Simon Company's year-end balance sheets follow.

At December 31	Current Year	1 Year Ago	2 Years Ago
Assets
Cash	$ 32,811	$ 37,977	$ 38,776
Accounts receivable, net	93,232	63,828	49,674
Merchandise inventory	116,050	89,562	53,983
Prepaid expenses	10,359	10,068	4,097
Plant assets, net	292,767	268,581	237,470
Total assets	$ 545,219	$ 470,016	$ 384,000
Liabilities and Equity
Accounts payable	$ 134,402	$ 81,021	$ 50,688
Long-term notes payable	100,451	109,185	85,713
Common stock, $10 par value	163,500	163,500	163,500
Retained earnings	146,866	116,310	84,099
Total liabilities and equity	$ 545,219	$ 470,016	$ 384,000

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?

(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?