Provide a comparative analysis for Southwest Airlines.

Use appropriate ratios to analyze:

a. Short Term Liquidity

b. Capital Structure and Solvency

c. Asset Utilization

d. Profitability

Prepare at least two equity valuation calculations and discuss your results relative to the current market price for your company.

http://investors.southwest.com/~/media/Files/S/Southwest-IR/financial-statement/annual-balance-sheet-21-01-2016.pdf Balance Sheet http://investors.southwest.com/~/media/Files/S/Southwest-IR/financial-statement/annual-income-statement-21-01-2016.pdf http://investors.southwest.com/~/media/Files/S/Southwest-IR/financial-statement/annual-cash-flow-statement-21-01-2016.pdf

SOUTHWEST AIRLINES CO.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
(unaudited)
Year ended		Year ended		Year ended
December 31,		December 31,		December 31,
2013		2014		2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	754$		1,136$		2,181$
Adjustments to reconcile net income to
cash provided by (used in) operating activities:
Depreciation and amortization	867		938		1,015
Unrealized (gain) loss on fuel derivative instruments	(5)		279		113
Deferred income taxes	50		501		(109)
Changes in certain assets and liabilities:
Accounts and other receivables	(17)		54		(88)
Other assets	(46)		142		103
Accounts payable and accrued liabilities	343		36		961
Air traffic liability	400		326		94
Cash collateral received from (provided to) derivative counterparties	57		(233)		(570)
Other, net	74		(277)		(462)
Net cash provided by operating activities	2,477		2,902		3,238
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(1,433)		(1,748)		(2,041)
Assets constructed for others	(14)		(80)		(102)
Purchases of short-term investments	(3,135)		(3,080)		(1,986)
Proceeds from sales of short-term and other investments	3,198		3,185		2,223
Other, net	-		(4)		(7)
Net cash used in investing activities	(1,384)		(1,727)		(1,913)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt	-		300		500
Proceeds from Employee stock plans	96		110		46
Reimbursement for assets constructed for others	-		27		24
Proceeds from termination of interest rate derivative instruments	-		-		12
Payments of long-term debt and capital lease obligations	(313)		(561)		(213)
Payments of cash dividends	(71)		(139)		(180)
Repayment of construction obligation	(5)		(11)		(10)
Repurchase of common stock	(540)		(955)		(1,180)
Other, net	(18)		(19)		(23)
Net cash provided by (used in) financing activities	(851)		(1,248)		(1,024)
NET CHANGE IN CASH AND CASH EQUIVALENTS	242		(73)		301
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	1,113		1,355		1,282
CASH AND CASH EQUIVALENTS AT END OF PERIOD	1,355$		1,282$		1,583

SOUTHWEST AIRLINES CO.
CONDENSED CONSOLIDATED BALANCE SHEET
(in millions)
(unaudited)
December 31,		December 31,
2014		2015
ASSETS		See note
Current assets:
Cash and cash equivalents	1,282$		1,583$
Short-term investments	1,706		1,468
Accounts and other receivables	365		474
Inventories of parts and supplies, at cost	342		311
Prepaid expenses and other current assets	232		188
Total current assets	3,927		4,024
Property and equipment, at cost:
Flight equipment	18,473		19,462
Ground property and equipment	2,853		3,219
Deposits on flight equipment purchase contracts	566		1,089
Assets constructed for others	621		915
22,513		24,685
Less allowance for depreciation and amortization	8,221		9,084
14,292		15,601
Goodwill	970		970
Other assets	534		717
19,723$		21,312$
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	1,203$		1,188$
Accrued liabilities	1,565		2,591
Air traffic liability	2,897		2,990
Current maturities of long-term debt	258		637
Total current liabilities	5,923		7,406
Long-term debt less current maturities	2,434		2,541
Deferred income taxes	2,782		2,490
Construction obligation	554		757
Other non-current liabilities	1,255		760
Stockholders' equity:
Common stock	808		808
Capital in excess of par value	1,315		1,374
Retained earnings	7,416		9,409
Accumulated other comprehensive loss	(738)		(1,051)
Treasury stock, at cost	(2,026)		(3,182)
Total stockholders' equity	6,775		7,358
19,723$		21,312$
Note: The Company adopted ASU 2015-17, Balance Sheet Classification of Deferred Taxes, utilizing retrospective application as permitted. As such, certain prior period amounts have been reclassified to conform to the current presentation. In the Condensed Consolidated Balance Sheet as of December 31, 2014, the Company has reclassified $477 million from Deferred income taxes in current assets to Deferred income taxes within non-current liabilities.