Professor Elam

Thursday June 2, 2011

SW Air LUV used to be that scrappy upstart with stews in hot pants and peanuts only. No longer.

As LUV has taken on more routes and grown, the fare prices have risen as well. We will use this article for our first posting in Intermed I this summer. Please read the link, now ponder

How can we use accounting knowledge to analyze LUV?

More routes but what, LUV is not making any more money, what happened?

Now think about the tools you have from cost accounting, what are fixed costs, what are variable costs for any airline?  What kinds of costs have increased with what results?

What has this done to various ratios like Return on Equity, or Return on Assets?

In retrospect was exapnding a great idea?  Now what?

Now, how is accounting different from bookkeeping?