Simon Company's year-end balance sheets follow.

At December 31	Current Year	1 Year Ago	2 Years Ago
Assets
Cash	$ 31,807	$ 35,374	$ 38,728
Accounts receivable, net	89,500	64,432	49,131
Merchandise inventory	110,279	85,142	53,932
Prepaid expenses	10,143	9,286	4,052
Plant assets, net	281,665	256,968	233,957
Total assets	$ 523,394	$ 451,202	$ 379,800
Liabilities and Equity
Accounts payable	$ 131,628	$ 77,016	$ 51,136
Long-term notes payable	98,398	100,663	81,418
Common stock, $10 par value	163,500	163,500	162,500
Retained earnings	129,868	110,023	84,746
Total liabilities and equity	$ 523,394	$ 451,202	$ 379,800

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

Exercise 13-6 (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?