Risk ratios for Sun Microsystems are given below and in the data file for this exam.

Risk Ratios for Sun Microsystems
	Year 12	Year 11	Year 10
Current Ratio	1.5	1.5	1.5
Quick Ratio	1.1	0.9	1.1
Operating Cash Flow / Average Current Liabilities	17.2%	43.1%	96.6%
Days Accounts Receivable	83	56	58
Days Inventory	39	29	21
Days Accounts Payable	54	34	39
Net Days Working Capital	68	51	40
Long-term Debt Ratio	21.0%	21.2%	24.3%
Debt-Equity Ratio	26.6%	27.0%	32.0%
Liabilities / Total Assets	44.6%	45.2%	50.5%
Operating Cash Flow / Average Total Liabilities	10.6%	25.8%	64.8%
Interest Coverage Ratio	-8.2	16.8	0.3

Question 1

Assess the changes in the short-term liquidity risk of Sun during the three-year period and the level of that risk at the end of Year 12.

Question 2

Assess the changes in the long-term solvency risk of Sun during the three-year period and the level of that risk at the end of Year 12.