Simon Company's year-end balance sheets follow.

At December 31	Current Year	1 Year Ago	2 Years Ago
Assets
Cash	$ 25,745	$ 29,798	$ 30,127
Accounts receivable, net	73,153	51,631	40,169
Merchandise inventory	90,137	70,273	41,929
Prepaid expenses	7,966	7,667	3,381
Plant assets, net	230,797	209,422	185,694
Total assets	$ 427,798	$ 368,791	$ 301,300
Liabilities and Equity
Accounts payable	$ 104,391	$ 62,326	$ 40,169
Long-term notes payable	79,622	85,670	64,590
Common stock, $10 par value	163,500	163,500	162,500
Retained earnings	80,285	57,295	34,041
Total liabilities and equity	$ 427,798	$ 368,791	$ 301,300

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

The companys income statements for the Current Year and 1 Year Ago, follow.

For Year Ended December 31	Current Year		1 Year Ago
Sales		$ 556,137		$ 438,861
Cost of goods sold	$ 339,244		$ 285,260
Other operating expenses	172,402		111,032
Interest expense	9,454		10,094
Income tax expense	7,230		6,583
Total costs and expenses		528,330		412,969
Net income		$ 27,807		$ 25,892
Earnings per share		$ 1.71		$ 1.59

Additional information about the company follows.

Common stock market price, December 31, Current Year	$ 32.00
Common stock market price, December 31, 1 Year Ago	30.00
Annual cash dividends per share in Current Year	0.22
Annual cash dividends per share 1 Year Ago	0.11

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?

(1-a) Compute days' sales uncollected. (1-b) Determine if days' sales uncollected improved or worsened in the current year. (2-a) Compute accounts receivable turnover. (2-b) Determine if accounts receivable turnover ratio improved or worsened in the current year. (3-a) Compute inventory turnover. (3-b) Determine if inventory turnover ratio improved or worsened in the current year. (4-a) Compute days' sales in inventory. (4-b) For each ratio, determine if days' sales in inventory improved or worsened in the current year.

(1) Debt and equity ratios. (2-a) Compute debt-to-equity ratio for the current year and one year ago. (2-b) Based on debt-to-equity ratio, does the company have more or less debt in the current year versus one year ago? (3-a) Times interest earned. (3-b) Based on times interest earned, is the company more or less risky for creditors in the Current Year versus 1 Year Ago?

For both the Current Year and 1 Year Ago, compute the following ratios: (1-a) Profit margin ratio. (1-b) Did profit margin improve or worsen in the Current Year versus 1 Year Ago? (2) Total asset turnover. (3-a) Return on total assets. (3-b) Based on return on total assets, did Simon's operating efficiency improve or worsen in the Current Year versus 1 Year Ago?