Portfolio Strategy Assignment Essay

1778 Words Aug 12th, 2013 8 Pages
This paper presents a revised portfolio strategy for Delta Airlines, Inc. as result of a large cash infusion it recently has received in the amount of $700 million.
Delta Airlines, Inc. provides schedule air transportation for passengers and cargo throughout the United States and around the world. Delta Airlines has a global route network giving is a presence in every major domestic and international market including airports in Amsterdam, Atlanta, Cincinnati, Detroit, Memphis, Minneapolis,
New York City, Paris, Salt Lake City, and Tokyo. Delta Airlines, Inc. is incorporated under the laws of the State of Delaware with principal executive offices located in Atlanta, Georgia. The company currently has a capital base of
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If the market prices are available, the investment is values and reported subsequent to acquisition using the fair value method. When the investor has an interest for 20% to 50% ownership, it is presumed that the investor exercises significant influence over the operating and financial policies of the investee. The FASB lists other factors to determine whether an investor can exercise significant influence over an investee. If significant influence is found to exist, the investor is required to account for the investment using the equity method. When one corporation (the parent) acquires a voting interest in more than 50% in another corporation (the subsidiary), the investor corporation is deemed to have a controlling interest. When the parent corporation treats the subsidiary corporation as an investment, consolidated financial statements are generally prepared. Proposed Investment Portfolio In developing a plan to maximize shareholder wealth, Delta Airlines, Inc. wants to invest the

large cash infusion of $700 million into various investment vehicles that will yield large returns

on investment,
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