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Interpreting Ratios

Please analyze the attached data. Include in report the answers to the below questions.

What can be concluded from the ratios?
Does the data show any warning signs?
Does anything stand out in the data?

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Conclusions from the ratios

(1) Liquidity ratios - both the current ratio and the quick ratio reveal that Southwest Airlines' ability to meets its short-term financial obligations has been declining. The company was in a better liquidity position in 2012, but its ability to pay its short-term debts using its short term assets weakened in 2013 and 2014. Additionally, the company's liquidity position is weaker than its competitors'.

(2) Asset management ratios - the company's efficiency in selling its inventory has improved, but it still ranks lower than competitors. Additionally, Southwest efficiency in collecting revenue declined year-on-year. The company's ability to use assets to generate revenue improved significantly in 2013 ...

Solution Summary

This solution reveals what can be concluded about a data set of Southwest Airlines ratios. The solution also highlights the warning signs identified in the ratios. Lastly, the solution highlights the issues that stand out in the data.

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