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. Current Year 1 Year Ago 2 Years Ago $ 26,579 77,812 98,812 8,905 242,934 $ 455,042 $113,305 83,837 163,500 $31,068 $ 33,344 54,370 74,023 8,403 224,414 $ 392,278 $ 64,306 92,028 163,500 72,444 44,458 48,295 3,596 200,507 $ 330,200 $ 44,022 74,434 162,500 49,244 Total liabilities and equity 94,400 $455,042 $ 392,278 $ 330,200 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? Req 1 Req 2 and 3 Express the balance sheets in common-size percents. (Do not round intermediate calculations and round your final p answers to 1 decimal place.) SIMON COMPANY Common-Size Comparative Balance Sheets December 31 2 Years Current Year 1 Year Ago Ago Assets Cash 6.0% 8.0 % 10.0 % Accounts receivable, net 16.8 14.0 12.9 Merchandise inventory 21.1 18.5 14.5 Prepaid expenses 1.9 2.1 1.1 Plant assets, net 54.3 57.4 61.5 Total assets 100.0 % 100.0 % 100.0 % Liabilities and Equity Accounts payable 24.4 % 17.1 13.6% Long-term notes payable 19.4 22.8 22.8 Common stock, $10 par Retained earnings Total liabilities and equity 28.1 x 32.6 38.4 28.1 x 27.5 25.3 100.0 % 100.0 % 100.0 % Req 1 Req 2 and 3> (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? Complete this question by entering your answers in the tabs below. es Required 1A Required 1B Required 2A Required 28 Compute the current ratio for each of the three years. Current Year: 1 Year Ago: 2 Years Ago: Numerator: Current Ratio Denominator: = Required 1A 11 " S Current Ratio Current ratio to 1 99 to 1 to 1 Required 1B > nces: (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? Complete this question by entering your answers in the tabs below. Required 1A Required 18. Required 2A Required 2B Compute the acid-test ratio for each of the three years. Current Year: 1 Year Ago: 2 Years Ago: + + Numerator: Short-term investments Acid-testratio Denominator: Acid-Test Ratio Acid-test ratio to 1 to 1 to 1 Required 18 Required 28 >