Using “Statement of Intermediate Balances” As Tool for International Financial Statement Analysis in Airline Industry

C. Richard Baker, Yuan Ding () and Hervé Stolowy ()
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Yuan Ding: GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique

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Abstract: Since September 11, 2001 and during the ensuing economic slowdown, a number of airline companies have experienced significant financial difficulties, including bankruptcies and near bankruptcies. In an economic setting where many airlines are struggling to achieve or maintain profitability, it is important for accountants, auditors, and financial analysts to be able to analyze the relative performance of such companies. In thisindustry, income statements are normally prepared ‘‘by nature'' rather than ‘‘by function.'' This differs from the usual presentation found in the income statements of many companies around the world, in particular most American companies. This paper demonstrates how to perform a comparative financial statement analysis when an income statement is prepared ‘‘by nature,'' through application of a tool called the ‘‘Statement of Intermediate Balances.'' This tool is illustrated using three companies chosen from different continents: Southwest Airlines, a low cost U.S. air carrier, Air France, the leader in Europe, and China Eastern Airlines, one of the biggest Chinese air carriers

Keywords: Intermediate balances; airline industry; comparative financial statement analysis (search for similar items in EconPapers)
Date: 2005
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Published in Advances in International Accounting, 2005, 18, pp.169-198. ⟨10.1016/S0897-3660(05)18009-X⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00004729

DOI: 10.1016/S0897-3660(05)18009-X

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