[The following information applies to the questions displayed below.] Simon Company's year-end balance sheets follow.

At December 31	Current Year	1 Year Ago	2 Years Ago
Assets
Cash	$ 35,313	$ 40,468	$ 41,733
Accounts receivable, net	103,351	71,527	54,519
Merchandise inventory	129,944	95,454	59,254
Prepaid expenses	10,814	10,729	4,684
Plant assets, net	307,364	287,672	265,610
Total assets	$ 586,786	$ 505,850	$ 425,800
Liabilities and Equity
Accounts payable	$ 147,571	$ 83,779	$ 57,892
Long-term notes payable	109,213	114,019	95,984
Common stock, $10 par value	163,500	162,500	163,500
Retained earnings	166,502	145,552	108,424
Total liabilities and equity	$ 586,786	$ 505,850	$ 425,800

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?

Question 1:

Express the balance sheets in common-size percents. (Do not round intermediate calculations and round your final percentage answers to 1 decimal place.)

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		%		%		%

Question 2 and 3:

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?

2. Change in accounts receivable : Favorable or unfavorable?

3. Change in merchandise inventory: Favorable or unfavorable?