Comparison Analysis: Interim Financial reporting and Seasonality
Both CVS and Southwest Airlines provide quarterly financial information in their financial statements. Quarterly financial reports provide important information about the "seasonality" of a company's operations. Seasonality refers to how dependent a com- pany is on sales during different seasons of the year, and how that affects a company's need to plan for cash flows and inventory. From the quarterly financial information for CVS in the Supplement, determine the effects of seasons on CVS's net revenues and net earnings by calculating for the most recent year the percentage of quarterly net sales and net earnings to annual net sales and net earnings. Discuss the results. How do you think the effect of seasons might differ for Southwest's operating revenues and income?