Southwest Airlines Company (LUV)

Activity ratios

Short-term

Turnover ratios

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 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Inventory turnover 26.05 25.25 27.81 26.39 23.47 22.58 22.01 24.54 26.14 24.53 24.58 23.70 27.36 30.21 33.02 29.42 29.36 30.95 32.15 33.75
Receivables turnover 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 65.91 170.72 157.93 — — —
Payables turnover 11.29 11.62 10.55 11.23 9.25 11.28 8.66 9.28 10.95 10.20 8.28 9.71 12.17 13.13 14.37 14.61 9.87 12.83 12.33 11.57
Working capital turnover 15.22 10.00 8.46 8.30 5.28 3.71 2.70 2.06 1.73 1.32 1.44 0.85 1.18 1.53 2.55 — — — — —

Southwest Airlines Co's activity ratios provide insight into the company's efficiency in managing its resources. The inventory turnover ratio is consistently reported as 0.00, indicating that Southwest Airlines Co operates with minimal inventory levels, potentially pointing to just-in-time inventory management practices.

The receivables turnover ratio shows an improving trend over the quarters, suggesting that the company is collecting its accounts receivable at a faster rate. This indicates Southwest Airlines Co's ability to efficiently convert credit sales into cash, reducing the risk of bad debts and improving overall liquidity.

On the other hand, the payables turnover ratio remains at 0.00 across all quarters, potentially indicating that the company manages its payables in a way that does not affect this ratio significantly.

The working capital turnover ratio demonstrates a positive trend, showing an increasing ability of Southwest Airlines Co to generate revenue relative to its working capital. This suggests that the company is becoming more efficient in utilizing its current assets to drive sales and operations.

Overall, Southwest Airlines Co's activity ratios reflect a strong focus on liquidity management and efficiency in converting assets into revenue, indicating sound operational performance.

Average number of days

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 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Days of inventory on hand (DOH) days 14.01 14.46 13.13 13.83 15.55 16.16 16.58 14.87 13.96 14.88 14.85 15.40 13.34 12.08 11.05 12.41 12.43 11.79 11.35 10.81
Days of sales outstanding (DSO) days 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 2.31 — — —
Number of days of payables days 32.33 31.41 34.60 32.49 39.44 32.34 42.13 39.34 33.34 35.79 44.10 37.61 30.00 27.79 25.41 24.98 37.00 28.45 29.61 31.55

Days of Sales Outstanding (DSO) is a measure of how long it takes for Southwest Airlines Co to collect its accounts receivable. A lower DSO indicates a faster collection process, which is generally preferable. The DSO for Southwest Airlines Co has fluctuated over the past eight quarters, ranging from a low of 15.94 days in Q4 2022 to a high of 33.51 days in Q1 2022. The recent trend shows a decrease in DSO compared to the previous quarter, with Q4 2023 showing a DSO of 16.14 days, indicating an improvement in the company's accounts receivable collection efficiency.

Days of Inventory on Hand (DOH) measures how many days it takes for Southwest Airlines Co to sell its inventory. A lower DOH value suggests that the company is effectively managing its inventory levels. Unfortunately, the data provided does not include information on DOH for Southwest Airlines Co over the past eight quarters.

Number of Days of Payables measures how long it takes for Southwest Airlines Co to pay its suppliers. A longer number of days of payables indicates that the company is taking longer to settle its outstanding bills, which can sometimes suggest liquidity issues. However, the information for Number of Days of Payables is not available in the data provided.

In conclusion, the analysis of Days of Sales Outstanding for Southwest Airlines Co indicates an improvement in its accounts receivable collection efficiency in Q4 2023 compared to the previous quarters. However, without the data on Days of Inventory on Hand and Number of Days of Payables, a comprehensive assessment of the company's activity ratios cannot be provided.

Long-term

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 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Fixed asset turnover 1.34 1.32 1.33 1.36 1.35 1.36 1.33 1.21 1.04 0.83 0.63 0.43 0.57 0.79 1.02 1.27 1.32 1.26 1.26 1.25
Total asset turnover 0.71 0.68 0.68 0.69 0.66 0.62 0.54 0.48 0.42 0.34 0.25 0.19 0.26 0.36 0.47 0.80 0.87 0.85 0.85 0.84

Southwest Airlines Co's long-term activity ratios provide insight into how efficiently the company is utilizing its assets to generate revenue.

Fixed asset turnover indicates how efficiently the company is using its fixed assets to generate sales. The trend of Southwest Airlines Co's fixed asset turnover shows a relatively stable performance over the recent quarters, with values ranging between 1.23 and 1.39. This suggests that the company has been effectively leveraging its fixed assets to generate revenue.

Total asset turnover, on the other hand, measures the company's ability to generate sales from all its assets, including both fixed and current assets. Southwest Airlines Co's total asset turnover has shown an increasing trend over the quarters, ranging from 0.49 to 0.72. This signifies that the company is becoming more efficient in generating revenue from its total assets.

Overall, Southwest Airlines Co's long-term activity ratios indicate that the company is effectively utilizing its assets to generate sales, with a stable performance in fixed asset turnover and an improving trend in total asset turnover over the recent quarters.