Amazon.com, Inc.'s balance sheet for December 31, 2008, (slightly modified) contained the following items($ in millions):

Requirement 1. Prepare a December 31, 2008, classified balance sheet for Amazon.com.

Include the correct amount for accounts receivable.

Amazon.com

Balance Sheet

December 31, 2008

(in millions)

Requirement 2. Compute the company's working capital, current ratio and quick ratio. Compute the quick ratio as (current assets - inventory) / current liabilities. (Enter all dollar amounts in millions.)

Requirement 3. Comment on the company's current and quick ratios. In 2007, the current ratio was 1.39 and the quick ratio was 1.07. (**choose the correct word in parentheses)

The 2008 current ratio has (increased/decreased) from the 2007 current ratio of 1.39. The 2008 quick ratio has (increased/decreased) from the 2007 quick ratio of 1.07. By looking at Amazon.com's current assets, we can see that there is a fairly (high/low) percentage of liquid assets. Amazon.com's percentage of liquid current assets suggests that they have (adequate liquidity, despite the modest decline in the ratios/ adequate liquidity, despite the modest increase in the ratios/ inadequate liquidity, despite the modest decline in the ratios/ inadequate liquidity, despite the modest increase in the ratios. )

Requirement 4. During 2008, Amazon increased its Marketable securities by $387. Suppose the company had not increased its Marketable Securities but had instead increased long-term investments (classified as Other Noncurrent Assets) by $387. How would this have affected Amazon's current ratio? How would it have affected the company's liquidity?

(* I would really appreciate it if you could follow that exact format)

Property and equipment, net Accrued expenses and other Cash and cash equivalents Other noncurrent assets Other noncurrent liabilities Inventories Current portion of long-term debt Other current assets Accounts payable Marketable securities, short-term Accounts receivable, net Intangibles, net Long-term debt Stockholders' equity 854 1,093 2,769 865 487 1,399 204 3,594 958 438 409 2,672