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

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

At December 31	Current Year	1 Year Ago	2 Years Ago
Assets
Cash	$ 30,160	$ 34,906	$ 35,284
Accounts receivable, net	83,952	62,306	47,520
Merchandise inventory	107,730	83,141	52,142
Prepaid expenses	9,616	9,346	3,920
Plant assets, net	274,673	246,621	221,134
Total assets	$ 506,131	$ 436,320	$ 360,000
Liabilities and Equity
Accounts payable	$ 128,547	$ 74,475	$ 48,470
Long-term notes payable	96,104	103,364	81,947
Common stock, $10 par value	162,500	163,500	163,500
Retained earnings	118,980	94,981	66,083
Total liabilities and equity	$ 506,131	$ 436,320	$ 360,000

For both the current year and one year ago, compute the following ratios:

Exercise 13-7 (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.

Did the acid-test ratio improve or worsen over the three-year period?

Compute the current ratio for each of the three years.

1A

Current Ratio
	Numerator:	/	Denominator:	=	Current Ratio
		/		=	Current ratio
Current Year:		/		=		to 1
1 Year Ago:		/		=		to 1
2 Years Ago:		/		=		to 1

1B
	Current ratio

Compute the acid-test ratio for each of the three years.

1C

Acid-test ratio
	Numerator:					/	Denominator:	=	Acid-Test Ratio
		+	Short-term investments	+		/		=	Acid-test ratio
Current Year:		+		+		/		=		to 1
1 Year Ago:		+		+		/		=		to 1
2 Years Ago:		+		+		/

1D

Acid-test ratio