Southwest airlines historical financial analysis
Your Case Study: Projections, NPV, Compilation Assignment paper must include:
1 Alternative strategies (giving advantages and disadvantages for each). There should
be at least two alternative strategies identified and discussed.
2. Projected Financial Statements (Income Statement, Balance Sheet and Statement of
Cash Flows) for 3 years into the future. This must be broken down by year into two
(2) columns: 1 column without your strategy and 1 column with your strategy. The
without column should serve as the basis for your with strategy column and only
those financial statement accounts that will be changed, based on your strategy,
should be impacted.
3. Include Projected ratios for the without and with strategy by year. Discuss how
these ratios compare and contrast with the historical findings.
4. Cost Analysis completed on an Excel tab that outlines the cost that will be incurred
to implement the strategy. This information should correspond with the With
Strategy on the Projected Financial Statements, linking of cells to the financial
statements is encouraged.
5. Net Present Value analysis of proposed strategy’s new cash flow – you may also
use Excel to solve for this. From the income statement the change in operating
income between your with and without strategy should serve as your cash inflow
for each year.
NOTE: To construct the first cash flow (cf1) the new revenue from your strategy(s)
must be discounted back to the present value by calculating EBIT (Operating
Income on the Income Statement) and that figure will be your cfn for each year. cf0
(initial cost of your strategy), cf1 (discounted cash flow first year), r (opportunity
cost of capital, the rate of the next best alternative use of cash/debt/equity
a. ????????????= ―????????0 + ????????1
(1 + ????)1 + ????????2
(1 + ????)2 + ????????3
(1 + ????)3… ????????????
(1 + ????)????
6. Implementation strategy – how and when will the strategy be implemented, this
should outline the who, how, what, and when of the implementation process.
7. Specific recommended strategy and long term objectives
Explain why you chose the strategy, discuss the advantages/benefits to
organizational success and sustainability. Incude a discussion of the challenges or
disadvantages that may arise as a result of the strategic choice.
8. Text must follow this order with current APA level headings for each component.
Place the results of the case study analysis in a Word document include matrices as appendices
and a reference page. Submit a separate Excel document for your Historical financials,
Projections, NPV, and Cost of the strategy.