Southwest Airlines Company — Earnings Quality Grade D
LUV · Industrials
Significant concerns
Screening Summary
Financial Trends
Revenue & Net Income ($B)
Margins (%)
18-Point Screening
Revenue Quality
DSO 1 days, change +1 days YoY
AR growth 108.5% exceeds revenue growth 2.1%
Revenue 2.1%, CFFO 298.7%. Cash follows revenue
Expense Quality
Inventory -3.1% vs COGS 0.6%. Normal
CapEx growth 30.1% is >2x revenue growth 2.1%
Insufficient data
Gross margin 17.4%, change +1.2pp. Stable
Cash Flow Quality
CFFO/NI = 4.18. Profits backed by cash
FCF < 50% of Net Income for 3 years
Accruals ratio = -4.8%. Low accruals
Cash $3.2B covers 54% of debt $6.0B
Balance Sheet Health
Goodwill+Intangibles $1.3B = 16% of equity. Manageable
Debt/EBITDA = 2.7x. Healthy
Other assets -1.6% vs revenue 2.1%. Normal
No write-off data
Acquisition Risk
FCF after acquisitions negative for 3 years
Goodwill+Intangibles change -0% YoY. Normal
Manipulation Score
Insufficient data
Altman Z-Score
Generated from public financial data using forensic accounting frameworks. Not investment advice. Data: Yahoo Finance · 2026-04-09