The following table contains current assets and current liability balances for Microsoft Corporation (MSFT):

	2016	2015	2014
Cash and cash equivalents	10,339,000	6,111,000	6,714,000
Short term investments	13,323,000	17,300,000	27,447,000
Net receivables	15,606,000	13,237,000	11,256,000
Inventory	985,000	1,127,000	1,478,000
Other current assets	2,989,000	2,393,000	2,115,000
Total current assets	43,242,000	40,168,000	49,010,000
Accounts payable	12,830,000	6,612,000	9,521,000
Short/current long-term debt	0	2,741,000	0
Other current liabilities	17,056,000	14,401,000	12,921,000
Total current liabilities	29,886,000	23,754,000	22,442,000

a. Assume that you are the lead banker for the syndicate of banks that manage Microsoft Corporation’s line of credit. Your boss has asked that you report to him on the current state of Microsoft’s liquidity. Calculate the working capital, current ratio, and the Debt Ratio for the three years How would you describe the liquidity of Microsoft in 2016? Be sure to talk about the firm’s current liabilities and current assets and in your description.

b. Have there been changes in Microsoft’s liquidity over the past 3 years shown? If so, have the changes been to improve the firm’s liquidity? Explain your observations.

c. Calculate the firm’s working capital for the 3 years. What is the tradeoff in managing the firm’s working capital? Is it possible for a firm to have a negative working capital measurement? Under what conditions can this happen? Is this always a cause for concern? If so, when is it dangerous?