Examine the partial balance sheet of Altria Group shown below and answer the following questions.
1. Current assets for Altria Group (parent company of Philip Morris) totaled $22,890 (in millions) at the end of 2007. Compute the company€™s current ratio.
2. Why would Altria classify its liabilities into two different categories?
3. Compute Altria€™s debt-to-equity ratio for 2007 using (a) only long-term debt and (b) all liabilities in your computations. Why the huge difference in your answers? When interpreting a debt-to-equity ratio computed by someone else, what should be your firstquestion?

Transcribed Image Text:

at December 31, 2007 2006 Liabilities Current portion of long-term debt..2.445 Accounts payable Accrued liabilities: Marketing 4,593 3.552 1,857 Income taxes Dividends payable. 9.866 $25.427 6,298 1.391 Total current liabilities .$18,782 Long-term debt Deferred income taxes . Accrued pension costs Accrued postretirement health care costs 2.009 19.629 2.658 $57.953 Other liabilities Long-term debt. Deferred income taxes Other liabilities 5,530 192 5.603 $ 6,698 $64.651 Contingencies (Note 19) Stockholders' Equity Common stock, par value $0.33 1/3 per share (2.805.961,317 shares issued) Additional paid-in capital Earnings reinvested in the business Accumulated other comprehensive losses Cost of repurchased stock 6.884 34.426 (237) $ 935 6.356 59.879 (3.808) (698.284.555 shares in 2007 and 708,880.389 shares in 2006) Total stockholders' equity (23.454) $18.554 $57.211 (23.743) $39.619 $104.270 Total liabilities and stockholders' equity