Simon Company's year-end balance sheets follow. At December 31 Current Year 1 Year Ago 2 Years Ago Assets Cash $ 26,016 $ 30, 721 $ 31,373 Accounts receivable, net 75,402 54,304 42,249 Merchandise inventory 93,837 70, 324 45,000 Prepaid expenses 8, 635 8, 309 3.556 Plant assets, net 246, 058 224, 228 194,722 Total assets $ 449,948 $387,886 $ 316,900 Liabilities and Equity Accounts payable $ 113, 157 $ 65,553 $ 40,994 Long-term notes payable 82, 053 90, 106 68,634 Common stock, $10 par value 162, 500 162,500 162,500 Retained earnings 92,238 69,727 44,772 Total liabilities and equity $ 449,948 $ 387,886 $ 316,900 For both the current year and one year ago, compute the following ratios: (1 - a) Compute the current ratio for each of the three years. (1 - b) Did the current ratio improve or worsen over the three-year period? (2 - a) Compute the acid - test ratio for each of the three years. (2-b) Did the acid - test ratio improve or worsen over the three-year period?

Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter15: Financial Statement Analysis
Section: Chapter Questions
Problem 50E: Juroe Company provided the following income statement for last year: Juroes balance sheet as of...
icon
Related questions
Question
Simon Company's year-end balance sheets follow.
At December 31 Current Year 1 Year Ago 2 Years Ago
Assets
Cash $ 26,016 $ 30, 721 $ 31,373
Accounts receivable, net 75,402 54,304 42,249
Merchandise inventory 93,837 70, 324 45,000
Prepaid expenses 8, 635 8, 309 3.556
Plant assets, net 246, 058 224, 228 194,722
Total assets $ 449,948 $387,886 $ 316,900
Liabilities and Equity
Accounts payable $ 113, 157 $ 65,553 $ 40,994
Long-term notes payable 82, 053 90, 106 68,634
Common stock, $10 par value 162, 500 162,500 162,500
Retained earnings 92,238 69,727 44,772
Total liabilities and equity $ 449,948 $ 387,886 $ 316,900
For both the current year and one year ago, compute the following ratios:
(1 - a) Compute the current ratio for each of the three years.
(1 - b) Did the current ratio improve or worsen over the three-year period?
(2 - a) Compute the acid - test ratio for each of the three years.
(2-b) Did the acid - test ratio improve or worsen over the three-year period?
Transcribed Image Text:Simon Company's year-end balance sheets follow. At December 31 Current Year 1 Year Ago 2 Years Ago Assets Cash $ 26,016 $ 30, 721 $ 31,373 Accounts receivable, net 75,402 54,304 42,249 Merchandise inventory 93,837 70, 324 45,000 Prepaid expenses 8, 635 8, 309 3.556 Plant assets, net 246, 058 224, 228 194,722 Total assets $ 449,948 $387,886 $ 316,900 Liabilities and Equity Accounts payable $ 113, 157 $ 65,553 $ 40,994 Long-term notes payable 82, 053 90, 106 68,634 Common stock, $10 par value 162, 500 162,500 162,500 Retained earnings 92,238 69,727 44,772 Total liabilities and equity $ 449,948 $ 387,886 $ 316,900 For both the current year and one year ago, compute the following ratios: (1 - a) Compute the current ratio for each of the three years. (1 - b) Did the current ratio improve or worsen over the three-year period? (2 - a) Compute the acid - test ratio for each of the three years. (2-b) Did the acid - test ratio improve or worsen over the three-year period?
Expert Solution
steps

Step by step

Solved in 2 steps

Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Managerial Accounting: The Cornerstone of Busines…
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning