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Chapter2a+notes - Chapter 2 Financial Statement Analysis...

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Financial Statement Analysis Chapter 2
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1 Fall 2008 Example: Cathay Pacific Airways Ltd. The decline left Cathay valued at 14 times estimated 2008 profit , compared with an average of 16 for the index. The stock is getting cheap and is becoming attractive for a long- term holding.” The carrier's cash ratio , an indicator of liquid assets compared to liabilities, is 70 percent , the fourth-highest in the Asia Pacific Airlines Index. The company's profit margin of 9.3 percent is almost double the average of 5.3 percent for the index, while its debt-to-asset ratio of 36 is lower than those of China Southern Airlines Co., China Eastern Airlines Co. and Air China Ltd., the country's three biggest carriers. “Cathay is financially healthy , unlike mainland rivals,” said Francis Chu, a Hong Kong-based analyst at South China Securities who advises buying shares.
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