Refer to Simon Company’s balance sheets in Exercise 13-6. (1) Compute the current ratio for each of the three years. Did the current ratio improve or worsen over the three-year period? (2) Compute the acid-test ratio for each of the three years. Did the acid-test ratio improve or worsen over the three-year period? Round ratios to two decimals.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
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Chapter1: Financial Statements And Business Decisions
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Refer to Simon Company’s balance sheets in Exercise 13-6. (1) Compute the current ratio for each of the three years. Did the current ratio improve or worsen over the three-year period? (2) Compute the acid-test ratio for each of the three years. Did the acid-test ratio improve or worsen over the three-year period? Round ratios to two decimals.

At December 31
Current Yr
1 Yr Ago
2 Yrs Ago
Assets
Cash. ....
$ 31,800
$ 35,625
$ 37,800
Accounts receivable, net .
89,500
62,500
50,200
Merchandise inventory. .
112,500
82,500
54,000
Prepaid expenses....
10,700
9,375
5,000
Plant assets, net.....
278,500
255,000
230,500
Total assets...
$523,000
$445,000
$377,500
Liabilities and Equity
Accounts payable . . .
$129,900
$ 75,250
$ 51,250
Long-term notes payable secured by
mortgages on plant assets
98,500
101,500
83,500
Common stock, $10 par value.
163,500
163,500
163,500
Retained earnings. . .
131,100
104,750
79,250
Total liabilities and equity. . .
$523,000
$445,000
$377,500
Transcribed Image Text:At December 31 Current Yr 1 Yr Ago 2 Yrs Ago Assets Cash. .... $ 31,800 $ 35,625 $ 37,800 Accounts receivable, net . 89,500 62,500 50,200 Merchandise inventory. . 112,500 82,500 54,000 Prepaid expenses.... 10,700 9,375 5,000 Plant assets, net..... 278,500 255,000 230,500 Total assets... $523,000 $445,000 $377,500 Liabilities and Equity Accounts payable . . . $129,900 $ 75,250 $ 51,250 Long-term notes payable secured by mortgages on plant assets 98,500 101,500 83,500 Common stock, $10 par value. 163,500 163,500 163,500 Retained earnings. . . 131,100 104,750 79,250 Total liabilities and equity. . . $523,000 $445,000 $377,500
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