Required information Skip to question [The following information applies to the questions displayed below.] Simon Companys year-end balance sheets follow. At December 31 Current Year 1 Year Ago 2 Years Ago Assets Cash $ 31,800 $ 35,625 $ 37,800 Accounts receivable, net 89,500 62,500 50,200 Merchandise inventory 112,500 82,500 54,000 Prepaid expenses 10,700 9,375 5,000 Plant assets, net 278,500 255,000 230,500 Total assets $ 523,000 $ 445,000 $ 377,500 Liabilities and Equity Accounts payable $ 129,900 $ 75,250 $ 51,250 Long-term notes payable 98,500 101,500 83,500 Common stock, $10 par value 163,500 163,500 163,500 Retained earnings 131,100 104,750 79,250 Total liabilities and equity $ 523,000 $ 445,000 $ 377,500 For both the current year and one year ago, compute the following ratios: (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?

Acid-Test Ratio
	Numerator:					/	Denominator:	=	Acid-Test Ratio
	not attempted	+	Short-term investments	+	not attempted	/	not attempted	=	Acid-test ratio
Current Year:	$31,800selected answer correct	+	not attempted	+	not attempted	/	not attempted	=	0	to 1
1 Year Ago:	not attempted	+	not attempted	+	not attempted	/	not attempted	=	0	to 1
2 Years Ago:	not attempted	+	not attempted	+	not attempted	/	not attempted	=	0	to 1

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