An analysis of Southwest Airlines: Applying the Horngren, Datar, and Foster (2006) strategic profitability analysis approach

Charles D. Bailey, Allison B. Collins, Denton L. Collins, Kenneth R. Lambert

Research output: Contribution to journalArticle

1 Scopus citations

Abstract

This case requires students to collect financial and operational data from Southwest Airlines' 2003-2006 annual reports and to use that data to conduct a strategic profitability analysis of the firm's changes in operating income. As described in Horngren et al. (2006), this analysis decomposes changes in a firm's operating income into components related to growth, price recovery, and productivity. Similar to other studies (e.g., Dikolli and Sedatole 2004), this case uses publicly available data to link textbook concepts to ''real world'' applications. Linking strategy with profitability allows students to see how firms manage inputs in order to compete, grow, and profit in output markets.

Original languageEnglish
Pages (from-to)539-551
Number of pages13
JournalIssues in Accounting Education
Volume24
Issue number4
DOIs
StatePublished - Nov 2009

Keywords

  • Case analysis
  • Growth
  • Horngren et al. (2006)
  • Price-recovery
  • Productivity
  • Southwest airlines
  • Strategic profitability analysis

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