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Southwest Airlines (LUV)-RATIOS (5 in millions) 2011 FREE CASH FLOW 2010 2009 2008 Net cash from operating activities (NCOA) Capital expenditures $ 1,385 $
Southwest Airlines (LUV)-RATIOS (5 in millions) 2011 FREE CASH FLOW 2010 2009 2008 Net cash from operating activities (NCOA) Capital expenditures $ 1,385 $ 1,561 $ 985 $ (1.521) (968) (493) Dividends paid (585) (923) (14) (13) (13) (13) NCOA-Capital exp Dividends paid $ 403 $ 1,055 $ 387 S (2.457) CASH FLOW ADEQUACY Net cash from operating activities (NCOA) $ 1,385 $ 1,561 $ 985 $ (1,521) Capital expenditures + Dividends paid $ 982 $ 506 $ 598 $ 936 NCOA/(Capital exp+ Dividends paid) 1.41 3.09 1.65 (1.63) CASH FLOW LIQUIDITY RATIO Cash and cash equivalents $ 829 $ 1,261 $ 1.114 $ Marketable securities (MS) $ 2,315 $ 2,277 $ 1,479 $ 1,368 435 Net cash from operating activities (NCOA) $ 1,385 $ 1,561 $ 985 $ (1.521) Current liabilities $ 4,533 $ 3,305 $ 2,676 $ 2,806 (Cash+MS+NCOA)/Current liabilities 1.00 1.54 1.33 0.10 QUALITY OF INCOME Net cash from operating activities (NCOA) $ 1,385 $ 1,561 $ 985 $ (1.521) Net income $ 178 $ 459 $ 99 $ 178 NCOA/Net income 7.78 3.40 9.95 (8.55) Refer to the information above to answer the following questions. Q1 20 Q2 Q3 23 Q4 Q5 FREE CASH FLOW: Southwest Airlines would have been able to take advantage of a $1 billion opportunity during (2011/2010/2009/2008). CASH FLOW ADEQUACY: Southwest Airlines had adequate cash for capital expenditures and dividends during (2011 2010 2009 / 2008), as indicated by a cash flow adequacy ratio of (greater/less) than 1.0. CASH FLOW LIQUIDITY RATIO: Southwest Airlines lacked cash resources to cover current liability obligations during (2011/ 2010 / 2009/2008), as indicated by a cash flow liquidity ratio of (greater/less) than 1.0. QUALITY OF INCOME: Southwest Airlines had adequate cash to support each $1 of net income during (2011 2010 2009 2008), as indicated by a quality of income ratio greater than (0.0/1.0/2.0). The strongest cash position for Southwest Airlines was during (2011/2010/2009/2008). Why? Support your response with at least two relevant observations.
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