Refer to Mixon Company’s balance sheets in Exercise 1–3. Express the balance sheets in common-size percents. Round to the nearest one-tenth of a percent. Mixon Company's year-end balance sheets show the following:CashAccounts receivable, netMerchandise inventoryPrepaid expensesPlant assets, netTotal assetsAccounts payable ..Long-term notes payable securedby mortgages on plant assetsCommon stock, $10 par valueRetained earningsTotal liabilities and equity2006$ 30,80088,500111,5009,700277,500$518,000$128,90097,500162,500129,100$518,00020052004$ 35,625$36,80062,50049,20082,50053,0009,3754,000255,000229,500$445,000$372,500$ 75,250 $ 49,250102,50082,500162,500162,500104,75078,250$445,000 $372,500Required: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 ratioresults.EXERCISE 1-3Evaluating Short-TermLiquidity

Introduction:- Ratio analysis used identify the business performance of the company. It is used to…

Answered: Required: Compare the year-end…

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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Refer to Mixon Company’s balance sheets in Exercise 1–3. Express the balance sheets in common-size percents. Round to the nearest one-tenth of a percent.

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
2004
$ 35,625
$36,800
62,500
49,200
82,500
53,000
9,375
4,000
255,000
229,500
$445,000
$372,500
$ 75,250 $ 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

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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