Financial Accounting: An Integrated Statements Approach, 2nd Edition

Chapter 9 Fixed Assets and Intangible Assets 435

The following table provides some recent operating statistics for four passenger airlines:

Available Revenue

Seat Miles Passenger Miles Operating Operating

(ASM) (RPM) Revenue Cost

(in millions) (in millions) (in millions) (in millions)

Northwest Airlines 88,593 68,476 $ 7,936 $ 8,800

Delta Air Lines 134,383 98,674 13,303 14,089

U.S. Airways 51,494 37,741 5,536 5,850

Southwest Airlines 76,861 53,418 6,530 5,976

a. Prepare a table showing for each airline the load factor, operating revenue per ASM,

operating cost per ASM, and operating margin (profit) per ASM. Round to four decimal

places.

b. Interpret the results in (a) for the four airlines.

The following table shows the revenues and average net fixed assets for a recent fiscal year for three

different companies from three different industries: retailing, manufacturing, and communications.

Average Net

Revenues Fixed Assets

(in millions) (in millions)

Wal-Mart $258,681 $51,686

Alcoa Inc. 21,504 12,333

Comcast Corp. 18,348 18,427

a. For each company, determine the fixed asset turnover ratio. Round to two decimal places.

b. Explain Wal-Mart’s ratio relative to the other two companies.

The freight statistics for Burlington Northern Santa Fe Corp.’s rail operations for three years

are provided from public disclosures as follows:

Year Ended December 31,

2004 2003 2002

Revenue ton miles (millions) 570,688 508,200 490,234

Freight revenue per thousand revenue ton miles $18.82 $18.27 $18.10

Average haul per ton (miles) 1,045 1,014 992

a. Revenue ton miles is also sometimes termed gross ton miles. What is a revenue ton mile?

(Hint:Note that the revenue ton miles are not expressed in dollar terms.)

b. How would you interpret the trend in freight revenue per thousand revenue ton milesover

the three years indicated?

c. Estimate the number of tons moved in 2004.

d. Estimate Burlington Northern’s total revenue for 2004.

Duke Energy Corp.is an integrated energy and energy services provider that generates and dis-

tributes electricity in North Carolina and South Carolina. Operating statistics for electricity gen-

eration and sales are provided from its public reports for a recent fiscal year, as follows:

Sources of Electric Energy, GWh*

Generated—net output:

Coal 43,696

Nuclear 40,256

Hydro 2,101

Oil and gas 106

Total generation 86,159

*Gigawatt-hour

Case 9-3

Fixed asset turnover:
three industries

Case 9-4

Interpreting railroad fixed
asset efficiency

Case 9-5

Operating utilization

statistics—power generation