Question

# Simon Company’s year-end balance sheets follow. At December 31 2017 2016 2015 Assets Cash \$ 31,508...

Simon Company’s year-end balance sheets follow.

 At December 31 2017 2016 2015 Assets Cash \$ 31,508 \$ 36,830 \$ 39,140 Accounts receivable, net 95,979 65,768 50,140 Merchandise inventory 115,989 87,777 54,489 Prepaid expenses 10,147 9,865 4,221 Plant assets, net 291,311 269,531 239,610 Total assets \$ 544,934 \$ 469,771 \$ 387,600 Liabilities and Equity Accounts payable \$ 134,332 \$ 80,979 \$ 52,186 Long-term notes payable secured by mortgages on plant assets 100,399 108,047 85,660 Common stock, \$10 par value 162,500 162,500 162,500 Retained earnings 147,703 118,245 87,254 Total liabilities and equity \$ 544,934 \$ 469,771 \$ 387,600

1. Compute the current ratio for the year ended 2017, 2016, and 2015.
2. Compute the acid-test ratio for the year ended 2017, 2016, and 2015.

 1 Current Ratio Choose Numerator: / Choose Denominator: = Current Ratio Current assets / Current liabilities = Current ratio 2017 \$253,623 / \$134,332 = 1.89 to 1 2016 \$200,240 / \$80,979 = 2.47 to 1 2015 \$147,990 / \$52,186 = 2.84 to 1 2 Acid-Test Ratio Choose Numerator: / Choose Denominator: = Acid-Test Ratio Cash + Short-term investments + Current receivables / Current liabilities = Acid-test ratio 2017 \$31,508 + 0 + \$95,979 / \$134,332 = 0.95 to 1 2016 \$36,830 + 0 + \$65,768 / \$80,979 = 1.27 to 1 2015 \$39,140 + 0 + \$50,140 / \$52,186 = 1.71 to 1

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