Southwest Air Financial Analysis and Financial Ratios
Quality Business Consultant's financial analysis expert, Paul Borosky, MBA., doctoral candidate, and published author, has created proprietary financial models to help analyze Southwest Air's financial performance using Southwest Air's summarized income statements and balance sheets for the last five years, found in their Annual Reports and Amazon's 10ks.
Further, our financial model also calculates over 20 popular financial ratios, such as Southwest Air's current ratio, return on equity, and debt ratio. This information is the basis of our financial report, "Southwest Air Financial Report," where we offer insights into understanding their financial standing through insightful financial analysis.
A Beginner's Guide to Southwest Air Financial Analysis - 2021
- Included Easy to download PDF File.
- Included Easy to use format.
- Included Summarized Income Statements and Balance Sheets for the last 5 years..
- Included Popular financial ratios for the last 5 years included... with calculations and formulas!
- Included Expert tips to help with financial statements analysis.
- Included Expert tips to help with financial ratios analysis.
- NOT Included-Identify and discuss financial trends for the company..
- NOT Included-Expert financial analysis done by Paul Borosky, MBA.
- NOT Included- Analyst "Letter Grades" for the company's ratios.
Southwest Air Financial Report by Paul Borosky, MBA. - 2019
- Included Easy to download PDF File.
- Included Easy to use format.
- Included Summarized Income Statements and Balance Sheets for the last 5 years..
- Included Popular financial ratios for the last 5 years included... with calculations and formulas!
- Included Expert tips to help with financial statements analysis.
- Included Expert tips to help with financial ratios analysis.
- Included Identify and discuss financial trends for the company.
- Included Expert financial analysis done by Paul Borosky MBA.
- Included Analyst "Letter Grades" for the company's ratios (starting in 2021).
Southwest Air's Financial Report and Financial Analysis
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Southwest Air Beginner's Guide 2021
Table of Contents
- Disclaimer 3
- Forward 4
- Income Statement 6
- Southwest Air’s Summarized Income Statements 6
- Revenues 7
- Cost of Goods Sold (COGS) 8
- Selling, General, and Administrative Expenses (SG&A 8
- Research and Development (R&D) 9
- Operating Expenses 10
- Earnings Before Interest and Taxes (EBIT 10
- Interest Expense 11
- Earnings Before Taxes (EBT) 12
- Taxes 12
- Net income 13
- Tax Rate 13
- Balance Sheet 14
- Southwest Air’s Summarized Balance Sheets 14
- Cash 15
- Short-Term Investments 16
- Accounts Receivables 16
- Inventory 17
- Current Assets 18
- Property, Plant, and Equipment (PP&E) 19
- Total Assets 19
- Accounts Payable 21
- Accrued Expenses 21
- Short-Term Debt 22
- Total Current Liabilities 23
- Long Term Debt (LT Debt) 24
- Total Liabilities 25
- Common Stock and Additional Paid-in Capital 26
- Treasury 26
- Retained Earnings 27
- Total Equity 28
- Financial Ratios 29
- Southwest Air’s Liquidity Ratios 30
- Current Ratio 30
- Quick Ratio 31
- Cash Ratio 32
- Southwest Air’s Asset Ratios 34
- Total Asset Turnover 35
- Fixed Asset Turnover 35
- Days Sales Outstanding 36
- Inventory Turnover 37
- Accounts Receivable Turnover 38
- Accounts Payable Turnover 39
- Other Asset Ratio Calculations 40
- Working Capital Turnover 40
- Average Days in Inventory 40
- Average Days Payable 40
- Southwest Air’s Profitability Ratios 42
- Return on Assets (ROA) 42
- Return on Equity (ROE) 43
- Net Profit Margin 44
- Gross Profit Margin 45
- Operating Profit Margin 45
- Southwest Air’s Debt Ratios 47
- Debt Ratio 47
- Debt to Equity Ratio 48
- Times Interest Earned 49
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Downloadable PDF Price!!
Southwest Air Financial Report 2019
Table of Contents
- Disclaimer 3
- Acknowledgments 4
- Forward 5
- About the Author 7
- Company Summary 8
- Financial Statement Introduction 11
- Income Statement 12
- Amazon.com’s Income Statement – Summary Analysis 13
- Income Statement Discussion 13
- Balance Sheet 24
- Balance Sheet – Summary Analysis 25
- Balance Sheet Discussion 25
- Financial Ratios 45
- Liquidity Ratios 46
- Liquidity Ratios - Summary Analysis 46
- Liquidity Ratios Discussion 47
- Current Ratio 47
- Quick Ratio 48
- Cash Ratio 49
- Other Liquidity Ratios 50
- Net Operating Working Capital 50
- Asset Ratios 52
- Asset Utilization Ratios - Summary Analysis 53
- Asset Utilization Ratios Discussion 53
- Total Asset Turnover 53
- Fixed Asset Turnover 54
- Days Sales Outstanding 55
- Inventory Turnover 56
- Accounts Receivable Turnover 57
- Accounts Payable Turnover 58
- Other Asset Ratio Calculations 59
- Working Capital Turnover 59
- Average Days in Inventory 60
- Average Days Payable 60
- Profitability Ratios 61
- Profitability Ratios - Summary Analysis 62
- Profitability Ratios Discussion 62
- Return on Assets (ROA) 62
- Return on Equity (ROE) 63
- Profit Margin 64
- Gross Profit Margin 65
- Operating Profit Margin 66
- Basic Earnings Power 67
- ROCE 68
- Capital Employed 68
- Debt Ratios 69
- Amazon.com’s Debt Ratios - Summary Analysis 69
- Debt Ratios Discussion 70
- Long-Term Debt Ratio 70
- Debt to Equity Ratio 71
- Times Interest Earned 72
- WACC 74
- Book Value of WACC 74
- Free Cash Flow (FCF) 76
- Amazon.com’s Free Cash Flows – 2015 - 2019 76
- Free Cash Flows – 5-Year Projections 77
- Income Statement – Projections for 5 years 78
- Income Statement – 5-Year Projections 78
- Balance Sheet – Projections for 5 years 80
- Balance Sheet – 5-Year Projections 80
- Company Valuation and Intrinsic Stock Price 83
- Appendix 1: Summarized Income Statement 84
- Appendix 2: Income Statement – Percent of Sales 85
- Appendix 3: Income Statement – Year over Year Growth 86
- Appendix 4: Summarized Balance Sheet 87
- Appendix 5: Balance Sheet as Percent of Total Assets 89
- Appendix 6: Summarized Financial Ratios 90
Southwest Air's Financial Report by Paul Borosky, MBA.
Hey All,
Thanks for considering my Southwest Air Financial Report. In this report, you will be able to find preliminary information about Southwest Air's current financial performance as well as some historical track records and trends. Also, in this report, written by myself, Paul Borosky, MBA., Doctoral Candidate and published author, you will find:
- Summarized income statement for the last 5 years.
- Summarized balance sheet for the last 5 years.
- Summary analysis by myself of the important income statement, balance sheet, and financial ratio trends and other happenings.
- Five years’ worth of over twenty common financial ratios presented with formulas, calculations, and analysis tips for each ratio.
- Line by line description, explanation, and analysis tip for most financial statement line items and financial ratios.
- Professional financial analysis tips are provided in each section to help YOU conduct your OWN financial analysis!
- Each section includes an “in other words” segment. This is where I use plain English to explain concepts.
Sincerely,
Paul, MBA.
Sample Report
Southwest Air Income Statement Analysis Sample
In this section of the financial report, I walk you through a broad definition of what an income statement is and why it is essential. From this, I then discuss and define important income statement line items, such as revenues, gross profits, etc., in detail. Finally, I offer a summary analysis of the company's important income statement line item trends. For example,...
Southwest Air's Cost of Goods Sold.
The organization’s cost of goods sold was approximately 24.5% of revenues in 2015. In the next two years, the cost of goods, as compared to revenues, would increase to 32.1% in 2019. This indicates that the companies gross profit margin are continually shrinking. Unfortunately, the situation is unsustainable for long-term growth. Either the organization needs to increase prices or do a better job of negotiating raw material costs. Further, the company’s average growth rate for the cost of goods is approximately 9.7%. In comparing this rate with revenue growth, which is 3.3%, the situation, again, is unsustainable. This means that the cost of goods sold is growing three times as fast as compared to revenue growth.
Southwest Air Summary Income Statement 2021 |
|||||
| Column1 |
2021 |
2020 | 2019 | 2018 |
2017 |
| Revenues |
15,790 |
9,048 | 22,428 | 21,965 |
19,763 |
| COGS |
5,620 |
3,245 | 6,933 | 7,057 |
6,369 |
| Gross Profit |
10,170 |
5,803 | 15,495 | 14,908 |
13,394 |
| SG&A |
7,743 |
6,811 | 8,293 | 7,649 |
7,305 |
| Depreciation |
1,272 |
1,255 | 1,219 | 1,201 |
1,218 |
| R & D | |||||
| Other | |||||
| Total Operating Expenses |
14,069 |
19,471 | 19,471 | 18,759 |
17,739 |
| EBIT |
1,721 |
(3,816) | 2,957 | 3,206 |
3,407 |
| Other Income | |||||
| Interest Expense |
467 |
349 | 118 | 131 |
114 |
| EBT |
1,325 |
(4,256) | 2,957 | 3,164 |
3,265 |
| Taxes |
657 |
699 |
(92) |
||
| Net Income |
977 |
(3,074) | 2,300 | 2,465 |
3,357 |
Southwest Air Balance Sheet Analysis Sample
In this section of the financial report, I walk you through a broad definition of what a balance sheet is and why it is important. From this, I then discuss and define important balance sheet line items, such as cash, inventory, etc., in detail. Finally, I offer a summary analysis of the company's important balance sheet line item trends. For example,...
Southwest Air Property, Plant, and Equipment
In 2015, the organization had approximately $24.6 billion in property, plant, and equipment. In the next four years, the firm’s property, plant, and equipment would increase to approximately $29.2 billion. This growth indicates that the executive team expected moderate or at least consistent revenue growth, and the company wishes to ensure enough fixed assets to support the expected growth. However, in 2019, the property, plant, and equipment would fall by 5.3%. This reduction could either mean that the executive team expects lower airline demand in the moderate to long term. Or, the company needs to liquidate assets to ensure enough cash for operations. In either scenario, investors should be concerned about long-term growth because of the substantial PP&E reduction.
Southwest Air 2021 Summary Balance Sheet |
|||||
| Column1 |
2021 |
2020 | 2019 | 2018 |
2017 |
| Cash |
12,480 |
11,063 | 2,548 | 1,854 |
1,495 |
| Short Term Investment |
3,024 |
2,271 | 1,524 | 1,835 |
1,778 |
| Account Receivable |
1,357 |
1,130 | 1,086 | 568 |
662 |
| Inventory |
537 |
414 | 529 | 461 |
420 |
| Other | |||||
| Current Assets |
18,036 |
15,173 | 5,974 | 5,028 |
4,815 |
| Net PPE |
27,574 |
27,574 | 27,713 | 29,256 |
28,229 |
| Goodwill |
970 |
970 | 970 | 970 |
970 |
| Other | |||||
| Total Assets |
36,320 |
34,588 | 25,895 | 26,243 |
25,110 |
| Accounts Payable |
1,282 |
931 | 1,574 | 1,416 |
1,320 |
| Accrued Expense |
1,624 |
2,259 | 1,749 | 1,749 |
1,700 |
| Accrued Taxes | |||||
| Notes Payable | |||||
| LT Debt - Current |
453 |
2,200 | 819 | 606 |
348 |
| Other | |||||
| Total Current Liabilities |
9,164 |
7,506 | 8,952 | 7,905 |
6,863 |
| LT Debt |
10,274 |
10,111 | 1,846 | 2,771 |
3,320 |
| Other | |||||
| Total Liabilities |
25,906 |
25,712 | 16,063 | 16,390 |
15,469 |
| Common Stock |
5,112 |
5,079 | 808 | 808 |
808 |
| Treasury |
10,860 |
10,875 | 10,441 | 8,452 |
6,462 |
| Retained Earnings |
388 |
(105) | 17,945 | 15,967 |
13,832 |
| Other | |||||
| Total Equity |
10,414 |
8,876 | 9,832 | 9,853 |
9,641 |
| Total Equity & Liability |
36,320 |
34,588 | 25,895 | 26,243 |
25,110 |
Southwest Air Financial Ratios Sample
In this section of the financial report, I walk you through definitions of various popular financial ratios, how to calculate the ratios, formulas used, etc. Also, for some popular financial ratios, I provide brief explanations of what the ratios mean as it is related to the company.
Southwest Air Fixed Asset Turnover Ratio
As for the fixed asset turnover, the organization would end 2015 at .8. Again, the firm would continually decrease its efficiency for fixed assets and end 2017 at .7. Because the organization has started liquidating some of its property, plant, and equipment, the organization was able to improve its fixed asset turnover, which resulted in .81 in 2019. If the organization is able to maintain the property, plant, and equipment liquidation and still grow its revenues, then for the short-term, this strategy is sustainable. However, in the long term, the organization needs to better align its fixed assets with revenue projections.
Southwest Air Return on Equity
The company’s return on equity was 29.6% in 2015; in the next two years, the company would increase its return on equity to 34.8%. However, in the last two years, the organization would continually reduce its return on equity until it reached 23.3% in 2019. The main reason for the organization's reduction in return on equity could be that the firm is lowering its debt usage. As the company pays off its debt, they are forced to use equity to pay for operations. In turn, investors should expect that if the company continues to reduce its debt position, the return on equity will continually fall as well.
Southwest Air 2021 Liquidity Ratios |
|||||
| Ratios |
2021 |
2020 | 2019 | 2018 |
2017 |
| Current Ratio |
1.97 |
2.02 |
|||
| Cash Ratio |
1.69 |
1.78 |
|||
| Quick Ratio |
1.91 |
1.97 |
|||
| Net Working Capital |
8,872 |
7,667 |
|||
Southwest Air 2021 Asset Utilization |
|||||
| Ratios |
2021 |
2020 | 2019 | 2018 |
2017 |
| Total Asset Turnover |
0.43 |
0.26 |
|||
| Fixed Asset Turnover |
0.57 |
0.33 |
|||
| Days Sales Outstanding |
28.74 |
44.70 |
|||
| Inventory Turnover (Using Sales) |
33.21 |
19.19 |
|||
| Inventory Turnover (Using COGS) |
11.82 |
6.88 |
|||
| Accounts Receivable Turnover |
12.70 |
8.17 |
|||
| Working Capital Turnover |
1.78 |
1.18 |
|||
| AP Turnover |
5.19 |
2.50 |
|||
| Average Days Inventory |
30.88 |
53.03 |
|||
| Average Days Payable |
70.32 |
146.06 |
|||
Southwest Air 2021 Profitability Ratios |
|||||
| Ratios |
2021 |
2020 | 2019 | 2018 |
2017 |
| Return on Assets |
2.69% |
-8.89% |
|||
| Return on Equity |
9.38% |
-34.63% |
|||
| Net Profit Margin |
6.19% |
-33.97% |
|||
| Gross Profit Margin |
64.41% |
64.14% |
|||
| Operating Profit Margin |
10.90% |
-42.18% |
|||
| Basic Earning Power |
4.74% |
-11.03% |
|||
| ROCE |
6.34% |
-14.09% |
|||
| Capital Employed |
27,156 |
27,082 |
|||
| ROIC |
8.14% |
-18.01% |
|||
Southwest Air 2021 Debt Ratios |
|||||
| Ratios |
2021 |
2020 | 2019 | 2018 |
2017 |
| Debt Ratio |
29.53% |
35.59% |
|||
| Debt/Equity |
103.01% |
138.70% |
|||
| Times Interest Earned |
3.69 |
(10.93) |
|||