Reformulation for Multi-Year Capitalization of Operating Leases Use the information provided below for Southwest Airlines to answer the requirements $ millions 2013 2014 2015 Net operating assets (NOA) $ 7,004 $6,479 $7,485 Net nonoperating obligations (NNO) 332 (296 127 7,336 6,775 7,358 51 Net operating profit after tax (NOPAT) 818 1,99 2,232 754 1,136 2,181 17,699 18,605 19,820 Total stockholders' equity Net nonoperating expenses (NNE) 64 63 Net income Revenue Below are the adjustments that analysts would use to account for Southwest's operating leases as if they were capitalized. Adjustments are based on the present value of Southwest's operating leases for fiscal years 2013-2015. Balance Sheet Adjustments ($ millions) Net operating assets (NOA) Net nonoperating obligations (NNO) Equity 2013 +3,267 +4,244 +3,188 +3,267 +4,244 +3,188 2014 2015 Income Statement Adjustments ($ millions) Interest expense Net nonoperating expense, NNE Net operating profit after tax, NOPAT Net income 2013 2014 +129 +167 +126 +81 +105 +79 +81 +105 +79 2015 a. Compute the following ratios using the unadjusted and the adjusted numbers for each year. For simplicity only, use year-end balances for NOA, NNO, and equity. . Round ROE, RNOA, and NOPM to one decimal place (ex: 0.2345-23.5%) Round NOAT and FLEV to two decimal places. Use negative signs with answers, when appropriate. 2013 2014 2015 Unadjusted Adjusted Unadjusted Adjusted Unadjusted Adjusted 10.3 10.3 16.8 16.8 29.6 29.6 ROE 11.7 8.8 18.5 12.2 29.8 21.7 RNOA 4.6 5.1 6.4 11.3 11.7 NOPM 2.53 NOAT 1.72 2.87 1.74 2.65 .86 4.5 FLEV 40 X 4.4 X 58.3X Reformulation for Multi-Year Capitalization of Operating Leases Use the information provided below for Southwest Airlines to answer the requirements $ millions 2013 2014 2015 Net operating assets (NOA) $ 7,004 $6,479 $7,485 Net nonoperating obligations (NNO) 332 (296 127 7,336 6,775 7,358 51 Net operating profit after tax (NOPAT) 818 1,99 2,232 754 1,136 2,181 17,699 18,605 19,820 Total stockholders' equity Net nonoperating expenses (NNE) 64 63 Net income Revenue Below are the adjustments that analysts would use to account for Southwest's operating leases as if they were capitalized. Adjustments are based on the present value of Southwest's operating leases for fiscal years 2013-2015. Balance Sheet Adjustments ($ millions) Net operating assets (NOA) Net nonoperating obligations (NNO) Equity 2013 +3,267 +4,244 +3,188 +3,267 +4,244 +3,188 2014 2015 Income Statement Adjustments ($ millions) Interest expense Net nonoperating expense, NNE Net operating profit after tax, NOPAT Net income 2013 2014 +129 +167 +126 +81 +105 +79 +81 +105 +79 2015 a. Compute the following ratios using the unadjusted and the adjusted numbers for each year. For simplicity only, use year-end balances for NOA, NNO, and equity. . Round ROE, RNOA, and NOPM to one decimal place (ex: 0.2345-23.5%) Round NOAT and FLEV to two decimal places. Use negative signs with answers, when appropriate. 2013 2014 2015 Unadjusted Adjusted Unadjusted Adjusted Unadjusted Adjusted 10.3 10.3 16.8 16.8 29.6 29.6 ROE 11.7 8.8 18.5 12.2 29.8 21.7 RNOA 4.6 5.1 6.4 11.3 11.7 NOPM 2.53 NOAT 1.72 2.87 1.74 2.65 .86 4.5 FLEV 40 X 4.4 X 58.3X
