Balance Sheets: The Good, the Bad and the In-Between
08/01/07 - 01:51 PM EDT
Negative net tangible assets: This is caused by an excessive amount of goodwill. Goodwill, or G/W, is the value paid by an acquiring company in excess of the book value
of the acquired company. G/W sits on the balance sheet like an ugly mole and has to be amortized
(expensed) over a period of time.
- Six Flags: - $848,776
- Level 3: - $803,000
- Sirius: - $505,564
- XM: - $650,089
company. A low ratio indicates that the company will have problems meeting its short-term obligations, and it could spell more-significant problems. Look for companies with current ratios of at least 1.00 -- but to be on the safe side, add some room for comfort and look for a slightly higher ratio.
Sirius, XM and Six Flags all have low current ratios (see below), and this is not a good sign. And even though Level 3 has a current ratio of 1.44, it is saddled with a great deal of long-term debt, which is another red flag.



