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A B D Simon Company's year-end balance sheets follow. Current Year 1 Year Ago 2 Years Ago At December 31 5 Assets 5 Cash 7 Accounts receivable, net 18 Merchandise inventory 9 Prepaid expenses 10 Plant assets, net 11 Total assets Liabilities and Equity 13 Accounts payable 14 Long-term notes payable 15 Common stock, $10 par value 16 Retained earnings 17 Total liabilities and equity 18 $31,800 89,500 112,500 10,700 278,500 $523,000 $35,625 62,500 82,500 9,375 255,000 $445,000 $37,800 50,200 54,000 5,000 230,500 $377,500 12 un $129,900 98,500 163,500 131,100 $523,000 $75,250 101,500 163,500 104,750 $445,000 $51,250 83,500 163,500 79,250 $377,500 24 SIMON COMPANY 25 Common-Size Comparative Balance Sheets 26 December 31 27 Current Year 1 Year Ago 2 Years Ago 28 Assets 29 Cash 30 Accounts receivable, net 31 Merchandise inventory 32. Prepaid expenses 33 Plant assets, net 34 Total assets 35 Liabilities and Equity 36 Accounts payable 37 Long-term notes payable 38 Common stock, $10 par 39 Retained earnings 40 Total liabilities and equity 41 2. Assuming annual sales have not changed in the last three years, is the change in accounts receivable as a percentage of total 43 assets favorable or unfavorable? 44 3. Assuming annual sales have not changed in the last three years, is the change in merchandise inventory as a percentage of total 45 assets favorable or unfavorable? 46 47 2. Change in accounts receivable 48 3. Change in merchandise inventory 49 SO 51 42