Southwest Airlines Company (LUV)
Solvency ratios
| 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 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 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 | 3.26 | 3.35 | 3.40 | 3.53 | 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 |
Based on the provided data, the solvency ratios of Southwest Airlines Company, specifically the debt-to-assets ratio, debt-to-capital ratio, debt-to-equity ratio, and financial leverage ratio, show consistent stability over the years.
The debt-to-assets ratio, which indicates the proportion of a company's assets financed by debt, remained consistently low at 0.00 across all periods. This suggests that Southwest Airlines relies minimally on debt to finance its assets, reflecting a strong financial position in terms of asset coverage by equity.
Similarly, the debt-to-capital ratio, which measures the proportion of a company's capital that comes from debt, also remained steady at 0.00 over the reported periods. This consistent low ratio signifies that Southwest Airlines has a conservative capital structure with a minimal reliance on debt financing.
The debt-to-equity ratio, reflecting the relationship between a company's borrowed funds and shareholders' equity, stayed at 0.00 throughout the data series. This indicates a balanced mix of debt and equity in Southwest Airlines' financial structure, with equity playing a significant role in financing the company's operations.
Lastly, the financial leverage ratio, which shows the extent to which a company relies on debt to finance its assets, fluctuated slightly but remained within a narrow range between 2.96 and 3.94 over the reporting periods. This implies that while there is a degree of leverage in Southwest Airlines' capital structure, it has been managed effectively to avoid excessive financial risk.
In conclusion, the solvency ratios of Southwest Airlines Company demonstrate a financially sound and stable position with low debt levels, balanced capital structure, and prudent leverage management throughout the reported periods.
Coverage ratios
| 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 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Interest coverage | -0.13 | -3.47 | -1.64 | 0.48 | 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 |
Interest coverage ratio is a financial metric that indicates a company's ability to meet its interest obligations on outstanding debt. A higher ratio implies that the company is more capable of covering its interest payments from its operating profits.
For Southwest Airlines Company, the interest coverage ratios fluctuated over the periods provided. From March 31, 2020, to June 30, 2020, the ratio decreased significantly from 21.72 to 1.81, indicating a potential decrease in the company's ability to cover interest expenses with its operating income.
The ratios remained negative from September 30, 2020, to September 30, 2021, reflecting that the company's operating income was insufficient to cover its interest expenses during these periods. However, from December 31, 2021, to June 30, 2022, the ratios turned positive, indicating an improvement in the company's ability to cover its interest payments.
From June 30, 2022, to December 31, 2024, the interest coverage ratios fluctuated but generally remained positive. However, the ratios dropped significantly from June 30, 2024, to September 30, 2024, signaling a potential decline in the company's ability to cover its interest expenses with its operating income.
Overall, monitoring the interest coverage ratio is crucial for assessing Southwest Airlines Company's financial health and its ability to manage its debt obligations. It is essential for investors and stakeholders to closely track these trends to evaluate the company's financial stability over time.