Mixon Company's year-end balance sheets show the following: Cash Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets Accounts payable Long-term notes payable secured. by mortgages on plant assets Common stock, $10 par value Retained earnings Total liabilities and equity 2006 $ 30,800 88,500 111,500 9,700 277,500 $518,000 $128,900 97,500 162,500 129,100 $518,000 2005 $ 35,625 62,500 82,500 9,375 255,000 $445,000 $ 75,250 2004 $36,800 49,200 53,000 4,000 229,500 $372,500 $ 49,250 102,500 82,500 162,500 162,500 104,750 78,250 $445,000 $372,500 Required: Compare the year-end short-term liquidity position of this company at the end of 2006, 2005, and 2004 by computing the: (a) current ratio and (b) acid-test ratio. Comment on the ratio results. EXERCISE 1-3 Evaluating Short-Term Liquidity

Mixon Company's year-end balance sheets show the following: Cash Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets Accounts payable Long-term notes payable secured. by mortgages on plant assets Common stock, $10 par value Retained earnings Total liabilities and equity 2006 $ 30,800 88,500 111,500 9,700 277,500 $518,000 $128,900 97,500 162,500 129,100 $518,000 2005 $ 35,625 62,500 82,500 9,375 255,000 $445,000 $ 75,250 2004 $36,800 49,200 53,000 4,000 229,500 $372,500 $ 49,250 102,500 82,500 162,500 162,500 104,750 78,250 $445,000 $372,500 Required: Compare the year-end short-term liquidity position of this company at the end of 2006, 2005, and 2004 by computing the: (a) current ratio and (b) acid-test ratio. Comment on the ratio results. EXERCISE 1-3 Evaluating Short-Term Liquidity

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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