Simon Company’s year-end balance sheets follow. At December 31 2015 2014 2013 As
ID: 2467963 • Letter: S
Question
Simon Company’s year-end balance sheets follow. At December 31 2015 2014 2013 Assets Cash $ 28,277 $ 32,412 $ 33,769 Accounts receivable, net 81,956 57,282 45,475 Merchandise inventory 100,043 75,694 48,921 Prepaid expenses 9,018 8,508 3,865 Plant assets, net 246,021 227,238 209,070 Total assets $ 465,315 $ 401,134 $ 341,100 Liabilities and Equity Accounts payable $ 114,705 $ 69,825 $ 45,926 Long-term notes payable secured by mortgages on plant assets 89,229 95,029 76,137 Common stock, $10 par value 162,500 162,500 162,500 Retained earnings 98,881 73,780 56,537 Total liabilities and equity $ 465,315 $ 401,134 $ 341,100 (1) Compute the current ratio for the year ended 2015, 2014, and 2013.
Compute the acid-test ratio for the year ended 2015, 2014, and 2013.
(2)Compute the acid-test ratio for the year ended 2015, 2014, and 2013.
Explanation / Answer
Answer 1. Current Ratio = Current Assets / Current Liabilities 2015 2014 2013 Current Assets Cash 28,277 32,412 33,769 Accounts Receivables 81,956 57,282 45,475 Merchandise Inventory 100,043 75,694 48,921 Prepaid Expenses 9,018 8,508 3,865 Total Curent Assets 219,294 173,896 132,030 Current Liabilities Accounts Payable 114,705 69,825 45,926 Total Curent Liabilities 114,705 69,825 45,926 Current Ratio 1.91 : 1 2.49 : 1 2.87 : 1 Answer 2. Quick Ratio = Quick Assets / Current Liabilities where, Quick Assets = Cash + Receivables + Marketable Securities 2015 2014 2013 Quick Assets Cash 28,277 32,412 33,769 Accounts Receivables 81,956 57,282 45,475 Total Quick Assets 110,233 89,694 79,244 Current Liabilities Accounts Payable 114,705 69,825 45,926 Total Curent Liabilities 114,705 69,825 45,926 Current Ratio 0.96 : 1 1.28 : 1 1.73 : 1
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