tal Debt ratio, which it might want to reduce. A potential investor might be pleased or displeased depending on his/her level of risk tolerance and outlook for the future. Company shows a financial risk above average, which is once again triggered by the expansion of the fleet.Accounts receivables1999199819971996Skywest (SKYW)N/A29N/AN/ASouthWest (LUV)N/A888Delta Air (DAL)N/AN/AN/AN/AThe length of the collection period is short, since almost 100 percent of the sales are targeted at passenger transportation rather than cargo. Southwest airlines are saving money by not extending its credit terms, unlike Skywest, which has a collection period of 29 days. Unfortunately market data is unavailable to compare and contrast.Return on EquityCompany's Return on equity is measured as following, 17.95% in 1999, 13% in 1998, 12,6% in 1997. Comparatively to the industry it is well below the mark, but the company has just broken out of the sector average of 14.42%. The company will deliver about average to the investor, and certainly below an average S&P500 company where the rate is 24.11%As the conclusion of the ratio analysis we'll use the Du Pont analysis for the two companies.Net Profit MarginAsset Turn-Over1-Debt to Asset RatioR.O.E.SkyWest Airlines 11.94%1.061-0.61120.7%SouthWest Airlines10.2%0.911-0.51717.95%As the data suggests, we have a higher R.O.E. for SkyWest Airlines due to several circumstances:SKYW has a higher profit margin than LUVSKYW has a higher Asset-Turnover than LUVIn order to increase performance and thus strengthen company's position, LUV should reevaluate its projects and decrease the number of those that don't meet the net-profit margin criteria. Also, asset-turnover can be increased through the resources utilization policy restructuring.StockIn the past 28 years, company stock was on the constant rise. It did experience its lows and highs, but the strong position of the company helped to maintain a constant growth. Even th...
