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

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.

SOUTHWEST AIRLINES CO. Balance Sheet (partial) December 31 (in millions) 2008 2007 $ 2,893 11,415 $ 4,443 Total current assets Noncurrent assets 12,329 Total assets $14,308 $16,772 $ 2,806 6,549 $ 4,836 4,995 Current liabilities Long-term liabilities Total liabilities 9,355 4,953 9,831 6,941 Shareholders' equity Total liabilities and shareholders' equity $14,308 $16,772 Other information: 2008 2007 $ 178 Net income (loss) Income tax expense 2$ 645 100 413 Interest expense Cash provided by operations Capital expenditures Cash dividends 130 119 (1,521) 2,845 1,331 923 13 14