Question

Simon Company's year-end balance sheets follow. 1 Yr Ago At December 31 2 Yrs Ago Current Yr Assets Cash 33,620 99,370 120,087 10,398 300,711 40,077 $ 70,134 40,936 54,581 58,135 4,548 251,200 Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net 89,078 10,214 276,864 486,367 § 409,400 564,186 Total assets Liabilities and Equity Accounts payable 137,673 82,196 $ 55,122 Long-term notes payable secured by mortgages on plant assets Common stock, $10 par value Retained earnings 89,573 163,500 101,205 105,006 163,500 158,007 110,746 163,500 129,925 Total liabilities and equity 486,367 $ 409,400 564,186 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?

Answer 1

rate positively .. let me know if you need any clarification..

	At December 31	Current year	1 yr ago	2 yr ago
	Asset
	Cash	33,620	40,077	40936
	Account receivable, net	99,370	70,134	54581
	Merchandise inventory	120,087	89,078	58135
	Prepaid expenses	10,398	10,214	4548
	Plant asset, net	300,711	276,864	251200
	total asset	564,186	486,367	409,400
	Liabilities and equity
	Account payable	137,673	82,196	55122
	Long-term notes payable secured by mort on plant	105,006	110,746	89573
	Common stock $10 par value	163,500	163,500	163500
	Retained earning	158,007	129,925	101205
	Total liabilities and equity	564,186	486,367	409,400
	Common size statement is based on % in which division will be done by total asset.
	Common size Balance sheet
	Asset	Current year	1 yr ago	2 yr ago
	Cash	6.0%	8.2%	10.0%
	Account receivable, net	17.6%	14.4%	13.3%
	Merchandise inventory	21.3%	18.3%	14.2%
	Prepaid expenses	1.8%	2.1%	1.1%
	Plant asset, net	53.3%	56.9%	61.4%
	total asset	100.0%	100.0%	100.0%
	Liabilities and equity
	Account payable	24.4%	16.9%	13.5%
	Long-term notes payable secured by mort on plant	18.6%	22.8%	21.9%
	Common stock $10 par value	29.0%	33.6%	39.9%
	Retained earning	28.0%	26.7%	24.7%
	Total liabilities and equity	100.0%	100.0%	100.0%
	Ans 2	Change in account receivable % is not favorable as the same is increasing YOY.
	Ans 3	Change in inventory % is not favorable as the same is increasing YOY.