A condensed balance sheet for Southwest Airlines and a partially completed vertical analysis are presented below.

Required:

1. Complete the vertical analysis by computing each line item (a)–(c) as a percentage of total assets. Round to the nearest whole percentage.
2. What percentages of Southwest’s assets relate to inventory of parts and supplies versus property and equipment? Which of these two asset groups is more significant to Southwest’s business?
3. What percentage of Southwest’s assets is financed by total stockholders’ equity? By total liabilities?

Transcribed Image Text:

SOUTHWEST AIRLINES Balance Sheet (summarlzed) December 31, 2016 (in millions of U.S. dollars) Cash $ 1,680 a% Current Liabilities $ 6,844 30% Accounts Receivable 546 Long-Term Liabilities 8,001 34 Inventory of Parts and Supplies 337 Total Liabilities 14,845 64 Other Current Assets 1,935 b Common Stock 2,218 9 Retained Earnings Total Stockholders' Equity Total Liabilities & Stockholders' Equity Property and Equipment, Net 17,044 6,223 27 Other Assets 1,744 8 8,441 36 Total Assets $23,286 100% $23,286 100%