Below are the financial statements of Southwest Airlines Co.,

Instructions

1. Calculate each of the following ratios for 2014 and 2013.

1. Current ratio.

2. Free cash flow.

3. Debt to assets ratio.

4. Times interest earned.

2. Discuss the trend in ratios.

3. Read the company's note on leases.

If the operating leases had instead been accounted for like a purchase, assets and liabilities would increase by approximately $1,600 million. Recalculate the debt to assets ratio for 2014 in light of this information, and discuss the implications for analysis.

SOUTHWEST AIRLINES CO Balance Sheet (partial) December 31 in millions) 2014 S 2,893 11,415 $14,308 2013 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: 2014 2013 $ 645 413 119 2,845 1,331 14 $ 178 Net income (loss) Income tax expense Interest expense Cash provided by operations Capital expenditures Cash dividends 100 130 (1,521) 923 13 Note 8. Leases The majority of the Company's terminal operations space, as well as 82 aircraft, were under operating leases at December 31, 2014. Future minimum lease payments under noncancelable operating leases are as follows: 2015, $376,000; 2016, $324,000; 2017, $249,000; 2018, $208,000; 2019, $152,000; after 2020, $728,000