategies; that is, they have chosen to use large amounts of long-term debt finance to purchase assets. This results in a high degree of financial leverage. In the past, the resulting combined leverage has created severe financial problems for major carriers, both domestically and internationally.The current study seeks to examine a sample of foreign carriers in order to measure the extent of risks on the international level. In doing so, comparisons will be made to the large U.S. carriers. If possible, the authors will use the same time horizon as in the published paper, although in some cases carriers are too new to have such a history

Storytime Can Be Social Justice Time

Library storytimes are resources through which children can learn literacy skills, but they also have the potential for even greater impact. Families also use storytimes to gain valuable social interactions. Libraries currently offer storytimes in response to community needs and values, and looking at storytime through a social justice lens gives library staff an opportunity to share and model valuable lessons in acceptance, inclusion, kindness, and empathy. Resources exist to help storytime providers re-evaluate their storytimes and make incremental changes that can reap big benefits for attendees