Business, 24.04.2020 16:23, valencial0917

Calculate the present value of operating lease payments (use the gross amounts, not the amounts net of subleases) for Southwest Airlines using a discount rate of 6%. Assume the minimum lease payments due after 2022 are split evenly over 2023 and 2024. If the operating leases were capitalized, Southwest would report an asset and liability approximately equal to the present value of future operating lease payments. Re-compute the long-term debt-to-total assets ratio and ROA for Southwest. Include the present value of the future operating lease payments as both assets and long-term debt in recalculating the ratios. Ignore any income differences that could result from capital versus operating leases (i. e., leave net income unchanged). Discuss how adding assets and liabilities (to the balance sheet) for the operating leases changes your interpretations of the ratios from before.

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Calculate the present value of operating lease payments (use the gross amounts, not the amounts net...