Required information [The following information applies to the questions displayed below.) Simon Company's year-end balance sheets follow. 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 Current Year 1 Year Ago 2 Years Ago $ 28,761 85,884 $ 34,298 $ 33,303 60,616 46,693 106,925 49,738 9,168 261,662 $ 492,400 $123,834 90,720 78,529 8,825 242,215 $424,483 $ 69,585 94,702 3,853 213,213 $ 346,800 $ 46,693 78,176. 163,500 162,500 162,500 115,346 97,696 58,431 $ 492,400 $424,483 $ 346,800 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? SIMON COMPANY Common-Size Comparative Balance Sheets Assets Cash Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net December 31 Current Year 1 Year Ago 2 Years Ago % % % Total assets % % % Liabilities and Equity Accounts payable % % % Long-term notes payable Common stock, $10 par Retained earnings Total liabilities and equity % % 2. Assuming annual sales have not changed in the last three years, is the change in accounts receiva total assets favorable or unfavorable? 3. Assuming annual sales have not changed in the last three years, is the change in merchandise in total assets favorable or unfavorable? 2. Change in accounts receivable 5. 3. Change in merchandise inventory