Exercise 13-7 Analyzing liquidity LO P3 Simon Company's year-end balance sheets follow. At December 31 Assets Cash Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets Liabilities and Equity Accounts payable Long-term notes payable secured by mortgages on plant assets Common stock, $10 par value Retained earnings Total liabilities and equity Current Yr 1 Yr Ago 2 Yrs Ago $ 31,800 89,500 $ 35,625 $ 37,800 62,500 50.200 112,500 10, 700 278,500 82,500 54,000 9, 375 255,000 5,000 230, 500 $ 523,000 $ 445,000 $ 377,500 $ 129,900 $ 75, 250 $ 51,250 98,500 101.500 83.500 163,500 163, 500 163,500 131, 100 104, 750 79,250 $ 523,000 $ 445,000 $ 377,500 (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? Complete this question by entering your answers in the tabs below. Required 1A Required 1B Required 2A Required 2B Compute the current ratio for each of the three years. Current Yr: 1 Yr Ago: 2 Yrs Ago: Current Ratio Choose Numerator: / Choose Denominator: = Current Ratio = Current ratio = to 1 = to 1 = to 1 < Required 1A Required 1B > Required 1A Required 1B Required 2A Required 2B Did the current ratio improve or worsen over the three year period? Current ratio < Required 1A Required 2A > Required 1A Required 1B Required 2A Required 2B Compute the acid-test ratio for each of the three years. + Current Yr: + 1 Yr Ago: 2 Yrs Ago: + + Acid-Test Ratio Choose Denominator: = Acid-Test Ratio = Acid-test ratio + = to 1 ++ 1 = to 1 = to 1 Choose Numerator: + < Required 1B Required 2B > Required 1A Required 1B Required 2A Required 2B Did the acid-test ratio improve or worsen over the three year period? Acid-test ratio