Required information

Use the following information for the Exercises below. (Static)

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[The following information applies to the questions displayed below.] Simon Companys year-end balance sheets follow.

At December 31	Current Yr					1 Yr Ago			2 Yrs 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

Exercise 13-7 Analyzing liquidity LO P3

(1-a) Compute the current ratio for each of the three years.

Compute the current ratio for each of the three years.

Current Ratio
	Choose Numerator:	/	Choose Denominator:	=	Current Ratio
		/		=	Current ratio
Current Yr:		/		=		to 1
1 Yr Ago:		/		=		to 1
2 Yrs Ago:		/		=		to 1

(1-b) Did the current ratio improve or worsen over the three-year period?

Current ratio

(2-a) Compute the acid-test ratio for each of the three years.

Acid-Test Ratio
	Choose Numerator:					/	Choose Denominator:	=	Acid-Test Ratio
		+		+		/		=	Acid-test ratio
Current Yr:		+		+		/		=		to 1
1 Yr Ago:		+		+		/		=		to 1
2 Yrs Ago:		+		+		/		=		to 1

(2-b) Did the acid-test ratio improve or worsen over the three-year period?

Acid-test ratio