FIN 571 Southwest Financial 
Southwest Financial Reports
FIN/571
April 6, 2015
John Triplett, CPA
Southwest Financial Reports
Efficiency Ratios: There are a number of ways for companies to determine the efficiency of their operations. It is a good way for investors to see if a company is doing a good job with their operations as well. There are a number of different ratios that can be used to come up with different measures of efficiency. Most of these ratios deal with the turnover of cash. Additionally, most of the numbers used to calculate these ratios can easily be found on the balance statement of the company. This paper will address the financials of Southwest Airlines. The first chart (below) shows some of the financial ratios that have been calculated for the company ranging from 2005 to 2014.
Leverage Ratios: The term “financial leverage refers to the use of debt in a firm's capital structure” (Parrino, Kidwell, & Bates, 2012, pg. 5). The purpose of leverage ratios is to measure the ability for a company to meet its long term financial debts and identify the extent of using debt over equity. In other words, leverage ratios indicate the level of debt and ability to pay off these debts. This information is critical for managers, shareholders, and creditors since they want to assess the organizations debt situation. By analyzing Southwest’s leverage ratio, one can identify their financial situations pertaining to debts.
Liquidity/Financial Health
2005-12
2006-12
2007-12
2008-12
2009-12
2010-12
2011-12
2012-12
2013-12
2014-12
Latest Qtr.
Current Ratio
0.94
0.90
0.92
1.03
1.25
1.29
0.96
0.91
0.79
0.74
0.74
Quick Ratio
0.72
0.69
0.63
0.72
1.03
1.13
0.76
0.71
0.63
0.57
0.57
Financial Leverage
2.13
2.09
2.42
2.89
2.61
2.48
2.63
2.66
2.64
2.98
2.98
Debt/Equity
0.21
0.24
0.30
0.71
0.61
0.46
0.45
0.47
0.34
0.36
0.36
After evaluating the leverage ratios for Southwest between 2011 through 2014, one can determine that they still have to meet
FIN/571
April 6, 2015
John Triplett, CPA
Southwest Financial Reports
Efficiency Ratios: There are a number of ways for companies to determine the efficiency of their operations. It is a good way for investors to see if a company is doing a good job with their operations as well. There are a number of different ratios that can be used to come up with different measures of efficiency. Most of these ratios deal with the turnover of cash. Additionally, most of the numbers used to calculate these ratios can easily be found on the balance statement of the company. This paper will address the financials of Southwest Airlines. The first chart (below) shows some of the financial ratios that have been calculated for the company ranging from 2005 to 2014.
Leverage Ratios: The term “financial leverage refers to the use of debt in a firm's capital structure” (Parrino, Kidwell, & Bates, 2012, pg. 5). The purpose of leverage ratios is to measure the ability for a company to meet its long term financial debts and identify the extent of using debt over equity. In other words, leverage ratios indicate the level of debt and ability to pay off these debts. This information is critical for managers, shareholders, and creditors since they want to assess the organizations debt situation. By analyzing Southwest’s leverage ratio, one can identify their financial situations pertaining to debts.
Liquidity/Financial Health
2005-12
2006-12
2007-12
2008-12
2009-12
2010-12
2011-12
2012-12
2013-12
2014-12
Latest Qtr.
Current Ratio
0.94
0.90
0.92
1.03
1.25
1.29
0.96
0.91
0.79
0.74
0.74
Quick Ratio
0.72
0.69
0.63
0.72
1.03
1.13
0.76
0.71
0.63
0.57
0.57
Financial Leverage
2.13
2.09
2.42
2.89
2.61
2.48
2.63
2.66
2.64
2.98
2.98
Debt/Equity
0.21
0.24
0.30
0.71
0.61
0.46
0.45
0.47
0.34
0.36
0.36
After evaluating the leverage ratios for Southwest between 2011 through 2014, one can determine that they still have to meet