Question

Simon Company's year-end balance sheets follow.

At December 31	Current Yr				1 Yr Ago			2 Yrs Ago
Assets
Cash		$	29,331		$	34,285		$	33,956
Accounts receivable, net			83,326			58,217			48,075
Merchandise inventory			105,825			76,144			49,207
Prepaid expenses			9,071			9,089			3,890
Plant assets, net			264,658			246,585			218,472
Total assets		$	492,211		$	424,320		$	353,600
Liabilities and Equity
Accounts payable		$	120,109		$	69,559		$	47,142
Long-term notes payable secured by mortgages on plant assets			90,685			98,570			78,927
Common stock, $10 par value			163,500			163,500			163,500
Retained earnings			117,917			92,691			64,031
Total liabilities and equity		$	492,211		$	424,320		$	353,600

1. Express the balance sheets in common-size percents. (Do not round intermediate calculations and round your final percentage answers to 1 decimal place.)
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?

Express the balance sheets in common-size percents. (Do not round intermediate calculations and round your final percentage answers to 1 decimal place.)

SIMON COMPANY
Common-Size Comparative Balance Sheets
December 31
	Current Year		1 Year Ago		2 Years Ago
Assets
Cash		%		%		%
Accounts receivable, net
Merchandise inventory
Prepaid expenses
Plant assets, net
Total assets		%		%		%
Liabilities and Equity
Accounts payable		%		%		%
Long-term notes payable secured by mortgages on plant assets
Common stock, $10 par
Retained earnings
Total liabilities and equity		%		%		%

• 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?
  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?

  Show less

  2.	Change in accounts receivable	unfavorable development.
  3.	Change in merchandise inventory	unfavorable development.

Answer 1

1.

At December 31	Current Yr	1 Yr Ago	2 Yrs Ago
Assets
Cash	6.0%	8.1%	9.6%
Accounts receivable, net	16.9%	13.7%	13.6%
Merchandise inventory	21.5%	17.9%	13.9%
Prepaid expenses	1.8%	2.1%	1.1%
Plant assets, net	53.8%	58.1%	61.8%
Total assets	100.0%	100.0%	100.0%
Liabilities and Equity
Accounts payable	24.4%	16.4%	13.3%
Long-term notes payable secured by	18.4%	23.2%	22.3%
mortgages on plant assets
Common stock, $10 par value	33.2%	38.5%	46.2%
Retained earnings	24.0%	21.8%	18.1%
Total liabilities and equity	100.0%	100.0%	100.0%

2. Unfavorable

3. Unfavorable