Question

Simon Company's year-end balance sheets follow.

At December 31	Current Yr				1 Yr Ago			2 Yrs Ago
Assets
Cash		$	27,053		$	32,580		$	32,617
Accounts receivable, net			80,783			55,898			44,350
Merchandise inventory			102,565			74,603			46,320
Prepaid expenses			8,976			8,468			3,660
Plant assets, net			243,775			227,720			199,253
Total assets		$	463,152		$	399,269		$	326,200
Liabilities and Equity
Accounts payable		$	114,172		$	67,476		$	41,767
Long-term notes payable secured by mortgages on plant assets			86,202			89,995			72,090
Common stock, $10 par value			163,500			163,500			163,500
Retained earnings			99,278			78,298			48,843
Total liabilities and equity		$	463,152		$	399,269		$	326,200

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 % % %

Answer 1

SIMON COMPANY
Common-Size Comparative Balance Sheets
December 31
	Current Year		1 Year Ago		2 Years Ago
Assets
Cash	5.8	%	8.2	%	10	%
Accounts receivable, net	17.4		14		13.6
Merchandise inventory	22.1		18.7		14.2
Prepaid expenses	1.9		2.1		1.1
Plant assets, net	52.6		57		61.1
Total assets	100	%	100	%	100	%
Liabilities and Equity
Accounts payable	24.7	%	16.9	%	12.8	%
Long-term notes payable secured by mortgages on plant assets	18.6		22.5		22.1
Common stock, $10 par	35.3		40.9		50.1
Retained earnings	21.4		19.6		15
Total liabilities and equity	100	%	100	%	100	%

2) un favourable

3) Un favourable