On Tuesday, November 24, 2009, U.S. Airways announced several ways that it will boost its current and future liquidity. Since beginning its innovative slot transaction with Delta Air Lines, the company has been trying to realign a number of financial areas to focus on their most profitable flying operations.

QUESTIONS:

1. What is liquidity and explain the most common liquidity ratios?
2. One of the areas that U.S. Airways is tweaking is capital expenditures by deferral of the delivery of 54 Airbus aircraft. Explain how that will affect the financial statements.
3. Using numbers in the article, explain how a current ratio of 1.4:1 might be affected.

SOURCE: RTTNews. “US Airways To Defer Aircraft Delivery To Boost Liquidity,” (Retrievable online at http://rttnews.com/Content/TopStories.aspx?Id=1139103)