START HERE Comments to help you fill in yellow data entry boxes are in blue or red font. Take one row at a time: read row comment and enter data in the yellow cells only.
CURRENCY: USD <-- This is the organization's home or functional currency. E.g., USD, INR (Indian Rupee), BRL (Brazilian Real), EUR (Euro), CNY (Chinese Yuan). Information is found on financial statements.
SCALING: x 1,000 <-- Local currency units: Usually 1000 is used. For example, if financial statement on Mergent Online says Scale = Thousands, 2,822,795 listed is actually 2,822,795,000.
Southwest Airlines (LUV) <-- Any financial report should show the name of the organization in the heading.
INCOME STATEMENT HIGHLIGHTS <-- Always identify the type of report.
Unaudited; Amounts USD x 1000 <-- The currency and scaling needs to be defined.
For Fiscal Years ending: Dec 31 <-- An organization's fiscal year might end on Dec 31, or June 30, or something else. State it here.
% Growth vs Prior Year
2020 2019 2018 2020 2019 <-- Replace leftmost year number (Cell C9) with most recent year of data available.
TOTAL REVENUES $9,048,000.0 $22,428,000.0 $21,965,000.0 -59.7% 2.1%
Cost of revenues 0.0% 0.0% <-- Cost of revenues is also referred to as cost of goods sold
Gross Profit or (Loss) $9,048,000.0 $22,428,000.0 $21,965,000.0 -59.7% 2.1%
Other Operating Expenses $12,864,000.0 $19,471,000.0 $18,759,000.0 -33.9% 3.8% <-- To enter multiple numbers, the formula would start with the equal sign like this: =1278022+1052778+863568
OPERATING INCOME or (Loss) $(3,816,000.0) $2,957,000.0 $3,206,000.0 -229.0% -7.8% <-- Confirm this matches what is listed on the financial statement you downloaded.
Interest expense $349,000.0 $118,000.0 $131,000.0 195.8% -9.9%
Interest & other income (expense) $(531,000.0) $118,000.0 $47,000.0 -550.0% 151.1%
INCOME (LOSS) BEFORE INCOME TAXES $(4,696,000.0) $2,957,000.0 $3,122,000.0 -258.8% -5.3% <-- Confirm this matches what is listed on the financial statement you downloaded.
Provision for (or benefit from) Income Taxes $(2,364,000.0) $1,314,000.0 $1,398,000.0 -279.9% -6.0%
Net Income or (Loss) from Continuing Operations $(2,332,000.0) $1,643,000.0 $1,724,000.0 -241.9% -4.7% <-- FYI, most analysts consider this better than total Net Income as an indicator of underlying business performance.
Discontinued Operations Income (Loss), Net $- $- $- 0.0% 0.0% <-- Typically, from shutting down or selling part of the business.
NET INCOME OR (LOSS) $(2,332,000.0) $1,643,000.0 $1,724,000.0 -241.9% -4.7% <-- Confirm this matches what is listed on the financial statement you downloaded.
Weighted average (Number of) Diluted Shares Outstanding 565,000 539,000 574,000 4.8% -6.1% <-- Make sure this value is scaled the same way as the other numbers (thousands or millions).
DILUTED EARNINGS OR (LOSS) PER SHARE $(4.13) $3.05 $3.00 -235.4% 1.5%
Net Income Margin % -25.8% 7.3% 7.8% <-- Net income or Loss / Total Revenue. Typical values are 2% to 20%, but it can be negative, too.
Common Stock Share Price at each Year-End $0.18 $0.70 $0.61 -74.3% 14.8% <-- Mergent Online instructions include how to find historical stock prices. Go back four years because you will need fourth year for Line 123.
Total Equity Value (= share price x shares) $101,700.0 $377,300.0 $350,140.0 <-- Better to use end-of-year shares outstanding, but this figure is close enough for this course.
Price / Earnings Ratio (P/E) (0.04) 0.23 0.20 -119.0% 13.1% <-- Market price at the end of the year divided by that year's earnings per share. Typical values are 10 to 30.
Source. (Publication Year). Title Retrieved from: http://www.?????????????? <-- Include APA citation for where you found the financial statement data.
Southwest Airlines (LUV)
CASH FLOW STATEMENT HIGHLIGHTS
Unaudited; Amounts USD x 1000
For Fiscal Years ending: Dec 31
% Growth vs Prior Year
2020 2019 2018 2020 2019
Net Income or (Loss), from Above $(2,332,000.00) $1,643,000.00 $1,724,000.00 -241.9% -4.7%
Depreciation and Amortization Expense $1,255,000.00 $1,219,000.00 $1,201,000.00 3.0% 1.5% <-- This is a noncash expense, so we add it back to net income here.
Other Operating Sources and (Uses) $(50,000.00) $1,125,000.00 $1,968,000.00 -104.4% -42.8% <-- These are working capital changes and other adjustments.
Cash Flow from Operating Activities $(1,127,000.00) $3,987,000.00 $4,893,000.00 -128.3% -18.5% <-- By entering the total here, the row above will be automatically calculated.
Purchases of property & equip., & other capital expenditures $(5,595,000.00) $(3,149,000.00) $(4,331,000.00) -77.7% 27.3% <-- This is normally a negative number.
Other Investing Activities $5,579,000.00 $2,849,000.00 $2,293,000.00 95.8% 24.2% <-- This is normally a negative number.
Cash Flow from Investing Activities $(16,000.00) $(303,000.00) $(2,038,000.00) 94.7% 85.1% <-- This is normally a negative number. By entering the total here, the row above will be automatically calculated.
Increase or (Decrease) in Debt $5,799,000.00 $(615,000.00) $(342,000.00) 1042.9% -79.8% <-- Borrowing money (debt) is a source of cash, "proceeds," repaying it is a use of cash.
Increase or (Decrease) in Common Stock $3,810,000.00 $(2,332,000.00) $(2,157,000.00) 263.4% -8.1% <-- Issuing stock is a source of cash, "proceeds," repurchasing it is a use of cash
Dividend Payments $(188,000.00) $(372,000.00) $(332,000.00) 49.5% -12.0% <-- Dividend payments should normally be a negative number, because they are a cash outflow.
Other Financing Activities $237,000.00 $329,000.00 $335,000.00 -28.0% -1.8%
Cash Flow from Financing Activities $9,658,000.00 $(2,990,000.00) $(2,496,000.00) 423.0% -19.8% <-- By entering the total here, the row above will be automatically calculated.
Cumulative Translation Adjustment $8,515,000.00 $694,000.00 $359,000.00 1126.9% 93.3% <-- Don't try to understand what this exchange rate-related number means at this time. It is applicable to most multicurrency organizations.
NET CASH FLOW $17,030,000.00 $1,388,000.00 $718,000.00 1126.9% 93.3% <-- Confirm this matches what is listed on the financial statement you downloaded.
Memo: Free Cash Flow $(6,722,000.00) $838,000.00 $562,000.00 -902.1% 49.1% <-- Usually defined as Cash Flow from Operating Actitivies less Capital Expenditures. Note: If cap exp is a negative number, you will use the
Source. (Publication Year). Title Retrieved from: http://www.?????????????? absolute value of that number; this means change the negative sign to positive for the calculation. If Cap Expenditures are -$100:
Southwest Airlines (LUV) Formula is Op Cash Flow less absolute value of Cap Exp, e.g., 1,000-100 = 900. Free Cash Flow must be less than Operating Cash Flow.
BALANCE SHEET HIGHLIGHTS
Unaudited; Amounts USD x 1000
For Fiscal Years ending: Dec 31
% Growth vs Prior Year
2020 2019 2018 2020 2019
Current Assets
Cash & cash equivalents $11,063,000.00 $2,548,000.00 $1,854,000.00 334.2% 37.4% <-- Cash equivalents include Accounts Receivable (invoices the organization has sent to clients, but that they have not yet paid) although some disagree AR should be considered this.
All Other Current Assets $4,110,000.00 $3,426,000.00 $3,174,000.00 20.0% 7.9%
Total Current Assets $15,173,000.00 $5,974,000.00 $5,028,000.00 154.0% 18.8% <-- Enter total current assets values, and the spreadsheet will calculate "other current assets."
Non-current Assets
Property, Plant and Equipment, Net $15,831,000.00 $17,025,000.00 $19,525,000.00 -7.0% -12.8% <-- These are for PP&E net of accumulated depreciation.
Other Non-current Assets $71,197,000.00 $69,587,000.00 $70,653,000.00 2.3% -1.5% <-- Includes intellectual property (IP), such as patents and acquired technology.
Total Non-current Assets $87,028,000.00 $86,612,000.00 $90,178,000.00 0.5% -4.0%
TOTAL ASSETS $102,201,000.00 $92,586,000.00 $95,206,000.00 10.4% -2.8% <-- Enter Total Assets, and the spreadsheet will calculate Total Noncurrent Assets and Other Noncurrent Assets.
Current Liabilities
Accounts Payable, Net $931,000.00 $1,574,000.00 $1,416,000.00 -40.9% 11.2% <-- These are for bills the organization has received but not yet paid.
Other Current Liabilities $8,834,000.00 $9,127,000.00 $8,238,000.00 -3.2% 10.8%
Total Current Liabilities $9,765,000.00 $10,701,000.00 $9,654,000.00 -8.7% 10.8% Note: Working Capital, capital used for day-to-day operations, is Total Current Assets - Total Current Liabilities
Non-current Liabilities
Long-term Debt 0.0% 0.0%
Other Non-current Liabilities $40,385,000.00 $13,979,000.00 $16,514,000.00 188.9% -15.4%
Total Non-current Liabilities $40,385,000.00 $13,979,000.00 $16,514,000.00 188.9% -15.4%
TOTAL LIABILITIES $50,150,000.00 $24,680,000.00 $26,168,000.00 103.2% -5.7% <-- Enter Total Liabilities and spreadsheet will calculate other non-current and total liabilities.
SHAREHOLDERS' EQUITY Note: Working Capital is Total Current Assets - Total Current Liabilities
Common Stock, at par $888,000.00 $808,000.00 $808,000.00
Additional Paid-in Capital $4,191,000.00 $1,581,000.00 $151,000.00
Retained Earnings $14,777,000.00 $17,945,000.00 $15,967,000.00
Cumulative Translation Adjustment and Other $32,195,000.00 $47,572,000.00 $52,112,000.00
TOTAL SHAREHOLDERS' EQUITY $52,051,000.00 $67,906,000.00 $69,038,000.00 <-- Confirm this matches what is listed on the financial statement you downloaded. By definition, Shareholders' equity equals total assets minus total liabilities.
Total Liabilities+Total Shareholders' Equity $102,201,000.00 $92,586,000.00 $95,206,000.00 <-- Confirm this matches Total Assets since Total Assets = Total Liabilities + Total Shareholders' Equity
Source. (Publication Year). Title Retrieved from: http://www.??????????????
Southwest Airlines (LUV)
SELECTED FINANCIAL RATIOS
Unaudited; Amounts USD x 1000
For Fiscal Years ending: Dec 31
% Growth vs Prior Year
2020 2019 2018 2020 2019
FINANCIAL RATIOS
Price / Earnings Ratio (0.0) 0.2 0.2 -119.0% 13.1% <-- Price per Share / Earnings per Share. Typical values are 10 to 40 times. Debt Ratio 49% 27% 27% 84.1% -3.0% <-- Total Liabilities / Total Assets. Result < 0.5, most of the assets are financed through equity. Result > 0.5, most of the assets are financed through debt.
Total Debt / Equity Ratio 1.0 0.4 0.4 165.1% -4.1% <-- Total Liabilities / Total Shareholders' Equity. Typical values are 0.2 to 0.6.
Return on Equity (ROE) % -4.5% 2.4% 2.5% -285.2% -3.1% <-- Net Income / Total Shareholders' Equity. Typical values are 2% to 40%.
Return on Assets (ROA) % -2.3% 1.8% 1.8% -228.6% -2.0% <-- Net Income / Total Assets. Typical values are 2% to 40%. Almost always LOWER than ROE.
Net Profit Margin % -25.8% 7.3% 7.8% -451.8% -6.7% <-- Net Income / Total Revenue. Typical values are 1% to 15%.
Free Cash Flow $(6,722,000.00) $838,000.00 $562,000.00 -902.1% 49.1% <-- If FCF is negative, consider what that means. Is a negative FCF a bad thing?
OTHER USEFUL RATIOS
Earnings per Share or EPS $(4.1274) $3.0482 $3.0035 -235.4% 1.5% <-- Net Income / Diluted Shares Outstanding. Typical values are $1.00 to $10.00. May also be negative.
Current Ratio 1.6 0.6 0.5 178.3% 7.2% <-- Current Assets / Current Liabilities. Typical values are 0.7 to 1.5.
COMMON STOCK PRICE
Adjusted Close Price on or near Dec 31 $0.18 $0.70 $0.61 -74.3% 14.8% <-- Usually, somewhere between a few dollars and a couple of hundred dollars per share
RATE OF RETURN CALCULATIONS 2017 2018 2019 2020 Pct Change <-- Need fiscal end-of-year information for four years to calculate three-year percentage change.
Adjusted Close Stock Price at fiscal End of Year (EOY) $0.67 $0.18 -73.1% <-- For this, ROI% = ($End - $Beg) / $Beg. More precisely, you would add dividends received to the $End value.
Annual Dividends per Share $(0.5784) $(0.6902) $(0.3327) <-- Approximate dividends/share are calculated here, but you may want to override those with disclosed div/share figures.
If you buy 1 share at end of fiscal 2017, collect dividends, then sell at end of fiscal 2020, your 3-year percent gain would be: -312.1% <-- Not required here, but a more complete measurement.
BUT WHAT IF WE VIEW THIS AS A TIME VALUE OF MONEY QUESTION?
Investor's Annual Cash Flow for 1 Share $(0.67) $(0.58) $(0.69) $(0.15) <-- For an investor who buys 1 share at beginning, collects dividends, then sells at end of third year.
Solve for the annual Internal Rate of Return or IRR, with N=3 Yrs #NUM! <-- This IRR is the best overall measure of this stock's performance over the time period.
Source. (Publication Year). Title Retrieved from: http://www.??????????????