Exercise 13-7 Analyzing liquidity LO P3

Simon Companys year-end balance sheets follow.

Current Yr 1 Yr Ago 2 Yrs Ago 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 $ 34,165 97,060 122,034 11,111 308,965 $ 573,335 $ 39, 145 $ 39,968 67,812 53,830 91,437 59,066 10,379 4,441 285,481 250,495 $ 494,254 $ 407,800 $ 141,333 $ 81,858 $ 53,830 104,553 162,500 164,949 $ 573,335 115,952 89,223 162,500 162,500 133, 944 102,247 $ 494,254 $ 407,800 Required 1A Required 1B Required 2A Required 2B Compute the current ratio for each of the three years. Choose Numerator: = Current Ratio 1 Choose Denominator: 1 1 Current Ratio Current ratio 0 to 1 0 to 1 11 Current Yr: 1 Yr Ago: 2 Yrs Ago: / - 1 = 0 to 1 Compute the acid-test ratio for each of the three years. Acid-test ratio Choose Numerator: 1 Choose Denominator: Acid-Test Ratio + + Acid-test ratio Current Yr: + 7 - 0 to 1 + 0 to 1 1 Yr Ago: 2 Yrs Ago: 1 1 + + = 0 to 1