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    Financial analysis of Southwest Airlines

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    Discuss all of the questions listed below as they relate to the financial statements of Southwest Airlines in its latest annual report. (http://www.southwest.com/investor_relations/annual_reports.html).

    1) What 3 items of important information does the Southwest income statement reveal about the financial performance of the company over the last three years?

    2) What 3 items of important information does the Southwest balance sheet reveal about the financial position of the company over the last two years?

    3) Can you identify the major sources of financing used by Southwest Airlines from the information presented in the company's annual report? If not, how could you get this information?

    4) Who is responsible for the issuance and content of the Southwest financial statements?

    5) What assurance, if any, is there that the Southwest financial statements are in compliance with GAAP, and are free of material misstatements?

    6) Of what use, if any, are the notes to the financial statements?

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    Solution Preview

    Discuss all of the questions listed below as they relate to the financial statements of Southwest Airlines in its latest annual report. (http://www.southwest.com/investor_relations/annual_reports.html).

    1) What 3 items of important information does the Southwest income statement reveal about the financial performance of the company over the last three years?

    As per Netmba.com "The accounting process is a series of activities that begins with a transaction and ends with the closing of the books."Financial Accounting is an art of recording, summarizing and interpreting the financial transactions of an organization. It provides us the financial statements such as balance sheet, income statement and cash flow statement. Financial Statements is designed primarily to assist stakeholders in deciding where to place their scarce investment resources. It is also used to help management to know the performance of organization. It is used by the external parties to take decisions, for example investor decides about the investment in the organization. Similarly lender, supplier etc. also assess the credibility of the company. Accountants summarize this information in a balance sheet, income statement, and statement of stockholder's equity and statement of cash flows.

    Income Statement is a financial statement that measures a company's financial performance over a specific accounting period. Financial performance is assessed by giving a summary of how the business incurs its revenues and expenses through both operating and ...

    Solution Summary

    Response provides financial analysis of Southwest Airlines

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