Required information Use the following information for the Exercises below. (Algo) [The following information applies to the questions displayed below.] Simon Company's year-end balance sheets follow. At December 31 Assets Current Year 1 Year Ago 2 Years Ago Cash $ 30,188 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 85,779 107,851 9,626 268,189 $ 501,633 $ 124,907 93,364 162,500 120,862 $ 35,287 61,147 77,602 8,900 249,506 $ 432,442 $ 72,352 98,467 162,500 99,123 $ 501,633 $ 432,442 $ 34,617 47,098 50,159 3,964 220,962 $ 356,800 $ 46,156 79,641 163,500 67,503 $ 356,800 For both the current year and one year ago, compute the following ratios: Exercise 17-6 (Algo) Common-size percents LO P2 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? Complete this question by entering your answers in the tabs below. Req 1 Req 2 and 3 Express the balance sheets in common-size percents. Note: Do not round intermediate calculations and round your final percentage answers to 1 decimal place. SIMON COMPANY Common-Size Comparative Balance Sheets Assets Cash Accounts receivable, net Merchandise inventory Prepaid expenses December 31 Current Year 1 Year Ago 2 Years Ago % % % Plant assets, net Total assets % % % Liabilities and Equity Accounts payable % % % Long-term notes payable Common stock, $10 par Retained earnings Total liabilities and equity % % % Req 1 Req 2 and 3 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? 2. Change in accounts receivable 3. Change in merchandise inventory Show less Required 2A 17-7 (Algo) Analyzing liquidity LO P3 (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 1B Required 2A Required 2B Compute the current ratio for each of the three years. Current Year: 1 Year Ago: 2 Years Ago: Numerator: 1 Current Ratio Denominator: II Current Ratio = Current ratio to 1 = II to 1 to 1 Required 1A Required 1B Required 2A Required 2B Did the current ratio improve or worsen over the three-year period? Current ratio Required 1A Required 1B Required 2A Required 2B Compute the acid-test ratio for each of the three years. Numerator: + Short-term investments + Current Year: + 1 Year Ago: 2 Years Ago: ++ Acid-test ratio Denominator: = Acid-Test Ratio II Acid-test ratio + = II to 1 + = to 1 + = to 1 Did the acid-test ratio improve or worsen over the three-year period? Acid-test ratio