Exercise 13-8 Analyzing and interpreting liquidity LO P3

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[The following information applies to the questions displayed below.] Simon Companys year-end balance sheets follow.

At December 31	Current Yr					1 Yr Ago			2 Yrs Ago
Assets
Cash		$	27,406			$	32,035		$	33,036
Accounts receivable, net			89,300				62,800			51,100
Merchandise inventory			113,500				82,500			54,000
Prepaid expenses			8,826				8,409			3,671
Plant assets, net			225,478				214,696			191,893
Total assets		$	464,510			$	400,440		$	333,700
Liabilities and Equity
Accounts payable		$	115,663			$	67,674		$	44,048
Long-term notes payable secured by mortgages on plant assets			87,328				92,101			73,748
Common stock, $10 par value			162,500				162,500			162,500
Retained earnings			99,019				78,165			53,404
Total liabilities and equity		$	464,510			$	400,440		$	333,700

The companys income statements for the Current Year and 1 Year Ago, follow. Assume that all sales are on credit:

For Year Ended December 31	Current Yr						1 Yr Ago
Sales				$	603,863					$	476,524
Cost of goods sold	$	368,356					$	309,741
Other operating expenses		187,198						120,561
Interest expense		10,266						10,960
Income tax expense		7,850						7,148
Total costs and expenses					573,670						448,410
Net income				$	30,193					$	28,114
Earnings per share				$	1.86					$	1.73

Exercise 13-8 Part 4

(4-a) Compute days' sales in inventory. (4-b) For each ratio, determine if it improved or worsened in the current year.

Required 4A Required 4B Compute days' sales in inventory. Days' Sales In Inventory Choose Denominator: Choose Numerator: 1 Days = X Days' Sales In Inventory Days' sales in inventory days Current Yr: / 1 Yr Ago: / X days Complete this question by entering your answers in the tabs below. Required 4A Required 4B For each ratio, determine if it improved or worsened in the current year. Days' sales in inventory