Are you guys? I'm Phil Towne for Rule 1 investing. We want to talk about another major part of the balance sheet, which is liabilities. Now, liabilities sound like, you know, liabilities. They're like the weight of the world. It's a liability. But liabilities are something that all businesses have some of. In fact, we've got them in our own life, don't we? Liabilities are not like, you know, "Gee, I'm not able to get to the store on time. I just can't keep track of a watch." No, liabilities are things that have value which you owe. So, this would be debt, like credit card debt; this would be what you owe on your house; this would be your auto loan. Those are all liabilities, things you have to pay off. Now, why is that important? Well, because we're trying to figure out a company and what its value is. One of the things we do is we look at what are the assets of the company, what does it own, and what are the liabilities, what does it owe? Now, one of the real major red flags of looking at a company is to look at liabilities and see that they are growing much faster than the assets of the business. In other words, the company is borrowing money like crazy. Now, we really don't like debt to get very high. So, we look at long-term debt, which is one of the key aspects of liabilities, and we say, well, can we pay this off in three years from net earnings? So, if a company is earning $100 a year, just every single year $100, and it has a thousand dollars worth of liabilities, it's going to take ten years over to pay that off. Liabilities are way...
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