Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

I CANNOT ADD THE FINANCIALS, IT WOULD MAKE THE QUESTION TOO LONG. I CAN SEND IT TO WHOMEVER CAN HELP ME WITH THE QUESTION REQUIRED

I CANNOT ADD THE FINANCIALS, IT WOULD MAKE THE QUESTION TOO LONG. I CAN SEND IT TO WHOMEVER CAN HELP ME WITH THE QUESTIONimage text in transcribed

REQUIRED a. Using the information in the exhibits, provide a comprehensive and detailed comparison of the long-term solvency risk of Southwest to Lufthansa as of December 31, 2008, and as of December 31, 2007. (lgnore tax effects. Deferred taxes are covered in Chapter 8 on operating activities.) (1) Consider the following ratios in your analysis: Liabilities to Assets Ratio Total Liabilities/Total Assets Long-Term Debt to Shareholders' Equity Ratio Long-Term Debt/ Total Shareholders' Equity Operating Cash Flow to Average Total Liabilities Ratio Operating Cash Flow/ AverageTotal Liabilities Interest Coverage Ratio (cash basis) (Operating Cash Flow +Interest Paid + Taxes Paid)/Interest Paid (2) Compute the ratios using financial information (a) as reported and (b) after capitaliza tion of operating leases. (Hint: Adjusting operating cash flow for assumed lease capi- talization requires the removal of rent paid from operating cash flows and the inclusion of interest paid in operating cash flows. Use rent expense and interest expense to approximate rent paid and interest paid, respectively. REQUIRED a. Using the information in the exhibits, provide a comprehensive and detailed comparison of the long-term solvency risk of Southwest to Lufthansa as of December 31, 2008, and as of December 31, 2007. (lgnore tax effects. Deferred taxes are covered in Chapter 8 on operating activities.) (1) Consider the following ratios in your analysis: Liabilities to Assets Ratio Total Liabilities/Total Assets Long-Term Debt to Shareholders' Equity Ratio Long-Term Debt/ Total Shareholders' Equity Operating Cash Flow to Average Total Liabilities Ratio Operating Cash Flow/ AverageTotal Liabilities Interest Coverage Ratio (cash basis) (Operating Cash Flow +Interest Paid + Taxes Paid)/Interest Paid (2) Compute the ratios using financial information (a) as reported and (b) after capitaliza tion of operating leases. (Hint: Adjusting operating cash flow for assumed lease capi- talization requires the removal of rent paid from operating cash flows and the inclusion of interest paid in operating cash flows. Use rent expense and interest expense to approximate rent paid and interest paid, respectively

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Liberalization And Macroeconomic Stability

Authors: Torben M. Andersen, Karl-Ove Moene

1st Edition

0631203490, 978-0631203490

More Books

Students also viewed these Finance questions