The Annual report for Spirit Airlines for their fiscal year-ending December 31, 2018, may be found...

 

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The Annual report for Spirit Airlines for their fiscal year-ending December 31, 2018, may be found at their Investor Relations website: http://ir.spirit.com/ Based on the "Balance Sheet", "Income Statement", and various footnotes for Spirit Airlines (e.g. Footnote 14: Leases and Aircraft Maintenance Deposits) for their fiscal year-ending December 31, 2018, please answer the following questions: A. (4) Assuming a discount rate of 10%, what is the amount by which Spirit's Liabilities would be increased if they had capitalized all of their Operating Leases that were in effect as of December 31, 2018. Include both their "Aircraft and Spare Engine" and "Property Facility Leases", and be certain to indicate any assumptions that you are making. B. (2) C. (2) D. (2) Using your answer to Part A, how does this "adjustment effect Spirit's "Debt Capital" ratio, defined as: Total Liabilities (per Balance Sheet) Total Liabilities (per Balance Sheet) + Total Equity (per Balance Sheet) Using your answer to Part A, how does this "adjustment effect Spirit's "EBIT Interest Coverage" ratio for the year-ending December 31, 2018? Based on your answers to Part B and C, along with the chart included in the January 25th handout, what credit rating would you assign to Spirit Airlines? What rating would you have assigned if you had failed to adjust for Operating Leases"? E. (2) Spirit Airlines adopted ASU 2016-02 on January 1, 2019. Based on the information provided in their 10K filing of December 31, 2019, do you believe that your answer in Part A is consistent with the amount of Right of Use" assets that Spirit Airlines reports on their Dec. 31, 2019 Balance Sheet? Why or why not? The Annual report for Spirit Airlines for their fiscal year-ending December 31, 2018, may be found at their Investor Relations website: http://ir.spirit.com/ Based on the "Balance Sheet", "Income Statement", and various footnotes for Spirit Airlines (e.g. Footnote 14: Leases and Aircraft Maintenance Deposits) for their fiscal year-ending December 31, 2018, please answer the following questions: A. (4) Assuming a discount rate of 10%, what is the amount by which Spirit's Liabilities would be increased if they had capitalized all of their Operating Leases that were in effect as of December 31, 2018. Include both their "Aircraft and Spare Engine" and "Property Facility Leases", and be certain to indicate any assumptions that you are making. B. (2) C. (2) D. (2) Using your answer to Part A, how does this "adjustment effect Spirit's "Debt Capital" ratio, defined as: Total Liabilities (per Balance Sheet) Total Liabilities (per Balance Sheet) + Total Equity (per Balance Sheet) Using your answer to Part A, how does this "adjustment effect Spirit's "EBIT Interest Coverage" ratio for the year-ending December 31, 2018? Based on your answers to Part B and C, along with the chart included in the January 25th handout, what credit rating would you assign to Spirit Airlines? What rating would you have assigned if you had failed to adjust for Operating Leases"? E. (2) Spirit Airlines adopted ASU 2016-02 on January 1, 2019. Based on the information provided in their 10K filing of December 31, 2019, do you believe that your answer in Part A is consistent with the amount of Right of Use" assets that Spirit Airlines reports on their Dec. 31, 2019 Balance Sheet? Why or why not?