Southwest Airlines

Over 35 years ago, Rollin King and Herb Kelleher decided to create a different type of airline. They began with the simple notion: If you get your passengers to their destinations when they want to get there, on time and at the lowest possible fares, and make darn sure they have a good time doing it, people will fly your airline. They were right (Southwest Airlines, 2004)!

University of Phoenix. (2013). Harvard business publishing: Working capital simulation: Managing growth assignment [Multimedia]. Retrieved from University of Phoenix, FIN571 website.

The purpose of this study is to compare Spirit Airlines with American Airlines using the financial ratios of liquidity, activity, debt, profitability and the market, and to derive some concrete conclusions about the financial nature of Spirit Airlines. According to Spirit Airlines (2015) “Historic Stock Lookup,” from 2011 to 2014, the year-end stock prices have increased by 79.4%, which is outstanding. Thus, Spirit Airlines will be used as a benchmark in terms of comparing

Working capital is the key to a successful business. It is like their blood flow and the manager’s job is to help keep it flowing. Under the Generally Accepted Accounting Principles working capital is simply the difference between a company’s Current Assets, which are cash, inventory, accounts receivable and prepaid items, and Current Liabilities, accounts payable and accrued expenses.

While it is difficult, to some extent, to evaluate the success of a merger that is only just now entering its final implementation phases, it is known that the objective of that merger was to use the larger route network to attract more business, and that the combined airline would also extract cost savings as the result of increased operational efficiency. The airline had struggled in 2009, with its sales declining, but it recovered in 2010 and 2011. Sales last year were $33.678 billion, up from $21.068 billion the year before. In the past two years, the company has turned a profit, going from $253 million in net income in FY2010 to $840 million in net income in FY2011. Some of this improvement may stem from the impact of the merger. However, the airline industry is highly cyclical, and the past two years have represented economic improvement. Likewise, the losses the company faced in FY2008 and FY2009 were as much the result of the economic downturn as they were internal business factors.

Analyze the fundamental differences between the working capital structures and components for each chosen company, and speculate upon the main reasons why such differences exist.

The airline industry is an extremely competitive industry and is also a highly seasonal industry. Profit can be drastically affected by fluctuations in energy prices or economic downturns (Maverick, 2015). Key financial metrics utilized by analysts in the airline industry include the quick ratio, the return on assets ratio and the debt capitalization ratio, which was already covered earlier (Maverick, 2015).

How has SWA (a) responded to the “Shuttle By United” initiative (half page 5 points); and (b) what assessments can be made about SWA’s market and financial position on competitive routes based on 1994 4th quarter results (half page 5 points)?

Working Capital is again in the red zone, dropping more than 75% from FY09 to FY10. However, the historic trend for the company is not very impressive, with working capital dropping as low as -$3 billion. The Operating Cash Flow Ratio is somewhat more reassuring, standing at 18.13 in FY10 from 14.67 a year earlier. This implies that for every dollar of current liability, the operations are providing $18 of revenue to cover the expense. However, operations are not primarily meant to cover just short term obligations, but also long term costs. Thus it cannot be justified that operations are very adequate to meet ST obligations.

This report provides an examinaion of the current structure, performance, stragergy and management of Delta Airlines, along with an industry analysis of the airline industry. The report uses current and past financial and statistical data for the company along with other up to date material to determine Delta's current market position and future potential.

The Corporate Finance course has helped me, as a student, gain intelligence to make informed decisions upon analyzing the details for Sunflower Nutraceuticals (SNC). These decisions will influence the company’s overall growth annually. In addition to various details of the SNC Company I have also made various decisions in each of the phases of SNC’s simulation which has an estimated values to figure out the results. This paper also explains how SNC’s decisions are influenced with regards to the working capital followed with the final step of evaluating the general affects associated with the limited

Working Capital is defined as “a measure of both a company 's efficiency and its short-term financial health. (Investopedia, 2016.)” Having an efficient working capital can make or break a business’s success. To expand on our experience with working capital, we ran the Harvard Business Publication Working Capital Simulation. In our simulation, we are co-owners of Sunflower Nutraceuticals (SNC), “an internet-based, direct-to-consumer distributor and retailer of dietary supplements, including vitamins, minerals, and herbs for women (Harvard Business Publication, 2014.)”, looking to create more working capital for the company so Sunflower Nutraceuticals can expand. We were told that SNC is breaking even with a flat annual sales growth on total revenues of $10 million. The company has struggled to finance the payroll, and more than once overdrawn on the line of credit in the past. SNC keeps the minimum amount of cash on hand ($300,000) to meet its operational needs. A national bank, Miami Dade Merchant 's Bank (MDM), has issued a line of credit with restrictive covenants; credit limit of $3,200,000, and rate of 8%. We were also provided with a forecast of the global nutraceuticals market. In 2010 the market worth was approximately $128.6 billion and forecasted to grow at a compound annual growth rate of 4.9% and reach $180.1 billion by 2017 (Harvard Business Publication, 2014.). After being given all of this information, it was up to us to make

The Harvard Business Simulation asked that one act as the C.E.O. of Sunflower Nutraceuticals (which will be referred to as SNC throughout this paper). Within the simulation there were phase in which decisions were made to help SNC with the growth of the company. This paper will explain the decisions made will influence SNC to estimate the value of the company, the working capital of the company, and evaluate the general affects associated with the limited access of financial mix.

happen with no advanced notice in most cases. While these are the “worst case scenarios” for

In this paper I’ll analyze the fundamental differences between the working capital structures and components for Google and Oracle, and speculate upon the main reasons why such differences exist; how each company could improve its working capital positions. As a Wall Street Analyst who has to recommend one of the companies as an investment to a company’s clients; based solely on that company’s working capital; as an Investment Banker who has to recommend loaning a substantial amount of capital to one company based solely on that company’s working capital.