Calculating and interpreting long-term liquidity ratios. Data taken from the financial statements of American Airlines appear below (amounts in millions):

a. Compute the long-term debt ratio and the debt-equity ratio at the end of each year.

b. Compute the cash flow from operations to total liabilities ratio and the interest coverage ratio for Year 5 through Year 7.

c. How has the long-term liquidity risk of American Airlines changed over this three-year period?

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For the Year Year 5 Year 6 Year 7 Net Income before Interest Expense and Income Taxes $1,086 $1,331 $1,447 Cash Flow from Operations. 1,996 2,139 2,266 Interest Expense 273 203 194 On December 31 Year 4 Year 5 Year 6 Year 7 Long-term Debt .. Total Liabilities Total Shareholders' Equity $ 3,482 $ 3,095 $ 2,503 $ 2,319 14,090 13,983 13,034 3,233 3,646 4,528 12,399 5,354