[The following information applies to the questions displayed below.] Simon Company's year-end balance sheets follow. At December 31 Assets Cash Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets Liabilities and Equity Current Year 1 Year Ago 2 Years Ago $ 40,376 69,965 $ 34,880 96,186 127,106 10,905 304,893 $ 573,970 Accounts payable Long-term notes payable Common stock, $10 par value Retained earnings $ 142,919 106,827 162,500 161,724 $ 573,970 Total liabilities and equity 94,285 10, 391 279,785 $ 494,802 $ 83,622 113, 804 162,500 134, 876 $ 494,802 For both the current year and one year ago, compute the following ratios: $ 40,409 56,078 59,143 4,719 256,151 $ 416,500 $ 54,978 90,206 163,500 107,816 $ 416,500 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 tota assets favorable or unfavorable? SIMON COMPANY Common-Size Comparative Balance Sheets December 31 Current Year 1 Year Ago 2 Years Ago Assets Cash Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets Liabilities and Equity Accounts payable Long-term notes payable Common stock, $10 par Retained earnings Total liabilities and equity % 996 % 96 % 96 96 % % 996 % 96 96 % % %