Southwest Airlines Balance Sheet

Southwest Airlines has been making changes over the past few years that helped them become the largest low-cost carrier in the United States. Most other airlines have been struggling to make it through this economy, but Southwest has found a way to thrive. The airline has dropped their prices and eliminated fees for extras that have allowed them to fill up most flights. One cost they continue to struggle with is offsetting the increasing fuel prices. This has caused some airlines to merge or sell the company to competitors.

An executive summary is a short section of a document that summarizes a longer report in such a way that readers can rapidly become acquainted with a large body of material without having to read it all. It will usually contain a brief statement of what is covered in the major document, background information, concise analysis and main conclusions.

A balance sheet gives an overall picture of a company's financial situation by showing the total assets of a business, including liabilities plus equity. Current assets can include cash, accounts receivable, inventory and prepayments for insurance. The balance sheet is used by investors to get an idea of what the shareholders have invested, including

The article “U.S. Slaps Duties on Canadian Jet, Raising Trade Tensions,” written by Ana Swanson and published in The New York Times on September 26, 2017, describes how new duty fees will be charged on all new Bombardier CS100 airplanes imported into the United States. This conflict arose after Boeing (American airplane manufacturer) accused Bombardier (Canadian airplane manufacturer) of using subsidies to sell its jets at incredibly low prices in the American market. The United States Commerce Department confirmed that Bombardier’s CS100 aircraft had received subsidies that were worth 220 percent more than the value of the plane’s sales price. These subsidies, which were given by the Canadian government, allowed Bombardier to reduce prices on their aircraft. The profits that they

When you’re looking at the income statement, you can get information about profitability for a particular period. This is also called the profit and loss statement. The income statement is composed of both income and expenses. This statement can be used to deduct expenses from income and report either a net profit or net loss for that period. This statement will deduct all expenses from income and then report your net profit or net loss for that period. This will allow the business owner to determine if the business is bringing in a good amount of revenue to make a profit. The cash flow statement shows the movement in cash and balance over period. The cash flow can vary depending on the operating activities, investing and financing activities. This statement provides one business owner with insight to the company’s liquidity which is vital to the growth of the business. Reinvesting in business is very important, looking at the statement of retained earnings will tell a business owner how much were reinvested in the company. After profitable period, every big business has to give some of its profits to stockholders, and keep the rest amount as retained earnings. Out of all statements, retaining statement is important to companies that sells stocks to the public. This statement can also provide you with assets and liabilities information. These informations can be used to assess the financial health of your business. The results of a balance sheet will help the business owners to show the risk of liquidity and credit. Looking at these information you can measure trends and relationships to show where in the areas you can improve. These can also be compared to similar companies to show how the business measures up to leading competitors (Ali, 2010). In summary, the financial statements can provide a business owner

* An income statement is a report that contains information in regards to an organizations’ assets and financing in order to obtain those assets that is collected over a certain period of time

This memo focuses on the dividend payout, dividend yield, and dividend per share of Southwest Airlines, while comparing its performance and dividend strategy to that of the industry.

Income statements generally report on a period matching the standard accounting periods of the business, or may cover a specific period as defined for research purposes. At the core, the income statement provides a key measure of the profitability of a business. This differs from the liquidity or cash on hand of a business, but instead examines the business’ ability to bring in revenues that exceed expenses over a given period of time (Hofstrand, 2009).

Separately, the balance sheet reports a company’s financial position while the income statement reports a company’s fiscal year profits and losses. The balance sheet measures a company’s financial position by reporting its assets, liabilities, and owner’s (shareholder’s) equity. The income statement measures a company’s financial performance by reporting its revenues, expenses, and net income/loss. When combined, they serve two vital purposes: (1) expand the accounting equation and (2) enable analysis using ratios to determine industry position or potential material misstatements. The increase or decrease in owner’s (shareholder’s) equity on the balance sheet is a direct result of the net

1. How is the income statement related to the balance sheet? The income statement and balance sheet work cohesively together in order to show the company 's equity by determining and summarizing how all of their assets and liabilities were utilized. This is accomplished by reporting all financial assets, losses, gains, and liabilities within the organization during any unambiguous time frames.

This Income Statement also known as the Earnings Statements or statement of operation, is one of the four Financial Statement used by accountants, business owner’s, and investors. The Income Statement provides a detailed look into how profitable a business has been over a designated period of time.

Southwest Airlines is a passenger airline company that arranges and provides scheduled flights for passenger and transportation freight services. The company mainly provides, low-fare, point-to-point services all over the US and near-international markets. The headquarters is located in Dallas, Texas and as of December 2014, the company employed over 46,278 people. The company was founded by Rollin King and Herb Kelleher in 1971. Southwest was the first airline to introduce the frequent mile program. This took place in the mid 1980’s. This type of program allowed passengers to add up traveled miles to use later as credit on a future airline ticket. The traveled miles would add up and would also reduce the price of a ticket. Southwest created the idea of senior discount, fun fares and the fun packs. These were perks that attracted people from different age groups. When Southwest originally was incorporated, the idea was to operate in three cities in Texas, but after taking over Morris Air and TranStar in 1987, this gave them a cutting advantage in the airline industry.

Since 2016, operating income decreased while net income increased. Operating income decreased from 4,116 to 3,760. Net income increased from 2,181 to 2,244. In 2016, total operating revenues increased from 19,820 to 20,425 which is most likely because of an increase in their research and development. As for operating expenses, jet fuel prices are a huge factor because of fluctuating costs. In 2016, operating expenses increased from 15,704 to 16,655.

The “financial statements are formal reports providing information on a company's financial position, cash inflows and outflows, and the results of operations” (Hermanson, p.22). There are four main components that make up a financial statement. The four parts are, balance sheet, income statements, cash flow and, statement of owner’s equity. The balance sheets role is to define the company’s assets liabilities and revenue of the business. The income statement shows the income within the company. Cash flow reviews the position of the company by cash payments and receipts. Lastly, the statement of owner’s equity shows the amount of earnings, stock and other capitals of people in the company. (Hermanson, p.34-35).

Balance sheets and income statements are a snapshot of a company’s stability and financial situation. Combined the statements show the income, expenses, and stockholder’s equity in the company. These statements are often analyzed by financial institutions when a company comes to them needing a loan. Stockholders and other investors also look at these statements to make sure their investment will return a profit for them. This paper will look at four different companies and their balance sheets and income statements. The companies are Eastman Chemical Company, Covenant Transportation