SOUTHWEST AIRLINES CO. Balance Sheet (partial) December 31 (in millions) 2017 $2

Question

SOUTHWEST AIRLINES CO. Balance Sheet (partial) December 31 (in millions) 2017 $2,893 11,415 $14,308 2016 Total current assets Noncurrent assets $ 4,443 12,329 $16,772 Total assets $ 2,806 6,549 9,355 4,953 $14,308 $ 4,836 4,995 9,831 6,941 $16,772 Current liabilities Long-term liabilities Total liabilities Shareholders' equity Total liabilities and shareholders' equity Other information: 2017 2016 $ 178 $ 645 Net income (loss) Income tax expense Interest expense Cash provided by operations Capital expenditures Cash dividends 100 130 (1,521) 923 13 119 2,845 1,331 Note 8. Leases The majority of the Company's terminal operations space, as well as 82 aircraft, were under operating leases at December 31, 2017. Future noncancelable operating leases are as follows: 2018, $376,000; 2019, $324.000: 2020 $249,000; 2021, $208,000; 2022, $152,000; after 2023, $728,000. minimum lease payments under P10-7A The following information is taken from Lassen Corp.'s balance sheet at

Explanation / Answer

SOLUTION:

1) Current ratio

Year 2017: $2,893 / $2,806 = 1.03 : 1

Year 2016: $4,493 / $4,836 = 0.92 : 1

2) Free cash flow

Year 2017: -$1,521 - $923 - $13 = -$2,457

Year 2016: $2,845 - $1,331 - $14 = $1,500

3) Debt to assets ratio

Year 2017: $9,355 / $14,308 = 65%

Year 2016: $9,831 / $16,772 = 59%

4) Times interest earned

Year 2017: ($178 + $100 + $130) / 130 = 3.14 times

Year 2016: ($645 + $413 + $119) / 119 = 9.89 times

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