CCT $122$

SOUTHWEST AIRLINES PROJECT

Refer to the Southwest Airlines $2023$ annual report $(10-$K$)$ to answer the following questions. You must show

work on all questions requiring calculation.

LONG$-$TERM DEBT

$$ Refer to the company$$s Balance Sheet $$ page $88$ of the report $$ as well as Notes $7$ and $12,$ unless stated otherwise.

$$ In Note $7($page $110),$ you will be introduced to financing activities by SW$.$ This means you will be analyzing their LT

debt. Notes $($as in Notes Payable$)$ listed there, while debit, are not Bonds. As such, you will not need to consider

the information relating to Notes.

$1.$

What types of bonds have been issued by Southwest $($SW$)?$

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On what date were these bonds issued?

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What is the face $($par$)$ value of the bonds?

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What is the stated$/$contract rate of the bonds?

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What was the carrying value of the bonds on December $31,2023?$

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Based on your #$5$ answer only, would this lead you to believe that the bonds were issued at par,

discount, or premium? Explain your answer.

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When are the bonds set to mature?

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On what dates is interest paid to the bondholders?

$($Hint: Your answer in Question #$7$ will help you with this question.$)$

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Calculate the amount of interest paid to the SW bondholders every $6$ months. Show your work.

$($Hint: Refer to the previously answered questions above; do not search for this answer within the annual

report.$)$

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What is the carrying value of SW$$s long$-$term debt at the end of FY $2023?$ Show your calculation.

$($Hint: Refer to the current maturities of and non$-$current long$-$term debt listed on the SW Balance Sheet.$)$

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Did the company make payments on its long$-$term debt in $2023?$ What about $2022?$ Is so$,$ how

much in each respective year?

$($Hint: Look at the Cash Flow Statement.$)$

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