You have been presented with selected information taken from the financial statements of Southwest Airlines Co., shown

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You have been presented with selected information taken from the financial statements of Southwest Airlines Co., shown on the next page.

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Instructions(a) Calculate each of the following ratios for 2008 and 2007.(1) Current ratio.(2) Free cash flow.(3) Debt to total assets.(4) Times interest earned ratio.(b) Comment on the trend in ratios.(c) 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 total assets ratio for 2008 in light of this information, and discuss the implictions for analysis.

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
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