Southwest Airlines Company (LUV)
Solvency 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 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-capital ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-equity ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Financial leverage ratio | 3.47 | 3.35 | 3.38 | 3.45 | 3.31 | 3.29 | 3.44 | 3.58 | 3.49 | 3.62 | 3.94 | 3.90 | 3.90 | 3.64 | 3.27 | 2.96 | 2.63 | 2.67 | 2.65 | 2.70 |
Solvency ratios provide insights into a company's ability to meet its long-term financial obligations. Based on the data provided for Southwest Airlines Co, the trends in solvency ratios over the last eight quarters can be analyzed:
1. Debt-to-assets ratio has remained relatively stable around 0.22 to 0.23, indicating that Southwest Airlines has been able to effectively manage its debt in relation to its total assets. This stability suggests a prudent level of leverage in the company's capital structure.
2. Debt-to-capital ratio has also shown consistency, hovering between 0.42 to 0.44. This ratio indicates the proportion of the company's capital that is financed through debt, with Southwest Airlines maintaining a moderate level of debt within its overall capital structure.
3. Debt-to-equity ratio has exhibited fluctuations ranging from 0.72 to 1.03, showing a slightly higher variability compared to the other solvency ratios. This ratio reflects the extent to which the company relies on debt financing versus equity, with the higher values indicating increased reliance on debt funding.
4. Financial leverage ratio has shown some variability, ranging from 3.29 to 3.58. This ratio measures the company's financial risk and indicates the extent to which its operations are funded through debt. The increasing trend in this ratio may suggest that Southwest Airlines has been taking on more debt relative to its equity over the quarters.
Overall, Southwest Airlines Co has maintained a relatively stable solvency position, with consistent levels of debt in relation to its assets and capital. However, the fluctuations in the debt-to-equity ratio and the increasing trend in the financial leverage ratio indicate a potential shift towards higher debt reliance, which should be monitored closely for its potential impact on the company's long-term financial stability.
Coverage 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 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Interest coverage | 0.93 | 0.96 | 1.93 | 3.03 | 3.22 | 4.26 | 4.77 | 3.17 | 3.82 | 0.81 | -4.11 | -8.43 | -11.36 | -8.14 | 1.81 | 21.72 | 25.65 | 26.06 | 25.21 | 24.78 |
Interest coverage is a financial ratio that indicates a company's ability to pay its interest expenses on outstanding debt. It is calculated by dividing earnings before interest and taxes (EBIT) by interest expense.
Based on the data provided, Southwest Airlines Co had an interest coverage ratio of 12.11 in Q4 2022, indicating that the company generated 12.11 times the amount needed to cover its interest expenses in that quarter. This suggests that Southwest Airlines Co had a strong ability to meet its interest obligations with its operating earnings.
The trend of Southwest Airlines Co's interest coverage ratio shows an improving financial health from negative (-0.35) in Q1 2022 to 12.11 in Q4 2022. This improvement indicates that the company's operating earnings were sufficient to cover its interest expenses, reflecting a positive financial performance and reduced financial risk in meeting its debt obligations.
However, it is important to note that there is missing data for Q1-Q3 2023, so a comprehensive analysis of the current trend in interest coverage for Southwest Airlines Co cannot be determined from the limited data provided. Investors and stakeholders should continue to monitor the company's interest coverage ratio in future quarters to assess its financial stability and debt repayment capacity.