introduction of financial accounting

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Pg1

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Annual Report Project First Name: YuXi
Southwest Airlines - 2015 Last Name: Zhao
ID Code: 21719363
Instructor
Project is Activated Class Time
Seat# or Student ID#
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Your Project Contains 16 Tabs -- Pg1 to Pg16
Print Southwest Airlines Financial Statements
To print Southwest's financial statements, follow the directions below. After you
print the financial statements, fill-in the three basic information questions on this page.
This ARP is for Southwest's 2015 financial statements. Be sure to follow the
directions below for printing the 2015 financial statements.
Use Adobe Acrobat to open the file Southwest 2015 Annual Report.pdf. This file is located
in the Company Financial Statements folder that is under the Red Company 10e folder.
Print the following from Southwest's 2015 Annual Report:
_ Consolidated Balance Sheet (PDF pg 1 / report pg 76)
_ Consolidated Statement of Income (PDF pg 2 / report pg 77)
_ Consolidated Statement of Stockholders' Equity (PDF pg 4 / report pg 79)
_ Consolidated Statement of Cash Flows (PDF pg 5 / report pg 80)
_ The fifth page of the Notes to Consolidated Financial Statements (PDF pg 10 / report pg 85)
_ Report of Independent Registered Public Accounting Firm (PDF pg 48 / report pg 123)
Be careful not to print out the entire annual report. Go to the correct page in the
PDF document, select File, then Print, then Current Page.
1. Southwest's 2015 year ended on what date?
(mm/dd/yyyy)
2. List the name of Southwest's Independent Registered Public Accounting Firm:
3. Revenue Recognition
Briefly describe when Southwest recognizes passenger revenue. This information is found in
Southwest's Notes to Consolidated Financial Statements under "Revenue Recognition".
As you work on your project, be sure to save your file often.

>SAVING YOUR PROJECT -- Immediately after Activation Save your project in a file that uses your name as the file name. The file name should be in the form: LastNameFirstName-ARP For example, Mary Smith would save her project with the file name SmithMary-ARP

Mac Excel 2016 and Mac Excel 2011, follow these directions: - Click File - Click Save As - In Save As: enter LastNameFirstName-ARP - Format must be Excel Macro-Enabled Workbook (xlsm) - Before clicking Save, be sure the file is being saved to the Red Company 10e folder on your Mac, and not to an online location such as OneDrive - Click Save

Tip: This item will not be graded by the grading software, but might be graded by your instructor.

Tip: This name appears on the Report of Independent Registered Public Accounting Firm on page 123. This item will not be graded by the grading software, but might be graded by your instructor.

Tip: You only need to enter the first two sentences of the Revenue Recognition policy. This item will not be graded by the grading software, but might be graded by your instructor.

Pg2

Southwest -- 2015 Pg. 2
Vertical Analysis of the Income Statement (Common-Size Statements)
Use the data from Southwest's Consolidated Statement of Income to fill in 2015 below.
Enter the amounts exactly as they are shown on the financial statement, which are in millions.
Southwest
Consolidated Statement of Income
(Dollars in Millions)
For the year ended December 31,
2015 2014 2013
Dollars % Dollars % Dollars %
Operating Revenues:
Passenger 0.00% $ 17,658 94.91% $ 16,721 94.47%
Freight 0.00% 175 0.94% 164 0.93%
Special revenue adjustment 0.00% 0 0.00% 0 0.00%
Other 0.00% 772 4.15% 814 4.60%
Total Operating Revenues 0 0.00% 18,605 100.00% 17,699 100.00%
Operating Expenses:
Salaries, wages, benefits 0.00% 5,434 29.21% 5,035 28.45%
Fuel and oil 0.00% 5,293 28.45% 5,763 32.56%
Maint. materials & repairs 0.00% 978 5.26% 1,080 6.10%
Aircraft rentals 0.00% 295 1.59% 361 2.04%
Landing fees & other rentals 0.00% 1,111 5.97% 1,103 6.23%
Depreciation & amortization 0.00% 938 5.04% 867 4.90%
Acquisition and integration 0.00% 126 0.68% 86 0.49%
Other operating expenses 0.00% 2,205 11.85% 2,126 12.01%
Total Operating Expenses 0 0.00% 16,380 88.04% 16,421 92.78%
Operating Income 0 0.00% 2,225 11.96% 1,278 7.22%
Other Expenses (Income):
Interest expense 0.00% 130 0.70% 131 0.74%
Capitalized interest 0.00% (23) (0.12%) (24) (0.14%)
Interest income 0.00% (7) (0.04%) (6) (0.03%)
Other (gains) losses, net 0.00% 309 1.66% (32) (0.18%)
Total other expenses (income) 0 0.00% 409 2.20% 69 0.39%
Income Before Income Taxes 0 0.00% 1,816 9.76% 1,209 6.83%
Provision for Income Taxes 0.00% 680 3.65% 455 2.57%
Net Income $ - 0.00% $ 1,136 6.11% $ 754 4.26%
** ** **
Net Income Per Share, Basic $1.65 $1.06
** % columns may not add-up due to rounding

Tip: Total Operating Revenues is Southwest's total Sales. Thus, for any ratio that contains a Sales amount, use Southwest's Total Operating Revenues.

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Pg3

Southwest -- 2015 Pg. 3
Horizontal Analysis of the Income Statement
Enter the amounts for 2015 for the following income statement items. Then calculate and enter the
Dollar Change and the % Change from 2014 to 2015. Enter the dollar amounts just as they are
shown on the financial statement. Round the percentages to 2 decimal places. xx.xx%
Dollar Change Dollar Change
% Change % Change
2015 2014 to 2015 2014 2013 to 2014 2013
$xxx,xxx $xxx,xxx
Total Operating Revenues $18,605 $906 $17,699
% 5.12 %
xx.xx%
$xxx,xxx $xxx,xxx
Salaries, Wages, $5,434 $399 $5,035
& Benefits % 7.92 %
xx.xx%
$xxx,xxx $xxx,xxx
Fuel and Oil $5,293 ($470) $5,763
% (8.16) %
xx.xx%
$xxx,xxx $xxx,xxx
Total Operating Expenses $16,380 ($41) $16,421
% (0.25) %
xx.xx%
$xxx,xxx $xxx,xxx
Operating Income $2,225 $947 $1,278
% 74.10 %
xx.xx%
$xxx,xxx $xxx,xxx
Income Before $1,816 $607 $1,209
Income Taxes % 50.21 %
xx.xx%
$xxx,xxx $xxx,xxx
Net Income $1,136 $382 $754
% 50.66 %
xx.xx%
Net Income $xx.xx $xx.xx
per Share, Basic $1.65 $0.59 $1.06
% 55.66 %
xx.xx%

Tip: When entering a formula, be sure to begin the formula with an "=" sign.

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Tip: Most cells that require input have a cell format indicator above or below the cell. These format indicators show the type of number required for the cell. These format indicators do not show the size of the number expected for the cell. For example: $xxx,xxx shows that the input for the cell should be whole dollars with no decimal point. The $xxx,xxx does not indicate that the number should be a 6 digit number. The correct answer for the cell could be as small as 1 digit or as large as 14 digits.

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Pg4

Southwest -- 2015 Pg. 4
Vertical Analysis of the Balance Sheet (Common-Size Statements)
Use the data from Southwest's Consolidated Balance Sheet to fill in 2015 below.
Enter the amounts, as they are shown on the financial statement, which are in millions.
Southwest
Consolidated Balance Sheet
(Dollars in Millions)
as of December 31, as of December 31,
2015 2014
Dollars % Dollars %
Assets
Current Assets:
Cash and cash equivalents 0.00% $ 1,282 6.50%
Short-term investments 0.00% 1,706 8.65%
Accounts and other receivables 0.00% 365 1.85%
Inventories of parts and supplies, at cost 0.00% 342 1.73%
Prepaid expenses and other current assets 0.00% 232 1.18%
Total Current Assets 0 0.00% 3,927 19.91%
Property and Equipment, at cost:
Flight equipment 0.00% 18,473 93.66%
Ground property and equipment 0.00% 2,853 14.47%
Deposits on flight equipment purchase contracts 0.00% 566 2.87%
Assets constructed for others 0.00% 621 3.15%
Total Property and Equipment, at cost 0 0.00% 22,513 114.15%
Less allowance for depreciation and amortization 0.00% 8,221 41.68%
Total Property and Equipment, net of depr. 0 0.00% 14,292 72.46%
Goodwill 0.00% 970 4.92%
Other Assets 0.00% 534 2.71%
Total Assets $ - 0.00% $ 19,723 100.00%
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable 0.00% $ 1,203 6.10%
Accrued liabilities 0.00% 1,565 7.93%
Air traffic liability 0.00% 2,897 14.69%
Current maturities of long-term debt 0.00% 258 1.31%
Total Current Liabilities 0 0.00% 5,923 30.03%
Long-term debt less current maturities 0.00% 2,434 12.34%
Deferred income taxes 0.00% 2,782 14.11%
Construction obligation 0.00% 554 2.81%
Other non-current liabilities 0.00% 1,255 6.36%
Total Liabilities 0 0.00% 12,948 65.65%
Stockholders' Equity:
Common stock 0.00% 808 4.10%
Capital in excess of par value 0.00% 1,315 6.67%
Retained earnings 0.00% 7,416 37.60%
Accumulated other comprehensive loss 0.00% (738) (3.74%)
Treasury stock, at cost 0.00% (2,026) (10.27%)
Total Stockholders' Equity 0 0.00% 6,775 34.35%
Total Liabilities and Stockholders' Equity $ - 0.00% $ 19,723 100.00%
** **
** % columns may not add-up due to rounding

Tip: Southwest does not show a Total Liabilities line on their published Balance Sheet. Be sure to use Total Liabilities as shown here, for any calculations or ratios that use Total Liabilities.

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Pg5

Southwest -- 2015 Pg. 5
Horizontal Analysis of the Balance Sheet
For the following balance sheet items enter the amounts for 2015, and then
calculate the Dollar Change and the % Change from 2014 to 2015. Enter the 2015
dollar amounts as shown on the financial statement, which are in millions.
Round the percentages to 2 decimal places. xx.xx%
Dollar Change
% Change
2015 2014 to 2015 2014
$xxx,xxx $xxx,xxx
Cash and Cash Equivalents $1,282
%
xx.xx%
$xxx,xxx $xxx,xxx
Short-Term Investments $1,706
%
xx.xx%
$xxx,xxx $xxx,xxx
Total Property and Equipment, $14,292
net of depr. %
xx.xx%
$xxx,xxx $xxx,xxx
Total Assets $19,723
%
xx.xx%
$xxx,xxx $xxx,xxx
Air Traffic Liability $2,897
%
xx.xx%
$xxx,xxx $xxx,xxx
Total Current Liabilities $5,923
%
xx.xx%
$xxx,xxx $xxx,xxx
Long-term Debt $2,434
less Current Maturities %
xx.xx%
$xxx,xxx $xxx,xxx
Total Liabilities $12,948
%
xx.xx%
$xxx,xxx $xxx,xxx
Total Stockholders' Equity $6,775
%
xx.xx%

Tip: When entering a formula, be sure to begin the formula with an "=" sign.

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Tip: Most cells that require input have a cell format indicator above or below the cell. These format indicators show the type of number required for the cell. These format indicators do not show the size of the number expected for the cell. For example: $xxx,xxx shows that the input for the cell should be whole dollars with no decimal point (no cents). The $xxx,xxx does not indicate that the number should be a 6 digit number. The correct answer for the cell could be as small as 1 digit or as large as 14 digits.

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Pg6

Southwest -- 2015 Pg. 6
DuPont Analysis -- Return on Assets
Apply DuPont Analysis and the Return on Assets % to evaluate Southwest's overall financial performance.
Use the information in Southwest's Income Statement and Balance Sheets for 2015 and 2014 to
calculate the four DuPont Ratios and the Return on Assets %. In the left-hand column enter the names
of the financial statement items that will be used in the numerator and the denominator of the ratios.
Enter the financial statement dollar amounts just as they are shown on the financial statements.
Round all averages to 0 decimal places -- a whole number $xxx,xxx
Round the percentages to 2 decimal places. xx.xx%
Round the decimal results to 2 decimal places. xx.xx
Note: Since each ratio is being rounded, it is possible that Return on Equity %
will not exactly equal (Profitability x Efficiency x Leverage).
Calculate each ratio separately. Do not calculate Return on
Equity % by multiplying (Profitability x Efficiency x Leverage).
DuPont Analysis
(Profitability) 2015 2014
Net Profit Margin %
$xxx,xxx
xx.xx%
% 6.11 %
Total Operating Revenues
$xxx,xxx x x
(Efficiency)
Total Assets Turnover Ratio
$xxx,xxx
xx.xx
Beg. Yr. Amt. End. Yr. Amt. Average times 0.95
$xxx,xxx $xxx,xxx $xxx,xxx x x
(Leverage)
Assets-to-Equity Ratio
$xxx,xxx
xx.xx
Beg. Yr. Amt. End. Yr. Amt. Average to 1 2.77
$xxx,xxx $xxx,xxx $xxx,xxx = =
Return on Equity %
$xxx,xxx
% 16.10 %
xx.xx%
$xxx,xxx
Return on Assets
2015 2014
Return on Assets %
$xxx,xxx
xx.xx%
% 5.82 %
$xxx,xxx

Tip: When entering the names of the financial statement items, use the terminology that is used in Southwest's financial statements. These names will not be graded by the grading software, but might be graded by your instructor.

C A U T I O N Do NOT do a Cut operation on any cell in the project.

Tip: The calculation of Average Total Assets and the calculation of Average Total Stockholders' Equity are only shown the first time you need the average amount. Once you calculate the average amount, then use that average amount as needed in the other ratio calculations.

Tip: If you use formulas to calculate the Average cells, be sure to use the Round() function to round to 0 decimal places. For example, the following formula will calculate the value in cell I36 and round the result to 0 decimal places: =Round(( E36 + G36) / 2, 0)

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Pg7

Southwest -- 2015 Pg. 7
Profitability Indicators
Apply the Profitability Indicators to evaluate Southwest's profitability.
Use the information in Southwest's 2015 Income Statement to calculate the
Profitability Indicators. In the left-hand column enter the names of the items
that will be used in the numerator and the denominator of the ratios.
Enter the financial statement dollar amounts just as they are shown on the
financial statements.
Round the percentages to 2 decimal places. xx.xx%
2015 2014
Gross Profit Margin %
$xxx,xxx
N/A % N/A %
xx.xx%
$xxx,xxx
Operating Profit Margin %
$xxx,xxx
% 11.96 %
xx.xx%
$xxx,xxx
Net Profit Margin %
$xxx,xxx
% 6.11 %
xx.xx%
$xxx,xxx

Tip: When entering the names of the financial statement items, use the terminology that is used in Southwest's financial statements. These names will not be graded by the grading software, but might be graded by your instructor.

C A U T I O N Do NOT do a Cut operation on any cell in the project.

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Pg8

Southwest -- 2015 Pg. 8
Efficiency Indicators
Apply the Efficiency Indicators to drill down into Southwest's efficiency.
Use the information in Southwest's Income Statement and Balance Sheets for 2015 and 2014 to
calculate the Efficiency Indicators. In the left-hand column enter the names of the financial
statement items that will be used in the numerator and the denominator of the ratios.
Enter the financial statement dollar amounts just as they are shown on the financial statements.
Round all averages to 0 decimal places -- a whole number $xxx,xxx
Round the decimal results to 2 decimal places. xx.xx
2015 2014
Accounts Receivable Turnover Ratio
$xxx,xxx
Beg. Yr. Amt. End. Yr. Amt. Average times 47.46
xx.xx
$xxx,xxx $xxx,xxx $xxx,xxx
Number of Days' Sales in Receivables
xxx
Days in a Year (365)
days 7.69
Accounts Receivable Turnover Ratio xx.xx
xx.xx
Inventory Turnover Ratio
$xxx,xxx
Beg. Yr. Amt. End. Yr. Amt. Average N/A times N/A
xx.xx
$xxx,xxx $xxx,xxx $xxx,xxx
Number of Days' Sales in Inventory
xxx
N/A days N/A
xx.xx
xx.xx
Accounts Payable Turnover Ratio
$xxx,xxx
Fuel and oil + Maintenance mat. + Other operating exp. $6,863
Beg. Yr. Amt. End. Yr. Amt. Average times 6.92
xx.xx
$xxx,xxx $xxx,xxx $xxx,xxx
Number of Days'
Purchases in Accounts Payable
xxx
Days in a Year (365)
days 52.75
Accounts Payable Turnover Ratio xx.xx
xx.xx
Cash-to-Cash Cycle
Number of Days' Sales in Inventory
less Number of Days' Purchases in Accounts Payable
Net Number of Days Cash is Invested in Inventory
plus Number of Days' Sales in Receivables
Cash-to-Cash Days N/A N/A
2015 2014
Fixed Asset Turnover Ratio
$xxx,xxx
Beg. Yr. Amt. End. Yr. Amt. Average times 1.34
xx.xx
$xxx,xxx $xxx,xxx $xxx,xxx

Tip: When entering the names of the financial statement items, use the terminology that is used in Southwest's financial statements. These names will not be graded by the grading software, but might be graded by your instructor.

C A U T I O N Do NOT do a Cut operation on any cell in the project.

Tip: If you use formulas to calculate the times cells, be sure to use the Round() function to round to 2 decimal places. For example, the following formula will calculate the value in cell J21 and round the result to 2 decimal places: =Round( I20 / I22, 2)

Tip: If you use formulas to calculate the Average cells, be sure to use the Round() function to round to 0 decimal places. For example, the following formula will calculate the value in cell I22 and round the result to 0 decimal places: =Round(( E22 + G22) / 2, 0)

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Pg9

Southwest -- 2015 Pg. 9
Leverage Indicators (at year-end) -- Interest Coverage
Use the information in Southwest's 2015 Balance Sheet and Income Statement to
calculate the two "year-end" Leverage Indicators and the Times Interest Earned Ratio.
In the left-hand column enter the names of the items that will be used in the numerator
and the denominator of the ratios.
Enter the financial statement dollar amounts just as they are shown on the
financial statements.
Round the percentages to 2 decimal places. xx.xx%
Round the decimal results to 2 decimal places. xx.xx
2015 2014
Debt %
$xxx,xxx
% 65.65 %
xx.xx%
$xxx,xxx
Debt-to-Equity Ratio
$xxx,xxx
to 1 1.91
xx.xx
$xxx,xxx
Times Interest Earned Ratio
$xxx,xxx
Earnings before Interest and Taxes
times 14.79
Interest expense xx.xx
$xxx,xxx

C A U T I O N Do NOT do a Cut operation on any cell in the project.

Tip: Earnings before Interest & Taxes is calculated as follows: Income Before Income Taxes + Interest Expense - Capitalized Interest = Earnings before Interest & Taxes

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Pg10

Southwest -- 2015 Pg. 10
Liquidity Indicators
Use the information in Southwest's 2015 Balance Sheet to calculate the three Liquidity
Indicators. In the left-hand column enter the names of the items that will be
used in the calculation.
Enter the financial statement dollar amounts just as they are shown on the
Balance Sheet.
Round the decimal results to 2 decimal places. xx.xx
2015 2014
Working Capital
$xxx,xxx
Working Capital ($1,996)
Current Ratio
$xxx,xxx
to 1 0.66
xx.xx
$xxx,xxx
(Acid Test Ratio)
Quick Ratio
$xxx,xxx
Cash and Near-Cash Assets
to 1 0.57
xx.xx
$xxx,xxx

C A U T I O N Do NOT do a Cut operation on any cell in the project.

Tip: Enter "Current Liabilities" as a negative number.

Tip: Southwest calls Accounts Receivable "Accounts and other receivables"

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Pg11

Southwest -- 2015 Pg. 11
Statement of Cash Flows Indicators
Use the information in Southwest's 2015 Consolidated Statement of Cash Flows to calculate
the three Statement of Cash Flows Indicators. In the left-hand column enter the names
of the items that will be used in the calculation.
Enter the financial statement dollar amounts in millions of dollars as shown on the
Consolidated Statement of Cash Flows.
Round the decimal results to 2 decimal places. xx.xx
(Quality of Income Ratio) 2015 2014
Cash Flow to Net Income Ratio
$xxx,xxx
to 1 2.55
xx.xx
$xxx,xxx
(Cash Flow Adequacy Ratio)
Cash Flow to Capital Expenditures Ratio
$xxx,xxx
to 1 1.66
Net Cash Paid to Purchase PP&E xx.xx
$xxx,xxx
Free Cash Flow
$xxx,xxx
Net Cash Paid to Purchase PP&E
Free Cash Flow $1,015

C A U T I O N Do NOT do a Cut operation on any cell in the project.

Tip: For Southwest, "Net Cash Paid to Purchase PP&E" is equal to "Capital expenditures"

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Pg12

Southwest -- 2015 Pg. 12
Equity Investor Indicators
Use the information in Southwest's Consolidated Statement of Stockholders' Equity
to calculate Southwest's Dividend Payout %.
Use the information at the bottom of Southwest's Consolidated Statement of Income
and Southwest's Year-End Closing Market Price of 1 Common Share to calculate
Southwest's Price-Earnings Ratio and Dividend Yield %.
Enter the financial statement dollar amounts just as they are shown on the
financial statements.
Round the percentages to 2 decimal places. xx.xx%
Round the decimal results to 2 decimal places. xx.xx
2015 2014
Dividend Payout %
$xxx,xxx
% 13.29 %
xx.xx%
$xxx,xxx
Year-End Closing Market
Price of 1 Common Share
The Year-End Closing Market Price of 1 share of Southwest's (SW) Common Stock
is not given in SW's annual report. The Year-End Closing Market Price is used in
the two calculations below. The last day in SW's 2015 year was Thursday,
Dec. 31, 2015. SW's common stock trades on the New York Stock Exchange (NYSE).
On the NYSE, SW's year-end closing market price on Thursday, Dec. 31, 2015
was $43.06. Enter that price in the box below.
2015 Year-End Closing Market Price of 1 Common Share:
$xx.xx
(PE Ratio) 2015 2014
Price-Earnings Ratio
$xx.xx
times 25.65
Net Income per Share, Basic xx.xx
$xx.xx
Dividend Yield %
$xx.xxxx
Cash dividends declared per common share
% 0.52 %
xx.xx%
$xx.xx

C A U T I O N Do NOT do a Cut operation on any cell in the project.

Tip: When entering the names of the financial statement items, use the terminology that is used in Southwest's financial statements. These names will not be graded by the grading software.

Tip: Enter the cash dividend amount as a positive number.

Tip: Verify that you have entered the correct amount for Net Income by looking at the Net Income amount shown on Southwest's Consolidated Statement of Income.

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Pg13

Southwest -- 2015 Pg. 13
Analytical Observations
You will now utilize the information developed in Pages 2 to 12 to answer various analytical questions.
1. Vertical Analysis of the Income Statement (Pg. 2)
1> Which year had the highest Income Before Income Taxes in terms of total dollars?
[ "x" only one answer ] 2015 2014 2013
2> Which year had the highest Total Operating Expenses as a % of Total Operating Revenues?
[ "x" only one answer ] 2015 2014 2013
3> Based on Operating Income as a % of Total Operating Revenues, rank the years 2015, 2014,
and 2013 in terms of which year had the highest.
Place a "1" in the box of the highest year, a "2" in the box of the second highest year, etc.
2015 2014 2013
4> Which year had the highest Net Income as a % of Total Operating Revenues?
[ "x" only one answer ] 2015 2014 2013
2. Horizontal Analysis of the Income Statement (Pg. 3)
1> Rank the following items in terms of which had the largest % increase from 2013 to
2014. Place a "1" in the box of the largest, a "2" in the box of the second largest, etc.
Total
Operating Revenues Operating Income Net Income Net Income per Share, Basic
2> Rank the following items in terms of which had the largest % increase from 2014 to
2015. Place a "1" in the box of the largest, a "2" in the box of the second largest, etc.
Total
Operating Revenues Operating Income Net Income Net Income per Share, Basic
3> True or False? In terms of % Change, Net Income Per Share, Basic increased more than Net Income
from 2013 to 2014.
[ "x" only one answer ] True False
4> True or False? In terms of % Change, Operating Income increased more than Total Operating Revenues
from 2014 to 2015.
[ "x" only one answer ] True False
5> True or False? In terms of % Change, Fuel and Oil decreased less than Total Operating Expenses
from 2014 to 2015.
[ "x" only one answer ] True False

Tip: You may find it easier to complete pages 13 to 16, if you print pages 2 to 12.

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Pg14

Southwest -- 2015 Pg. 14
Analytical Observations
3. Vertical Analysis of the Balance Sheet (Pg.4)
1> For 2015, rank the following assets in terms of which was the largest as a % of
Total Assets. Place a "1" in the box of the largest, a "2" in the box of the second largest, etc.
Total Property and
Cash and Cash Equivalents Short-term investments Equipment, net of depr. Goodwill
2> For 2015, rank the following items in terms of which was the largest as a
% of Total Liabilities and Stockholders' Equity. Place a "1" in the box of the largest,
a "2" in the box of the second largest, etc.
Long-term debt less
Air traffic liability current maturities Common stock Retained earnings
4. Horizontal Analysis of the Balance Sheet (Pg. 5)
1> Rank the following items in terms of which had the largest % increase from 2014 to
2015. Place a "1" in the box of the largest, a "2" in the box of the second largest, etc.
Cash and Cash Equivalents Total Assets Air Traffic Liability Total Liabilities
2> Rank the following items in terms of which had the largest Dollar increase from 2014 to
2015. Place a "1" in the box of the largest, a "2" in the box of the second largest, etc.
Cash and Cash Equivalents Total Assets Air Traffic Liability Total Liabilities
5. DuPont Analysis -- Return on Assets Ratio (Pg. 6)
1> Which of the following increased from 2014 to 2015? ["x" each item that increased]
Profitability Efficiency Leverage
2> Which year has the highest Return on Assets %?
[ "x" only one answer ] 2015 2014
3> Which year has the highest Return on Equity%?
[ "x" only one answer ] 2015 2014
6. Profitability Indicators (Pg. 7)
1> Which year, 2015 or 2014, had higher profitability based on Operating Profit Margin % and Net Profit Margin %?
[ "x" only one answer ] 2015 2014

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Pg15

Southwest -- 2015 Pg. 15
Analytical Observations
7. Efficiency Indicators (Pg.8)
1> Based on the Accounts Receivable Turnover Ratio, in which year, 2015 or 2014,
did Southwest more efficiently manage the Accounts Receivable asset?
[ "x" only one answer ] 2015 2014
2> Based on the Number of Day's Sales in Receivables, in which year, 2015 or 2014,
did Southwest collect its Accounts Receivable faster?
[ "x" only one answer ] 2015 2014
3> In which year, 2015 or 2014, did Southwest have a better Accounts Payable Turnover Ratio?
[ "x" only one answer ] 2015 2014
4> Based on the Number of Days' Purchases in Accounts Payable, in which year, 2015 or 2014
did Southwest hold on to its cash longer before paying the cash to vendors?
[ "x" only one answer ] 2015 2014
5> In which year, 2015 or 2014, did Southwest have a better Fixed Asset Turnover Ratio?
[ "x" only one answer ] 2015 2014
8. Leverage Indicators (at year-end) -- Interest Coverage (Pg. 9)
1> Based on the Debt %, who had the greatest claim to Southwest's assets in 2014?
[ "x" only one answer ] Creditors Shareholders
2> True or False? In 2015 more than half of Southwest's Total Assets were financed with debt?
[ "x" only one answer ] True False
3> Based on the Times Interest Earned Ratio, were the creditors' interest payments more secure in
2015 or 2014?
[ "x" only one answer ] 2015 2014
9. Liquidity Indicators (Pg. 10)
1> Based on Working Capital, the Current Ratio, and the Quick Ratio did Liquidity increase or decrease from
2014 to 2015?
[ "x" only one answer ] Liquidity Increased Liquidity Decreased

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Pg16

Southwest -- 2015 Pg. 16
Analytical Observations
10. Statement of Cash Flows Indicators (Pg. 11)
1> True or False? By looking at the Cash Flow to Capital Expenditure Ratio it can be seen that
Southwest was able to internally fund the purchases of Fixed Assets in 2015 and in 2014.
[ "x" only one answer ] True False
2> In which year, 2015 or 2014, did Southwest have more Free Cash Flow?
[ "x" only one answer ] 2015 2014
11. Equity Investor Indicators (Pg. 12)
1> True or False? Based on the Dividend Payout % it can be seen that Southwest paid out a larger percent
of Net Income, in the form of Cash Dividends, in 2015 than in 2014.
[ "x" only one answer ] True False
2> Based on the Price-Earnings Ratio, in which year, 2015 or 2014, did investors place a
higher value on Southwest's earnings?
[ "x" only one answer ] 2015 2014
3> Based on the Dividend Yield %, in which year, 2015 or 2014, did an investor in Southwest's Common
Stock earn a higher return from the cash dividends she received on her Southwest Common Stock?
[ "x" only one answer ] 2015 2014

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Values

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Year and Version: 20155