Southwest Airlines Financial Report

Paper Summary:

The paper responds to a series of questions related to financial reports contained within a company's annual report. Specifically addressed are Southwest Airline's 2005 Annual Report and the characteristics of its income and balances sheet statements. Also, Southwest's accounting and accounting oversight practices are discussed as are its notes to the financial statements.

From the Paper:

"Southwest's income statement is a useful document in underlining the overall performance of the company and provides key insight into the operational health of the company. While there are other key financial ratios that can and should be examined, the income statement provides important reference points for operational integrity. For example, Southwest's passenger, freight and other types of operating revenues all increased year on year from 2003 to 2005 moving from $5,937m to $7,584m respectively and, ideally, this increase in revenues should also come accompanied by an increase in profits (Southwest, 2005, p.48). An increase in revenues accompanied by a loss in profits would be indicative of poor operational management or an extraordinary increase in operational expenses related to market forces rather than management."

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