Overview of Southwest Airline Company Assignment Help
For this assignment, provide a 500 word company overview that addresses the following information related to the company you have selected.
1. Describe the company, including business sector, product(s) sold, competitors, and the geographic area where business is conducted.
2. Discuss cyclicality associated with the company's product sales and any other information relevant to the particular business or its industry.
3. Discuss whether the company is using generally accepted accounting principles (GAAP) or International Financial Reporting Standards (IFRS) as its standard for financial reporting, and explain how you can tell which method is being employed based upon your review of the Form 10-K.
4. Summarize the information from the press release/article and explain why this information is significant for the company. Focus on current and future financial implications and how the company's financial performance might be influenced.
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Introduction
This overview provides the detailed analysis in relation to the products sold by the company, the competitors of the company and the geographical areas covered by company. It also contains information in relation to the risk factors and the standards followed by company.
Description of the company
Southwest Airline Company is a company that is providing air transportation in the United States and the other nearby international markets. The company is providing its services in around 40 states such as Columbia, Rico, and also 10 nearby international countries such as Mexico, Belize, Cuba, Costa Rica, Turks, Caicos etc. The operating bases of the company are Atlanta, Denver, Las Vegas, Los Angeles, Orlando, Oakland, Baltimore etc. The main services provided by the company are related to the transfer of passenger from one place to another by way of flights and they are providing flights at the affordable rates. The areas of service for the company are domestic flights, cargo transportation services, contract flight training, and online ticket booking services, airport lounge and arrival suites. The main competitors of the company are Jet blue, Delta, American Airlines, United, Spirit, Alaska, Singapore airlines, Frontier.
Cyclicality associated with the sales of the products
The Southwest Airline Company belongs to the airline industry and is considered to be sensitive to the changes in the conditions in the economic market. Thus the results of the operations of the company can be affected negatively with the unfavorable changes in the economic conditions. The business of the company can also be negatively affected by the high prices of the fuel. The operations of the company can also be disrupted by the delay in the supply of the fuel. Hence the increase in the price of fuel and the availability of the fuel need to be carefully considered while making plans for the profitability of the future period. The company is greatly affected by the changes in the technology and thus the delay and disruption in technology may lead to adverse affects on operations of company.The company is well maintaining its policies and thus the revenue of company is increasing from past four years.
Use of GAAP or IFRS
The company is using GAAP as its standard for financial reporting. The method use is GAAP a it is evident from the policies in relation to the revenue recognition, the accounting done for the long term assets, fair value measurements, valuation of financial derivative instruments. Company is also doing loyalty accounting and the consolidated balance sheet and consolidated statement of income is also prepared in accordance with GAAP. The valuation of the inventory is in accordance with GAAP and is valued at cost. The goodwill and other intangible assets are valued at fair value by using impairment testing.
Press release- Southwest Airlines is returning value to the shareholders
The company had announced in the meeting held on May 15, 2019 the increase in the quarterly dividend of the company by 12.5% and it had also announced for the share repurchase amounting to $2billion. The quarterly dividend will increase to $0.18 per share from $0.16 per share. The increase in dividend will improve the public image of the company and will thereby improve the financial position of the company. It will help in attracting investment towards the company and will thus provide funds for future expansion thereby increasing the return on capital of the company.
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