Exercise 13-7 Analyzing liquidity LO P3 Simon Companys year-end balance sheets follow.

At December 31	Current Yr	1 Yr Ago	2 Yrs Ago
Assets Cash	$ 35,108	$ 41,038	$ 41,491
Accounts receivable, net	102,772	70,381	56,428
Merchandise inventory	125,378	95,850	58,322
Prepaid expenses	11,306	10,449	4,564
Plant assets, net	320,490	295,260	258,295
Total assets	$ 595,054	$ 512,978	$ 419,100
Liabilities and Equity Accounts payable	$ 148,168	$ 88,427	$ 54,215
Long-term notes payable secured by mortgages on plant assets	115,226	120,345	94,474
Common stock, $10 par value	162,500	162,500	162,500
Retained earnings	169,160	141,706	107,911
Total liabilities and equity	$595,054	$ 512,978	$ 419,100

(1-a) Compute the current ratio for each of the three years.

(1-b) Did the current ratio improve or worsen over the three year period?

(2-a) Compute the acid-test ratio for each of the three years.

(2-b) Did the acid-test ratio improve or worsen over the three year period?