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		$	31,563		$	37,632		$	38,432
Accounts receivable, net			91,480			64,565			51,755
Merchandise inventory			118,469			87,025			53,471
Prepaid expenses			10,266			9,491			4,227
Plant assets, net			283,193			262,469			240,315
Total assets		$	534,971		$	461,182		$	388,200
Liabilities and Equity
Accounts payable		$	130,544		$	78,719		$	52,267
Long-term notes payable secured by mortgages on plant assets			99,569			108,193			87,508
Common stock, $10 par value			162,500			162,500			162,500
Retained earnings			142,358			111,770			85,925
Total liabilities and equity		$	534,971		$	461,182		$	388,200

(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?