1.Perform common size analysis using the data from last project (see attached) a. What does this analysis tell you about your company? b. Are any trends apparent?

SOUTHWEST AIRLINES FINANCIAL STATEMENT ANALYSIS 2014 $42.32 697 38% 0.0% $0 $0 2013 $18.84 738 38% 0.0% $0 $0 2012 $10.24 779 45% 0.0% $0 $0 Assets Cash and equivalents Short-term investments Accounts receivable Inventories Other Total current assets Net plant and equipment Intangibles Other Assets Total assets 2014 $3,152 $0 $419 $467 $418 $4,456 $13,389 $970 $530 $19,345 2013 $2,970 $0 $332 $469 $456 $4,227 $12,766 $970 $633 $18,596 2012 $3,144 $0 $299 $401 $501 $4,345 $12,127 $970 $626 $18,068 Liabilities and equity Accounts payable Notes payable/current installments of LT debt Income Taxes Payable Accruals Other Current Liabilities Total current liabilities Deferred Taxes/Income Long-Term Debt Other Liabilities Total liabilities $1,247 $629 $0 $1,229 $2,571 $5,676 $2,934 $2,628 $771 $12,009 $1,107 $271 $0 $1,102 $2,170 $4,650 $2,947 $2,883 $1,124 $11,604 $1,057 $644 $0 $996 $1,836 $4,533 $2,641 $3,107 $910 $11,191 Capital Surplus Common Stock (Par) Retained earnings Other Equity Less Treasury Stock Total common equity Total liabilities and equity $1,231 $808 $6,431 -$3 -$1,131 $7,336 $19,345 $1,210 $808 $5,768 -$119 -$675 $6,992 $18,596 $1,222 $808 $5,395 -$224 -$324 $6,877 $18,068 2014 $17,699 $13,342 $4,357 $3,079 $0 $3,079 $1,278 $38 $107 $1,209 $455 $754 $0 $754 2013 $17,088 $13,399 $3,689 $3,066 $0 $3,066 $623 $188 $126 $685 $264 $421 $0 $421 2012 $15,658 $12,237 $3,421 $2,728 $0 $2,728 $693 -$188 $182 $323 $145 $178 $0 $178 2014 $1,562 $14,951 $792 $3,833 $3,871 $169 2013 $1,562 $14,328 $386 $3,487 $3,452 ($24) 2012 $1,791 $13,918 $381 $2,906 $3,109 n/av 2014 $1.08 $10.53 $5.50 $0.24 2013 $0.57 $9.48 $4.73 ($0.03) 2012 $0.23 $8.83 $3.73 N/A 2014 2013 2013 0.79 0.70 0.91 0.81 0.96 0.87 2014 2013 2012 37.90 8.64 1.32 0.91 36.43 7.09 1.34 0.92 39.05 6.97 1.29 0.87 Year-end common stock price Weighted average shares outstanding (in thousands) Tax rate After-tax cost of capital Principal and Lease payments Required principal and sinking fund payments Balance Sheets (in thousands of dollars) Income Statements (in thousands of dollars) Net sales Operating costs Earnings before interest, taxes, depr. & amort. (EBITDA) Depreciation Amortization Depreciation and amortization Earnings before interest and taxes (EBIT) Non-Operating Income Less interest and Other Earnings before taxes (EBT) Taxes Income From Cont. Operations Extras & Discontinued Operations Net Income available to common stockholders Calculated Data: Operating Performance and Cash Flows Net operating working capital (NOWC) Total operating capital Net Operating Profit After Taxes (NOPAT) Net Cash Flow (Net income + Depreciation) Operating Cash Flow (OCF) Free Cash Flow (FCF) Calculated Data: Per-share Information Earnings per share (EPS) Book value per share (BVPS) Cash flow per share (CFPS) Free cash flow per share (FCFPS) LIQUIDITY RATIOS (Section 3.2) Liquidity ratios Current Ratio Quick Ratio ASSET MANAGEMENT RATIOS (Section 3.3) Asset Management ratios Inventory Turnover Days Sales Outstanding Fixed Asset Turnover Total Asset Turnover DEBT MANAGEMENT RATIOS (Section 3.4) 2014 2013 2012 62.08% 1.64 28.94% 11.94 40.72 62.40% 1.66 45.50% 4.94 29.28 61.94% 1.63 58.40% 3.81 18.80 2014 2013 2012 4.26% 6.61% 3.90% 10.28% Debt Management ratios Debt Ratio Debt-to-Equity Ratio Market Debt Ratio Times Interest Earned EBITDA Coverage Ratio 2.46% 3.35% 2.26% 6.02% 1.14% 3.84% 0.99% 2.59% PROFITABILITY RATIOS (Section 3.5) Profitability ratios Profit Margin Basic Earning Power Return on Assets Return on Equity MARKET VALUE RATIOS (Section 3.6) 2014 2013 2012 39.10 7.69 0.49 4.02 Market Value ratios Price-to Earnings Ratio Price-to-Cash Flow Ratio Price-to-EBITDA Market-to-Book Ratio 33.02 3.99 0.26 1.99 44.79 2.74 0.15 1.16 DU PONT ANALYSIS (Section 3.8) ROE Brinker Brinker 2014 2013 = 10.28% 6.02% (Profit margin) 4.26% 2.46% (Equity (TA turnover) Multiplier) 0.91 2.64 0.92 2.66 SOUTHWEST AIRLINES FINANCIAL STATEMENT ANALYSIS 2014 $42.32 697 38% 0.0% $0 $0 2013 $18.84 738 38% 0.0% $0 $0 2012 $10.24 779 45% 0.0% $0 $0 Assets Cash and equivalents Short-term investments Accounts receivable Inventories Other Total current assets Net plant and equipment Intangibles Other Assets Total assets 2014 $3,152 $0 $419 $467 $418 $4,456 $13,389 $970 $530 $19,345 2013 $2,970 $0 $332 $469 $456 $4,227 $12,766 $970 $633 $18,596 2012 $3,144 $0 $299 $401 $501 $4,345 $12,127 $970 $626 $18,068 Liabilities and equity Accounts payable Notes payable/current installments of LT debt Income Taxes Payable Accruals Other Current Liabilities Total current liabilities Deferred Taxes/Income Long-Term Debt Other Liabilities Total liabilities $1,247 $629 $0 $1,229 $2,571 $5,676 $2,934 $2,628 $771 $12,009 $1,107 $271 $0 $1,102 $2,170 $4,650 $2,947 $2,883 $1,124 $11,604 $1,057 $644 $0 $996 $1,836 $4,533 $2,641 $3,107 $910 $11,191 Capital Surplus Common Stock (Par) Retained earnings Other Equity Less Treasury Stock Total common equity Total liabilities and equity $1,231 $808 $6,431 -$3 -$1,131 $7,336 $19,345 $1,210 $808 $5,768 -$119 -$675 $6,992 $18,596 $1,222 $808 $5,395 -$224 -$324 $6,877 $18,068 2014 $17,699 $13,342 $4,357 $3,079 $0 $3,079 $1,278 $38 $107 $1,209 $455 $754 $0 $754 2013 $17,088 $13,399 $3,689 $3,066 $0 $3,066 $623 $188 $126 $685 $264 $421 $0 $421 2012 $15,658 $12,237 $3,421 $2,728 $0 $2,728 $693 -$188 $182 $323 $145 $178 $0 $178 2014 $1,562 $14,951 $792 $3,833 $3,871 $169 2013 $1,562 $14,328 $386 $3,487 $3,452 ($24) 2012 $1,791 $13,918 $381 $2,906 $3,109 n/av 2014 $1.08 $10.53 $5.50 $0.24 2013 $0.57 $9.48 $4.73 ($0.03) 2012 $0.23 $8.83 $3.73 N/A 2014 2013 2013 0.79 0.70 0.91 0.81 0.96 0.87 Year-end common stock price Weighted average shares outstanding (in thousands) Tax rate After-tax cost of capital Principal and Lease payments Required principal and sinking fund payments Balance Sheets (in thousands of dollars) Income Statements (in thousands of dollars) Net sales Operating costs Earnings before interest, taxes, depr. & amort. (EBITDA) Depreciation Amortization Depreciation and amortization Earnings before interest and taxes (EBIT) Non-Operating Income Less interest and Other Earnings before taxes (EBT) Taxes Income From Cont. Operations Extras & Discontinued Operations Net Income available to common stockholders Calculated Data: Operating Performance and Cash Flows Net operating working capital (NOWC) Total operating capital Net Operating Profit After Taxes (NOPAT) Net Cash Flow (Net income + Depreciation) Operating Cash Flow (OCF) Free Cash Flow (FCF) Calculated Data: Per-share Information Earnings per share (EPS) Book value per share (BVPS) Cash flow per share (CFPS) Free cash flow per share (FCFPS) LIQUIDITY RATIOS (Section 3.2) Liquidity ratios Current Ratio Quick Ratio ASSET MANAGEMENT RATIOS (Section 3.3) 2014 2013 2012 28.57 8.64 1.32 0.91 Asset Management ratios Inventory Turnover Days Sales Outstanding Fixed Asset Turnover Total Asset Turnover 28.57 7.09 1.34 0.92 30.52 6.97 1.29 0.87 DEBT MANAGEMENT RATIOS (Section 3.4) 2014 2013 2012 16.84% 0.44 9.95% 11.94 40.72 Debt Management ratios Debt Ratio Debt-to-Equity Ratio Market Debt Ratio Times Interest Earned EBITDA Coverage Ratio 16.96% 0.45 18.49% 4.94 29.28 20.76% 0.55 32.00% 3.81 18.80 PROFITABILITY RATIOS (Section 3.5) 2014 2013 2012 4.26% 6.61% 3.90% 10.28% Profitability ratios Profit Margin Basic Earning Power Return on Assets Return on Equity 2.46% 3.35% 2.26% 6.02% 1.14% 3.84% 0.99% 2.59% MARKET VALUE RATIOS (Section 3.6) 2014 2013 2012 39.10 7.69 6.77 4.02 Market Value ratios Price-to Earnings Ratio Price-to-Cash Flow Ratio Price-to-EBITDA Market-to-Book Ratio 33.02 3.99 3.77 1.99 44.79 2.74 2.33 1.16 DU PONT ANALYSIS (Section 3.8) ROE 2014 2013 = 10.28% 6.02% (Profit margin) 4.26% 2.46% (Equity (TA turnover) Multiplier) 0.91 2.64 0.92 2.66 SOUTHWEST AIRLINES FINANCIAL STATEMENT ANALYSIS 2014 $42.32 697 38% 0.0% $0 $0 2013 $18.84 738 38% 0.0% $0 $0 2012 $10.24 779 45% 0.0% $0 $0 Assets Cash and equivalents Short-term investments Accounts receivable Inventories Other Total current assets Net plant and equipment Intangibles Other Assets Total assets 2014 $3,152 $0 $419 $467 $418 $4,456 $13,389 $970 $530 $19,345 2013 $2,970 $0 $332 $469 $456 $4,227 $12,766 $970 $633 $18,596 2012 $3,144 $0 $299 $401 $501 $4,345 $12,127 $970 $626 $18,068 Liabilities and equity Accounts payable Notes payable/current installments of LT debt Income Taxes Payable Accruals Other Current Liabilities Total current liabilities Deferred Taxes/Income Long-Term Debt Other Liabilities Total liabilities $1,247 $629 $0 $1,229 $2,571 $5,676 $2,934 $2,628 $771 $12,009 $1,107 $271 $0 $1,102 $2,170 $4,650 $2,947 $2,883 $1,124 $11,604 $1,057 $644 $0 $996 $1,836 $4,533 $2,641 $3,107 $910 $11,191 Capital Surplus Common Stock (Par) Retained earnings Other Equity Less Treasury Stock Total common equity Total liabilities and equity $1,231 $808 $6,431 -$3 -$1,131 $7,336 $19,345 $1,210 $808 $5,768 -$119 -$675 $6,992 $18,596 $1,222 $808 $5,395 -$224 -$324 $6,877 $18,068 2014 $17,699 $13,342 $4,357 $3,079 $0 $3,079 $1,278 $38 $107 $1,209 $455 $754 $0 $754 2013 $17,088 $13,399 $3,689 $3,066 $0 $3,066 $623 $188 $126 $685 $264 $421 $0 $421 2012 $15,658 $12,237 $3,421 $2,728 $0 $2,728 $693 -$188 $182 $323 $145 $178 $0 $178 2014 $1,562 $14,951 $792 $3,833 $3,871 $169 2013 $1,562 $14,328 $386 $3,487 $3,452 ($24) 2012 $1,791 $13,918 $381 $2,906 $3,109 n/av 2014 $1.08 $10.53 $5.50 $0.24 2013 $0.57 $9.48 $4.73 ($0.03) 2012 $0.23 $8.83 $3.73 N/A 2014 2013 2013 0.79 0.70 0.91 0.81 0.96 0.87 2014 2013 2012 37.90 8.64 1.32 0.91 36.43 7.09 1.34 0.92 39.05 6.97 1.29 0.87 Year-end common stock price Weighted average shares outstanding (in thousands) Tax rate After-tax cost of capital Principal and Lease payments Required principal and sinking fund payments Balance Sheets (in thousands of dollars) Income Statements (in thousands of dollars) Net sales Operating costs Earnings before interest, taxes, depr. & amort. (EBITDA) Depreciation Amortization Depreciation and amortization Earnings before interest and taxes (EBIT) Non-Operating Income Less interest and Other Earnings before taxes (EBT) Taxes Income From Cont. Operations Extras & Discontinued Operations Net Income available to common stockholders Calculated Data: Operating Performance and Cash Flows Net operating working capital (NOWC) Total operating capital Net Operating Profit After Taxes (NOPAT) Net Cash Flow (Net income + Depreciation) Operating Cash Flow (OCF) Free Cash Flow (FCF) Calculated Data: Per-share Information Earnings per share (EPS) Book value per share (BVPS) Cash flow per share (CFPS) Free cash flow per share (FCFPS) LIQUIDITY RATIOS (Section 3.2) Liquidity ratios Current Ratio Quick Ratio ASSET MANAGEMENT RATIOS (Section 3.3) Asset Management ratios Inventory Turnover Days Sales Outstanding Fixed Asset Turnover Total Asset Turnover DEBT MANAGEMENT RATIOS (Section 3.4) 2014 2013 2012 62.08% 1.64 28.94% 11.94 40.72 62.40% 1.66 45.50% 4.94 29.28 61.94% 1.63 58.40% 3.81 18.80 2014 2013 2012 4.26% 6.61% 3.90% 10.28% Debt Management ratios Debt Ratio Debt-to-Equity Ratio Market Debt Ratio Times Interest Earned EBITDA Coverage Ratio 2.46% 3.35% 2.26% 6.02% 1.14% 3.84% 0.99% 2.59% PROFITABILITY RATIOS (Section 3.5) Profitability ratios Profit Margin Basic Earning Power Return on Assets Return on Equity MARKET VALUE RATIOS (Section 3.6) 2014 2013 2012 39.10 7.69 0.49 4.02 Market Value ratios Price-to Earnings Ratio Price-to-Cash Flow Ratio Price-to-EBITDA Market-to-Book Ratio 33.02 3.99 0.26 1.99 44.79 2.74 0.15 1.16 DU PONT ANALYSIS (Section 3.8) ROE Brinker Brinker 2014 2013 = 10.28% 6.02% (Profit margin) 4.26% 2.46% (Equity (TA turnover) Multiplier) 0.91 2.64 0.92 2.66