90.2K

Verified Solution

Link Copied!

Use the following information for the Exercises below. $($Algo$)$

$[$The following information applies to the questions displayed below.$]$

Simon Company's year$-$end balance sheets follow.

$\backslash$table$[[$At December $31,$Current Year,$1$ Year Ago,$2,$Years Ago$],[$Assets$,,,,],[$Cash$,$$$31,163,$$$36,426,$$$37,196,],[$Accounts receivable, net,$86,777,64,371,48,613,],[$Merchandise inventory,$109,106,81,758,54,409,],[$Prepaid expenses,$9,740,9,468,4,174,],[$Plant assets, net,$281,038,254,377,227,608,],[$Total assets,$$517,824,$$$446,400,$$$372,000,],[$Liabilities and Equity,,,,$],[$Accounts payable,$$131,517,$$$73,933,$$$47,631,],[$Long$-$term notes payable,$95,404,99,592,81,390,],[$Common stock, $$10$ par value,$162,500,162,500,162,500,],[$Retained earnings,$128,403,110,375,80,479,],[$Total liabilities and equity,$$517,824,$$$446,400,$$$372,000,]]$

For both the current year and one year ago, compute the following ratios:

Exercise $13-7($Algo$)$ Analyzing liquidity LO P$3$

$(1-$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.

Required $1$ A

Required $1B$

Required $2$ A

Required $2$B

Compute the current ratio for each of the three years.

$\backslash$table$[[$Current Ratio$],[,$Numerator:,$1,$Denominator:,$=,$Current Ratio$],[,,1,,=,$Current ratio$],[$Current Year:,,$1,,=,$to $1],[1$ Year Ago:,,$1,,=,$to $1],[2$ Years Ago:,,$1,,=,$to $1]]$

Required $1$ A

Required $1$ B

Required $2$ A

Required $2$B

Compute the acid$-$test ratio for each of the three years.

Answer & Explanation Solved by verified expert

See Answer