Exercise 13-7 Analyzing liquidity LOP3 Simon Company's 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 $ 25,718 $ 30,973 $ 32,263 74,538 52,608 42,596 92,771 70,922 44,008 8,198 7,971 3,550 239,072 217,092 197,083 $ 440,297 $ 379,566 $ 319,500 $ 110,730 $ 62,864 $ 43,017 83,604 162,500 83,463 $ 440,297 87,300 72,022 162,500 162,500 66,902 41,961 $ 379,566 $ 319,500 (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? Compute the current ratio for each of the three years. Current Ratio Choose Numerator: Choose Denominator: Current Ratio Current Yr: 1 Yr Ago: 2 Yrs Ago: Current ratio to 1 to 1 to 1 11 11 Compute the acid-test ratio for each of the three years, Acid-test ratio Choose Numerator: Choose Denominator: = Acid-Test Ratio Acid-test ratio to 1 to 1 to 1 Current Yr: 1 Yr Ago: 2 Yrs Ago