Question

Ch 13 Ex 13-7 Saved Help Save & Exit Submit Check my work Simon Company's year-end balance sheets follow. Current Yr 1 Yr Ago 2 Yrs Ago points $ 26,535 77,669 93,825 8,461 238,811 $ 445,301 At December 31 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 value Retained earnings Total liabilities and equity $ 31,018 $ 31,037 55,355 41,805 69,597 45,880 8,142 3,554 219, 768 197,624 $ 383,880 $ 319,900 eBook Hint Ask $ 108,662 $ 66,173 $ 41,805 Print 86,228 162,500 87,911 $ 445,301 89,175 162,500 66,032 $ 383,880 70,698 162,500 44,897 $ 319,900 References (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? Complete this question by entering your answers in the tabs below.

Answer 1

Current Ratio
	Choose Numerator:	/	Choose Denominator:	=	Current Ratio
	Current assets	/	Current liabilities	=	Current ratio
Current yr.	$206,490	/	$108,662	=	1.90	to 1
1 Yr. ago	$164,112	/	$66,173	=	2.48	to 1
2 Yrs. ago	$122,276	/	$41,805	=	2.92	to 1
1B
Current ratio worsen over three year period.
2A
Acid-Test Ratio
	Choose Numerator:					/	Choose Denominator:	=	Acid-Test Ratio
	Cash	+	Short-term investments	+	Current receivables	/	Current liabilities	=	Acid-test ratio
Current yr.	$26,535	+	0	+	$77,669	/	$108,662	=	0.96	to 1
1 Yr. ago	$31,018	+	0	+	$55,355	/	$66,173	=	1.31	to 1
2 Yrs. ago	$31,037	+	0	+	$41,805	/	$41,805	=	1.74	to 1
2B
Acid-test ratio worsen over three year period.
	Workings:
		Current yr.	1 Yr. ago	2 Yrs. ago
	Cash	26535	31018	31037
	Accounts Receivable	77669	55355	41805
	Merchandise Inventory	93825	69597	45880
	Prepaid expenses	8461	8142	3554
	Current assets	206490	164112	122276