9. What company has the highest level of long-term liabilities relative to its shareholder equity? 10. Does company 2 have a liquidity problem? 11. Does company 1 appear to be highly leveraged?

12. Extra Credit: Take a look at the gross margin, relative size and asset configuration: These three companies are: An international shipping company, a regional beer company and an international software company. Which company is number 2?

Notes: A company has a liquidity problem if its current ratio is less than 2 or its quick ratio is less than 1. A company is considered highly leveraged if its ratio of long-term liabilities to total equity is greater than 1.

Company 2 Net Sales 10646 3393 3 | 201 99 COGS 2125 3746 Net Income 2365 24 11 Accounts Receivable 2876 263 Inventory 29 Current Assets 7469 377 88 14 Fixed Assets Fixed Assets 4869 1103 Total Assets 12338 1480 102 Current Liabilities 2553 317 25 Long-Term Debt 242 351 668 Total Liabilities 2795 668 27 | 75 Shareholder's Equity 9543 812 Number of Shares Outstanding 1993 54