! Required information (The following information applies to the questions displayed below.) Simon Company's year-end balance sheets follow. Current Year 1 Year Ago 2 Years 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 Common stock, $10 par value Retained earnings Total liabilities and equity $ 31,693 93,694 116,648 9,900 285, 240 $ 537,175 $ 36, 306 64,831 83,957 10,016 267,972 $ 463,082 $ 38,590 52,997 55,352 4,288 238,573 $ 389,800 $ 129,744 101,999 162,500 142,932 $ 537,175 $ 75,913 106,509 162,500 118,160 $ 463,082 $ 50,425 87,007 162,500 89,868 $ 389,800 For both the current year and one year ago, compute the following ratios: 1. Express the balance sheets in common-size percents. 2. Assuming annual sales have not changed in the last three years, is the change in accounts receivable as a percentage of total assets favorable or unfavorable? 3. Assuming annual sales have not changed in the last three years, is the change in merchandise inventory as a percentage of total assets favorable or unfavorable? Express the balance sheets in common-size percents. (Do not round intermed answers to 1 decimal place.) 2 Years Ago % SIMON COMPANY Common-Size Comparative Balance Sheets December 31 Current Year 1 Year Ago Assets Cash % % Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets % % Liabilities and Equity Accounts payable % % Long-term notes payable Common stock, $10 par Retained earnings Total liabilities and equity % % % % % (1-a) Compute the current ratio for each of the three years. (1-6) 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? Complete this question by entering your answers in the tabs below. Required 1A Required 1B Required 2A Required 2B Compute the current ratio for each of the three years. Current Ratio Denominator: Numerator: 1 = Current Ratio Current ratio / - 1 = to 1 Current Year: 1 Year Ago: 2 Years Ago: / = to 1 / - to 1 Required 1A Required 1B Required 2A Required 2B Compute the acid-test ratio for each of the three years. Acid-test ratio Numerator: Denominator: Acid-Test Ratio Short-term investments / Acid-test ratio / 0 to 1 Current Year: 1 Year Ago: 2 Years Ago: +++ + 1 = 0 to 1 0 to 1
