Question

Simon Company’s year-end balance sheets follow. At December 31 Current Yr 1 Yr Ago 2 Yrs...

Simon Company’s year-end balance sheets follow.

At December 31 Current Yr 1 Yr Ago 2 Yrs Ago
Assets
Cash $ 33,719 $ 40,608 $ 40,227
Accounts receivable, net 100,689 69,671 55,295
Merchandise inventory 125,356 90,224 58,294
Prepaid expenses 10,639 10,346 4,654
Plant assets, net 306,874 286,804 260,430
Total assets $ 577,277 $ 497,653 $ 418,900
Liabilities and Equity
Accounts payable $ 143,742 $ 84,103 $ 54,742
Long-term notes payable secured by
mortgages on plant assets
109,613 117,894 93,503
Common stock, $10 par value 162,500 162,500 162,500
Retained earnings 161,422 133,156 108,155
Total liabilities and equity $ 577,277 $ 497,653 $ 418,900


(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?

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