Southwest Airlines Financial Analysis

The dividend policy has grown over the years. This may be so that the company projects itself as a less risky share and thus also gaining investors faith. The investors buy its shares and thus increase its demand. This helps to gives positive signals to the investors signalling that the company is stable and can generate earnings steadily. This hypothesis is gains standing from the dividend hypothesis theory.

Total Resource Network (TRN) congratulates Southwest Airlines for thirty-eight years of consecutive profitability. This is a major accomplishment that should be applauded especially during this economic recession and recovery period. Southwest’s success has been attributed to their core values and mission that begin with their employees and exceptional customer service. These two attributes along with low airfares have

Southwest Airline’s successful strategy consists of three complementary qualities which are focus, divergence and compelling tagline. This short-haul airline believes that by focusing on friendly service, speed and frequent point-to-point departures, its low pricing is able to compete against car transportation. While other competitors try to delight customers by investing in meals, airport lounges and seating selections, Southwest chooses to eliminate or reduces investments in these industry’s competitive factors. As a result, Southwest’s low prices are unbeatable making them the preferred airline in the industry. With a divergence element in Southwest’s strategy, it is able to innovate and stand apart

By utilizing their strategic capabilities obtained through the competences and resources, Southwest Airlines increases the competitive advantage over other airlines. To gain competitive advantage companies use competences and the tangible and intangible assets of the entity are considered resources (Thompson and Gamble, 2012). A company can react to the external environment and be successful through their capabilities and resources. This internal analysis will look at Southwest Airlines competencies and resources over the last three years through their financials. When looking a company’s financial statements and ratios, the numbers explain different financial standpoints within the company. Some companies would like to see certain areas in their finances increase and decrease. Looking at Southwest Airlines’ ratio we will consider the current ratio, debt to equity ratio, fixed assets turnover and gross profit margin. In looking at these ratios one can view areas the company is doing well in as well as areas of improvement.

The payments of interest are a fixed liability of the company so the financial manager have to decide what profit is left over for the company (Pujari, S 2015). The surplus profit is distributed to equity shareholders as dividend or it is kept aside as retained earnings. Financial managers have to decide how much to distributed as dividend and how much is needed to keep aside as retained earnings. They take in consideration the growth plans and investment opportunities (Pujari, S 2015). There are also affecting factors for dividend decision which the financial manager needs to analyze the factors before dividing the net earnings between dividend and retained earnings. Earnings is an affecting factor because dividends are paid out of the current and previous year’s earning (Pujari, S 2015). When a company experiences more earnings than the company has a high rate of dividends whereas if the experience low earnings than the dividends are low as well. Stability of earnings is another affecting factor because when a company has stable earnings they will give a higher rate of dividends, but if a company has lower earnings the dividends will be lower as well (Pujari, S 2015). Dividend decisions also has cash flow position factors where companies will declare a high rate of dividends only when the company has surplus funds. In cases where the company has a cash shortage they will also have low dividends (Pujari, S

As Southwest Airlines reached their 43rd birthday, it has matured within the airline industry. During the past four decades, Southwest Airlines has maintained its image. However between 2008 and 2013 the profits have been at a loss and Southwest Airlines has had a declining financial performance record. In the end, Southwest Airlines would need to define itself for the long term in light of the rise of the ultra-low-cost carriers (ULCCs) and the product evolution taking place within the industry. Perhaps the most radical change they need is for its Southwest "family"

There has been a great deal of uncertainty about world economic growth and stock markets have been extremely volatile resulting low returns. However the firm’s ordinary shares have made good progress during the year. Ordinary share dividends have achieved substantial growth over the last two years although this rate of increase is not expected to continue. Ordinary dividends have grown at an average rate of 14% per annum over the past 10 years and this rate is a more realistic growth rate for future dividends.

〖X'〗_(i,t) is a vector of explanatory variables and includes all the relevant factors identified in section 3.2. Table 2 in the appendix provides a summary of these variables, their measures, empirical evidence and expected sign. 〖PV〗_it is the payout variable analysed as only dividends, only repurchases, both or total payout. The paper

In making my decision to retain our investments in Southwest Airlines I analyzed Southwest’s performance in the U.S airline industry, as well as looked at Southwest’s operations, strategy/culture, and their past expansions. The advantages to my recommendation that we retain our investment in Southwest Airlines is that our company could see high returns for our customers and shareholders. In addition, our investment in Southwest

Having been very successful in their operations, Southwest Airlines is surely a target of competitors’ focus. And by that, other airlines may begin copying Southwest 's

A dividend policy is a company’s way of distributing profits to shareholders. It is a guideline that companies use to make decisions concerning how much earnings will be paid to shareholders. Dividend policy only refers to ordinary shares. Before drafting a dividend policy, management needs to take a number of basics considerations into account, such as factors that influence the dividends policy. There are four factors to be considered, legal, contractual and internal constraints, growth considerations, owner requirements and market considerations. The aim of dividend policy is to satisfy certain purposes such as wealth maximization and securing a source of funds.

Dividend payout ratio has been an issue of interest in daily financial literature. An example, many academicians and researchers have devoted their time to develop several theoretical models to provide some insights into the dividend policy puzzle. Dividend theories are developed with some of empirical support.

Southwest Airlines main product is to provide low cost air travel to passengers that are traveling on business and those that are leisure travelers. This airline focuses on making their customers travel experience

While conducting the analysis of EMI group’s dividend policy, one factor that stood out to us was the clientele effect. The clientele effect shows us who holds most of our outstanding shares. High tax-bracket individuals would prefer zero-to-low dividend payout to save on taxes. Low tax-bracket individuals would prefer a low-to-medium dividend payout, which gives them additional income while helping them save on taxes. An investing corporation would prefer a higher dividend payout because if they own a significant amount of shares, say 1 million, the income stream from that dividend would provide the company with more monetary resources while benefitting from tax exemptions. So before setting a dividend policy for EMI group, we must first

3.1 Data Collection Procedure This study uses data of public listed companies of Bursa Malaysia (Malaysian Stock Exchange) an online database of worldwide stock information. Financial Statements, which are obtained from Bursa Malaysia's website, have also been used as supplementary source. 15 proportional stratified samples are randomly selected from companies listed on the Main Board, Second Board and MESDAQ of Bursa Malaysia. The 15 companies studied in this research come from consumer sector, properties sector and plantation sector whereas consist of 5 firms from each sector. Data on the dividend policies and companies’ performance of the sample companies are hand-collected from the financial statements for years