Compare the ratios for each company against each other and draw a conclusion about each of the ratios. Interpret the meaning of the ratio in relation to your companies.

South West Airlines (2019) In millions

Payout Ratio = Cash Dividends on Common Stock / Net Income

= .372/2.3 / 2,300 * = 16.17% ( cash dividend taken from cash flow statement)

Return on Common Stockholder's Equity = Net Profit - Preferred Dividend / Average Common Stokholder's Equity

= (2,300 -0 ) / (17,945 +15,967)/2 = 2,300 / 16,956 = 13.56%

Times Interest Earned = Net income + Interest Expenses + Income Tax Expenses / Interest Expenses

= (2,300 + 118 + 779 ) / 118 = 27.09

American Airlines (2019) In millions

Payout Ratio = Cash Dividends on Common Stock/Net Income

0.40/3.80= 10.5% (cash dividend taken from cash flow statement)

Return on Common Stockholders Equity = Net Profit - Preferred Dividend / Average Common Stockholders Equity

= (1686-0) / (3,945+4,964)/2= 1,686 / 4,445.5 = 37.85%

Times Interest Earned = Net income + Interest Expenses + Income Tax Expenses / Interest Expenses

= (1,686+1,095+570) / 1095 = 3.06