Exercise 13-8 Analyzing and interpreting liquidity LO P3 [The following information applies to the questions displayed below.] 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 $ 27,907 89,100 114,500 8,987 237,287 $ 477,781 $ 32,621 $ 33,980 62,300 51,000 84,000 58,000 8,563 3,776 224,396 199, 944 $ 411,880 $ 346,700 $ 117,778 $ 68,912 $ 45,307 88,925 162,500 108,578 $ 477,781 93,785 75,854 162,500 162,500 86,683 63,039 $ 411,880 $ 346,700 The company's income statements for the Current Year and 1 Year Ago, follow. Assume that all sales are on credit: For Year Ended December 31 Sales Cost of goods sold Other operating expenses Interest expense Income tax expense Total costs and expenses Net income Earnings per share Current Yr $ 621,115 $ 378,880 192,546 10,559 8,074 590,059 $ 31,056 1 Yr Ago $ 490,137 $ 318,589 124,005 11, 273 7,352 461,219 28,918 $ 1.91 $ 1.78 (4-a) Compute days' sales in inventory. (4-b) For each ratio, determine if it improved or worsened in the current year. Complete this question by entering your answers in the tabs below. 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: / X 1 Yr Ago: / X = days (4-a) Compute days' sales in inventory. (4-6) For each ratio, determine if it improved or worsened in the current year. 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