Southwest Airlines Company (LUV)

Days of sales outstanding (DSO)

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020
Receivables turnover		153.94	157.45	113.81	130.45	76.72	58.07	56.38	48.38	71.76	41.11	37.24	20.81	19.62	13.36	11.79	9.49	11.67	37.88	65.91	170.72
DSO	days	2.37	2.32	3.21	2.80	4.76	6.29	6.47	7.54	5.09	8.88	9.80	17.54	18.61	27.33	30.96	38.48	31.26	9.64	5.54	2.14

December 31, 2024 calculation

DSO = 365 ÷ Receivables turnover
= 365 ÷ 153.94
= 2.37

Days of Sales Outstanding (DSO) is a financial ratio that indicates the average number of days a company takes to collect its accounts receivable. For Southwest Airlines Company, the DSO trend has shown fluctuations over the quarters analyzed.

From March 31, 2020, to December 31, 2020, Southwest Airlines' DSO increased significantly from 2.14 days to 31.26 days, which may indicate a delay in collecting payments from customers. The trend continued to rise until March 31, 2021, reaching a peak of 38.48 days.

However, from June 30, 2021, to December 31, 2024, Southwest Airlines managed to decrease its DSO consistently. The company improved its collection efficiency, with the DSO declining to 2.37 days by the end of December 31, 2024.

The declining trend in DSO from June 30, 2021, to December 31, 2024, reflects Southwest Airlines' efforts in managing its accounts receivable effectively, indicating a more efficient collection process or potentially stricter credit policies. This improvement in DSO suggests that the company has been successful in accelerating its cash inflows by collecting payments from customers at a faster pace.