Southwest Airlines Company (LUV)
Return on total capital
| 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 224,000 | 243,000 | 521,000 | 884,000 | 1,017,000 | 1,597,000 | 1,935,000 | 1,371,000 | 1,721,000 | 357,000 | -1,787,000 | -3,508,000 | -3,817,000 | -1,953,000 | 307,000 | 2,433,000 | 3,078,000 | 3,232,000 | 3,202,000 | 3,196,000 |
| Long-term debt | US$ in thousands | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Total stockholders’ equity | US$ in thousands | 10,515,000 | 11,054,000 | 10,789,000 | 10,302,000 | 10,687,000 | 10,924,000 | 11,120,000 | 10,417,000 | 10,414,000 | 10,250,000 | 9,688,000 | 9,093,000 | 8,876,000 | 9,769,000 | 10,878,000 | 9,075,000 | 9,832,000 | 9,931,000 | 9,940,000 | 9,791,000 |
| Return on total capital | 2.13% | 2.20% | 4.83% | 8.58% | 9.52% | 14.62% | 17.40% | 13.16% | 16.53% | 3.48% | -18.45% | -38.58% | -43.00% | -19.99% | 2.82% | 26.81% | 31.31% | 32.54% | 32.21% | 32.64% |
December 31, 2023 calculation
Return on total capital = EBIT (ttm) ÷ (Long-term debt + Total stockholders’ equity)
= $224,000K ÷ ($—K + $10,515,000K)
= 2.13%
Southwest Airlines Co's return on total capital has shown fluctuations over the past eight quarters. In Q1 2022, the return on total capital was -0.67%, indicating a negative return on the company's invested capital. However, there was a significant improvement in subsequent quarters, with the return on total capital increasing to 5.37% in Q2 2022 and further to 8.16% in Q3 2022.
Despite this upward trend, Southwest Airlines Co experienced a decline in return on total capital in the following quarters. In Q4 2022, the return on total capital stood at 5.42%, and it further decreased to 4.82% in Q1 2023. The trend continued with returns of 2.77% in Q2 2023 and 1.27% in Q3 2023. The most recent data available for Q4 2023 shows a return on total capital of 1.21%.
Overall, the fluctuating trend in return on total capital suggests varying efficiency in generating profits relative to the total capital employed by Southwest Airlines Co. It is essential for the company to analyze the factors contributing to these fluctuations and take appropriate measures to improve the return on total capital in the future.
Peer comparison
Dec 31, 2023