1. How can looking at the ratio of total assets to total liabilities mislead an analyst?

2. A company has book equity of $20. After it is acquired, the combined balance sheet shows goodwill of $70, vs. $0 before the acquisition. What was the purchase price of the company’s equity?

3. The value of timberlands on a company’s balance sheet can be increased if the market value of timber increases. True or false and why?

4. In a case of bankruptcy, would you rather be the holder of senior debt or subordinated debt? Why?