Suppose you have been presented with selected information taken from the financi

Question

Suppose you have been presented with selected information taken from the financial statements of Southwest Airlines Co., shown below.

Problem 10-6A Suppose you have been presented with selected information taken from the financial statements of Southwest Airlines Co., shown below SOUTHWEST AIRLINES CO. Balance Sheet (partial) December 31 (in millions) Total current assets Noncurrent assets Total assets 2017 $2,840 10,900 $13,740 2016 $4,900 12,265 $17,165 $2,840 6,540 $4,710 5,000 9,3809710 7,455 $17,165 Current liabilities Long-term liabilities Total liabilities 4,360 $13,740 Shareholders' equity Total liabilities and shareholders' equity Other information:

Explanation / Answer

Current ratio = Current assets/Current liabilities 2017 1.00 =2840/2840 2016 1.04 =4900/4710 Free cash flow = Cash provided by operations-Capital expenditures-Cash dividends 2017 -2450 =-1525-905-20 2016 1286 =2715-1405-24 Debt to assets ratio = Total debt/Total Assets 2017 68% =9380/13740 2016 57% =9710/17165 Times interest earned = Income before interest and tax/Interest expense 2017 3.24 =(170+110+125)/125 2016 9.61 =(570+420+115)/115

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