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Use the information provided below for Southwest Airlines to answer the requirements
Use the information provided below for Southwest Airlines to answer the requirements.
$ millions 2013 2014 2015
Net operating assets (NOA) $ 7,670 $ 7,145 $ 8,151
Net nonoperating obligations (NNO) (332) (296) 127
Total stockholders' equity 8,002 7,441 8,024
Net nonoperating expenses (NNE) 152 151 139
Net operating profit after tax (NOPAT) 906 1,287 1,136 21,271 2,320
Net income 754 2,181 22,486
Revenue 20,365 21,271 22,486
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) 2013 2014 2015
Net operating assets (NOA) +3,267 +4,244 +3,188
Net nonoperating obligations (NNO) +3,267 +4,244 +3,188
Equity 0 0 0
Income Statement Adjustments ($ millions) 2013 2014 2015
Interest expense +129 +167 +126
Net nonoperating expense, NNE +81 +105 +79
Net operating profit after tax, NOPAT +81 +105 +79
Net income 0 0 0
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.
Expert Solution
PFA
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