Finance and Operations For Southwest Airlines
Return on Equity (ROE)
This is a ratio that measures the rate at which there is return for the ownership
interest of the common stock owners. The ROE for Southwest Airlines Co. as of September 2015 is 33.07%.
ROE is calculated as net income divided by its average shareholder equity. Therefore, for the quarter that ended in September 2015, the net income was $2, 336 Million, and the average shareholder equity was $7,063 Million. With this analysis, 33.07% is the outcome of the ROE
Return on Assets (ROA)
Return on assets (ROA) is defined as a financial ratio showing the percentage of the profit obtained by a company earning with respect to its major resources. It is calculated as net income divided by total assets.
The ROA of Southwest Airlines Co. for the quarter that ended in September 2015 was $2,336 Million. Also, the Southwest Airlines Co’s average total assets for the just concluded quarter for September 2015 was $21,117 Million. With this analysis, the ROA is 11.06%.
Return on Capital (ROC)
Return on capital (ROC) can be defined as a financial ratio, which can be used for finance, accounting, and valuation. This is calculated by the division of the after-tax operating income by the book value of both equity and debt capital cash/equivalents.
The ROC of the Southwest Airlines Co’s for the quarter that ended in September 2015 was 25.65%.
Gross Profit Margin
Gross margin can be defined by the calculation of the subtracting cost of goods sold from the overall revenue and then dividing that number by the overall revenue. The highest number in the analysis is known as gross margin, and the total revenue subtracted from the direct costs of producing that good or service.
The Gross Margin for Southwest Airlines Co. for the three months that ended in September 2015 was $3,760 Million. While the Southwest Airlines Co’s revenue for the space of three months that ended in September 2015 was $5,318 Million. Hence, the outcome in percentage is given by 70.70%
SG&A Margin
Selling, General & Administrative Expense is a financial ratio that sums all direct and indirect selling expenses and all other administrative and general expenses of an organization.
The SG&A Margin for Southwest Airlines as of July 2015 from Bloomberg was 50.18 USD
Current Ratio
The current ratio is a financial ratio that measures the enough resources of a firm to the possibilities of its debts to be paid over the next one year. It also compares the current assets of a firm to its current liabilities.
The current ratio of Southwest Airlines as of September 2015 is 0.60. It is calculated as the total current assets excludes inventory divides by its total current liabilities of a company.
Quick Ratio
The quick ratio is a financial ratio that is used for the gauging an organization’s liquidity. It is also known as the acid test ratio. It is used to compare the total amount of cash added to marketable securities, added to the accounts receivable to a number of current liabilities.
The quick ratio for Southwest Airlines Co. is 0.60 as of the quarter that ended in September 2015.
Total Debt/Equity
The total debt/equity ratio is the financial debt ratio that is used for the measurement of a company’s financial leverage. It is calculated by the division of a company’s total liabilities by its stockholders’ equity. The D/E ratio describes the value of debt a company uses to finance its assets with respect to the amount of value it stands for in shareholders’ equity.
The total debt/equity of Southwest Airlines Co. is 0.38 as of September 2015. This was obtained from the long-term debt for the quarter, which was $2,381 Million, and the total equity was $6,968 Million.
Total Revenue
The total revenue of an organization is defined as the total receipts from every sale of a given quantity of goods or services. In other words, it is the total income of any business and it is calculated by the multiplication of the quality of goods sold by the price of the goods.
The total revenue of Southwest Airline Co. is 49.85, (0.87%) according to Yahoo finance.
Gross Profit
Gross profit is a financial ratio of the profit made by a company after the deduction of the costs associated with the making and selling of its products, or the related costs with the services it provides. It appears on a company’s income statement. Gross profit = revenue – cost of goods sold.
The gross profit of Southwest Airline Co. is $15.52 billion as of the end of September 2015. (“Wikinvest”)
References:
- GuruFocus Premium Plus Membership. (2015). Retrieved December 7, 2015, from https://www.gurufocus.com/term/ROE/LUV/Return+on+Equity/Southwest+Airlines+Co
- LUV Income Statement | Southwest Airlines Company Comm Stock – Yahoo! Finance. (2015). Retrieved December 7, 2015, from https://finance.yahoo.com/q/is?s=LUV Income Statement&annual
- GuruFocus Premium Plus Membership. (2015). Retrieved December 7, 2015, from https://www.gurufocus.com/term/grossmargin/LUV/Gross+Margin/Southwest+Airlines+Co
- Southwest Airlines Company (LUV). (2015). Retrieved December 7, 2015, from https://www.wikinvest.com/stock/Southwest_Airlines_Company_(LUV)/Data/Gross_Profit
- LUV:New York Stock Quote. (2015). Retrieved December 7, 2015, from https://www.bloomberg.com/quote/LUV:US
- GuruFocus Premium Plus Membership. (2015). Retrieved December 7, 2015, from https://www.gurufocus.com/term/quick_ratio/LUV/Quick+Ratio/Southwest+Airlines+Co
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