Calculations of Ratios

Long Term Solvency Ratios for Southwest Airlines

A) 31 stDec. 1993
1. Debt-to-Total Assets
=
2. Debt-to-Equity
=
3. Long-Term-Debt-to-Total-Capital
=

1522 / 2576
0.59
1522 / 1054
1.44
639.1 / (1054 + 639.1)
0.38

B) 31 stDec. 1994
1. Debt-to-Total Assets
=
2. Debt-to-Equity
=
3. Long-Term-Debt-to-Total-Capital
=

1584 / 2823.1
0.56
1584 / 1238.7
1.28
583.1 / (1238.7 + 583.1)
0.32

C) 31 stDec. 1995
1. Debt-to-Total Assets
=
2. Debt-to-Equity
=
3. Long-Term-Debt-to-Total-Capital
=

1828.8 / 3256.1
0.56
1828.8 / 1427.3
1.28
661 / (1427.3 + 661)
0.32

4) 31 stDec. 1996
1. Debt-to-Total Assets
=
2. Debt-to-Equity
=
3. Long-Term-Debt-to-Total-Capital
=

2075.2 / 3723.5
0.56
2075.2 / 1648.3
1.26
650.2 / (1648.3 + 650.2)
0.28

E) 31stDec. 1997
1. Debt-to-Total Assets
=
2. Debt-to-Equity
=

2237.1 / 4246.2
0.53
2237.1 / 2009
1.11
19

3. Long-Term-Debt-to-Total-Capital
=

628.1 / (2009 + 628.1)

0.24

Profitability Ratios for Southwest Airlines.

(In thousands)
A) 31st December 1993

5. Asset Turnover

=
=

2296.7 467.8
1828.9
1828.9 / 2296.7
79.6%
154.3 / 2296.7
6.7%
154.2 / 966.8
16.0%
N/A

6. Pretax return on operating assets

N/A

7. Earnings Per Share

.77

1. Gross Profit
=
2. Gross Profit Rate
=
3. Return on Sales
=
4. Return on Stockholders Equity

B) 31st December 1994

1. Gross Profit
=
2. Gross Profit Rate
=
3. Return on Sales
=
4. Return on Stockholders Equity
=
5. Asset Turnover
=
6. Pretax return on operating assets
7. Earnings Per Share

=
=

2591.9 509.9
2082
2082 / 2591.9
80.3%
179.3 / 2591.9
6.9%
179.3 / 1146.4
15.6%
2591.9/2699.55
.96
316.7/2699.55
11.7%
.81

C) 31st December 1995

1. Gross Profit
=
2. Gross Profit Percentage
=
3. Return on Sales
=

2872.8 582.9
2289.9
2289.9 / 2872.8
79.7%
182.6 / 2872.8
6.4%
20

4. Return on Stockholders Equity

=
5. Asset Turnover
=
6. Pretax return on operating assets
7. Earnings Per Share

=
=

182.6 / 1333
13.7%
2872.8/3039.6
.95
313.6/3039.6
10.3%
.85

D) 31st December 1996

1. Gross Profit
=
2. Gross Profit Percentage
=
3. Return on Sales
=
4. Return on Stockholders Equity
=
5. Asset Turnover
=
6. Pretax return on operating assets
7. Earnings Per Share

=
=

3406.2 738.2
2668
2668 / 3406.2
78.3%
207.3 / 3406.2
6.1%
207.3 / 1537.8
13.5%
3406.2/3489.8
.98
350.9/3489.8
10.1%
.95

E) 31st December 1997

1. Gross Profit
=
2. Gross Profit Percentage
=
3. Return on Sales
=
4. Return on Stockholders Equity
=
5. Asset Turnover
=
6. Pretax return on operating assets
7. Earnings Per Share

=
=

3816.8 751.5
3065.3
3065.3 / 3816.8
80.3%
317.8 / 3816.8
8.3%
317.7 / 1828.7
17.4%
3816.8/3984.85
.96
524.2/3984.85
13.2%
1.45

21

Market Price and Dividend Ratios for Southwest Airlines

A) December 31, 1993
1. Price-Earnings
=
2. Dividend-Yield
=
3. Dividend-Payout
=

27.85/.77
36.17
.026/27.85
.1%
.026/.77
3.4%

B) December 31, 1994

1. Price-Earnings
=
2. Dividend-Yield
=
3. Dividend-Payout
=

26.03/.81
32.13
.027/26.03
.1%
.027/.81
3.3%

C) December 31, 1995

1. Price-Earnings
=
2. Dividend-Yield
=
3. Dividend-Payout
=

20.51/.85
24.13
.027/20.51
.13%
.027/.85
3.2%

D) December 31, 1996

1. Price-Earnings
=
2. Dividend-Yield
=
3. Dividend-Payout
=

22.94/.95
24.15
.029/22.94
.13%
.029/.95
3.1%

E) December 31, 1997

1. Price-Earnings
=
2. Dividend-Yield
=
3. Dividend-Payout
=

29.13/1.45
20.9
.033/29.13
.1%
.033/1.45
2.3%

22

Short Term Solvency Ratios for Southwest Airlines

A) 31st December 1993
1. Current Ratio
=
2. Quick Ratio
=
=
3. Average Collection Period in Days
=
4. Inventory Turnover
=

432/478.6
.90
.90 to 1
295.6+70.5/478.6
.76
.76 to 1
(70.515) x365/2296.7
11.2
467.8 / 31.7
14.76

B) 31stDecember 1994
1. Current Ratio
=
2. Quick Ratio
=
3. Average Collection Period in Days
=
4. Inventory Turnover
=

314.9/522.3
.60
.60 to 1
174.5+75.7/522.3
.48
.48 to 1
((75.7+70.5)/2) x 365)/2591.9
10.29
509.9 / 37.6
13.56

C) 31 stDecember 1995
1. Current Ratio
=
=
2. Quick Ratio
=
=
3. Average Collection Period in Days
=
4. Inventory Turnover
=

473.1/610.6
.78
.78 to 1
317.4+79.8/610.6
.65
.65 to 1
((79.8+75.7)/2) x 365)/2872.8
9.88
582.9 / 41.1
14.18

D) 31 stDecember 1996
1. Current Ratio
=
=
2. Quick Ratio
=
15

751/765.4
.98
.98 to 1
581.8+73.4/765.4
.86

Accounts Receivable for 31 stDec. 1993 was used for Average Accounts Receivable for 1993.

23

=
3. Average Collection Period in Days
=
4. Inventory Turnover
=

.86 to 1
((73.4+79.8)/2) x 365)/3406.2
8.21
738.2 / 51.1
14.44

E) 31stDecember 1997
1. Current Ratio
=
=
2. Quick Ratio
=
=
3. Average Collection Period in Days
=
4. Inventory Turnover
=

806.4/868.5
.93
.93 to 1
623.3+76.5/868.5
.81
.81 to 1
((76.5+73.4)/2) x 365)/3816.8
7.17
751.5 / 52.4
14.34

24