Simon Company's year-end balance sheets follow.

At December 31	Current Year	1 Year Ago	2 Years Ago
Assets
Cash	$ 31,476	$ 35,711	$ 36,476
Accounts receivable, net	91,228	64,388	47,672
Merchandise inventory	115,826	83,415	50,248
Prepaid expenses	10,037	9,753	4,013
Plant assets, net	274,469	257,626	226,391
Total assets	$ 523,036	$ 450,893	$ 364,800
Liabilities and Equity
Accounts payable	$ 128,934	$ 76,963	$ 48,635
Long-term notes payable	95,381	106,817	82,233
Common stock, $10 par value	163,500	163,500	162,500
Retained earnings	135,221	103,613	71,432
Total liabilities and equity	$ 523,036	$ 450,893	$ 364,800

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

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?

Part2:

(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?