# Analyzing and Interpreting Liquidity Using Financial Statements## OverviewThis educational resource focuses on analyzing liquidity through financial statements. The data provided pertains to Simon Company's financial health over several years. The exercise involves calculating accounts receivable turnover and determining trends in financial performance.## Financial Data### Balance Sheets (at December 31)#### Assets- **Cash**: - Current Year: $26,794 - 1 Year Ago: $31,320 - 2 Years Ago: $32,958- **Accounts Receivable, Net**: - Current Year: $89,900 - 1 Year Ago: $62,100 - 2 Years Ago: $50,500- **Merchandise Inventory**: - Current Year: $111,000 - 1 Year Ago: $84,000 - 2 Years Ago: $53,000- **Prepaid Expenses**: - Current Year: $8,629 - 1 Year Ago: $8,221 - 2 Years Ago: $3,662- **Plant Assets, Net**: - Current Year: $227,082 - 1 Year Ago: $213,846 - 2 Years Ago: $199,580- **Total Assets**: - Current Year: $463,405 - 1 Year Ago: $399,487 - 2 Years Ago: $339,700#### Liabilities and Equity- **Accounts Payable**: - Current Year: $113,080 - 1 Year Ago: $66,163 - 2 Years Ago: $43,944- **Long-term Notes Payable (secured by mortgages on plant assets)**: - Current Year: $85,378 - 1 Year Ago: $90,044 - 2 Years Ago: $73,572- **Common Stock, $10 par value**: $162,500 (constant over years)- **Retained Earnings**: - Current Year: $102,447 - 1 Year Ago: $80,780 - 2 Years Ago: $59,684- **Total Liabilities and Equity**: - Current Year

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Description: # Analyzing and Interpreting Liquidity Using Financial Statements## OverviewThis educational resource focuses on analyzing liquidity through financial statements. The data provided pertains to Simon Company's financial health over several years. The

Account Receivable Turnover = Net Credit Sales/ Average Accounts Receivable

Answered: -a) Compute accounts receivable…

Business

Accounting

-a) Compute accounts receivable tunover. -b) For each ratio, determine if it improved or worsened in the current year. Complete

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter6: Cash And Internal Control

Section: Chapter Questions

Problem 6.4MCP

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Concept explainers

Financial Transaction Analysis

The transaction analysis is done with the help of the accounting equation. The basic accounting equation is alternatively known as the balance sheet equation is based on the double-entry system which says that for each transaction happening in a business, at least two accounts should be affected I.e. both the debit side and the credit side should be equal. The Accounting Equation is

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# Analyzing and Interpreting Liquidity Using Financial Statements

## Overview

This educational resource focuses on analyzing liquidity through financial statements. The data provided pertains to Simon Company's financial health over several years. The exercise involves calculating accounts receivable turnover and determining trends in financial performance.

## Financial Data

### Balance Sheets (at December 31)

#### Assets
- **Cash**:
- Current Year: $26,794
- 1 Year Ago: $31,320
- 2 Years Ago: $32,958
- **Accounts Receivable, Net**:
- Current Year: $89,900
- 1 Year Ago: $62,100
- 2 Years Ago: $50,500
- **Merchandise Inventory**:
- Current Year: $111,000
- 1 Year Ago: $84,000
- 2 Years Ago: $53,000
- **Prepaid Expenses**:
- Current Year: $8,629
- 1 Year Ago: $8,221
- 2 Years Ago: $3,662
- **Plant Assets, Net**:
- Current Year: $227,082
- 1 Year Ago: $213,846
- 2 Years Ago: $199,580

- **Total Assets**:
- Current Year: $463,405
- 1 Year Ago: $399,487
- 2 Years Ago: $339,700

#### Liabilities and Equity
- **Accounts Payable**:
- Current Year: $113,080
- 1 Year Ago: $66,163
- 2 Years Ago: $43,944
- **Long-term Notes Payable (secured by mortgages on plant assets)**:
- Current Year: $85,378
- 1 Year Ago: $90,044
- 2 Years Ago: $73,572
- **Common Stock, $10 par value**: $162,500 (constant over years)
- **Retained Earnings**:
- Current Year: $102,447
- 1 Year Ago: $80,780
- 2 Years Ago: $59,684

- **Total Liabilities and Equity**:
- Current Year

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