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 Current Year 1 Year Ago $ 35,180 99,964 128, 199 11,440 309,799 $ 584,582 $ 40,719 69,142 92,298 10,477 291,314 $ 503,950 $ 148,472 111,000 163,500 161,610 $ 584,582 Liabilities and Equity Accounts payable Long-term notes payable. Common stock, $10 par value Retained earnings Total liabilities and equity For both the current year and one year ago, compute the following ratios: 2 Years Ago $ 41,576 55,434 61,441 4,806 260,943 $ 424,200 $ 85,168 115,909 163,500 139,373 $ 503,950 $ 54,875 95,623 163,500 110,202 $ 424,200 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?
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 Current Year 1 Year Ago $ 35,180 99,964 128, 199 11,440 309,799 $ 584,582 $ 40,719 69,142 92,298 10,477 291,314 $ 503,950 $ 148,472 111,000 163,500 161,610 $ 584,582 Liabilities and Equity Accounts payable Long-term notes payable. Common stock, $10 par value Retained earnings Total liabilities and equity For both the current year and one year ago, compute the following ratios: 2 Years Ago $ 41,576 55,434 61,441 4,806 260,943 $ 424,200 $ 85,168 115,909 163,500 139,373 $ 503,950 $ 54,875 95,623 163,500 110,202 $ 424,200 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?
Managerial Accounting: The Cornerstone of Business Decision-Making
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Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
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Chapter15: Financial Statement Analysis
Section: Chapter Questions
Problem 56P: The following selected information is taken from the financial statements of Arnn Company for its...
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![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
Current Year 1 Year Ago
$ 40,719
$ 35,180
99,964
128, 199
11,440
309,799
69,142
92,298
10,477
291,314
$ 584,582
$ 503,950
2 Years Ago
$ 41,576
55,434
61,441
4,806
260,943
$ 424,200
Liabilities and Equity
Accounts payable
Long-term notes payable
Common stock, $10 par value
Retained earnings
Total liabilities and equity
For both the current year and one year ago, compute the following ratios:
$ 85,168
115,909
$ 148,472
111,000
163,500
161,610
163,500
139,373
$ 584,582 $ 503,950
$ 54,875
95,623
163,500
110,202
$ 424,200
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?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F86c14074-7be8-458f-afa9-42fb8622c8e5%2F8e1f163b-43ad-4c86-a9b8-0dded8afcc18%2F5roy1pn_processed.jpeg&w=3840&q=75)
Transcribed Image Text: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
Current Year 1 Year Ago
$ 40,719
$ 35,180
99,964
128, 199
11,440
309,799
69,142
92,298
10,477
291,314
$ 584,582
$ 503,950
2 Years Ago
$ 41,576
55,434
61,441
4,806
260,943
$ 424,200
Liabilities and Equity
Accounts payable
Long-term notes payable
Common stock, $10 par value
Retained earnings
Total liabilities and equity
For both the current year and one year ago, compute the following ratios:
$ 85,168
115,909
$ 148,472
111,000
163,500
161,610
163,500
139,373
$ 584,582 $ 503,950
$ 54,875
95,623
163,500
110,202
$ 424,200
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?
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