Southwest Airlines is a major air transport firm based in Dallas, Texas. The primary services of the company are low-haul, point-to-point, high-frequency, cheap air travel services. The company is known for its low-cost operational strategy and has maintained the best offers and lowest prices to its clients. Preferred stock usually has a higher claim on dividends compared to common shares. In 2018, the company had no preferred stock. The common stock dividends for the end of year 2018 amounted to $0.332 Billion, which was an increase of more than 20% from 2017. The outstanding common stocks for the company at the end of 2018 financial year was at $26, 243 million. The total company shares were 574 million shares for the year 2018.
EPS= [NI – PD]/ CS
Where, EPS=Earnings Per Share, NI=Net Income, PD=Preferred Dividends, and CS=Weighted Average Common Shares Outstanding
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Using the formula, the EPS for 2018 was $4.29, which was recorded as a decrease of more than 22 per cent from 2017. The 2017 EPS was $5.57, which had increased with more than 60 per cent from 2016, whose EPS was recorded at $3.45. The company utilizes the direct method to report the net cash flows from the operating activities. I can tell this because the financial report, under the operating activities, there is an agglomeration of the sales receipt and deducts all the cash expenses that were made from the identified expenses such as acquisitions and salaries. The evaluation highlights the value and growth potential of the company. It is a viable company every investor must consider.
References
Southwest Airlines (March, 2019). 2018 Annual Report to Shareholders. Retrieved from http://investors.southwest.com/~/media/Files/S/Southwest-IR/LUV_2018_Annual%20Report.pdf
Southwest Airlines (March, 2018). 2017 Annual Report to Shareholders. http://investors.southwest.com/~/media/Files/S/Southwest-IR/Bookmarked%20Annual%20no%20blanks.pdf
Southwest Airlines (March, 2017). 2016 Annual Report to Shareholders. http://investors.southwest.com/~/media/Files/S/Southwest-IR/Annual%20Reports/2016_AnnualReport_LUV.PDF
