Simon Company\'s year-end balance sheets follow At December 31 Assets Cash Accou

Question

Simon Company's year-end balance sheets follow 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 2017 2016 $ 27,867 $ 33,903 33,927 45,237 51,172 3,770 219,194 $ 481,958 $ 415,481 353,300 84,063 102,585 9,066 258,377 58,749 74,558 8,900 239,371 $ 116,407$ 69,514 $ 47,102 mortgages on plant assets Common stock, $.10 par value Retained earnings Total liabilities and equity 98,427 162,500 85,040 $ 481,958 415,481 92,420 162, 500 110,631 78,860 162,500 64,838 353,300 1. Compute the current ratio for the year ended 2017, 2016, and 2015 2. Compute the acid-test ratio for the year ended 2017, 2016, and 2015

Explanation / Answer

1 Current Ratio Choose Numerator: / Choose Denominator: = Current Ratio Current assets / Current liabilities = Current ratio 2017 223581 / 116407 = 1.92 to 1 2016 176110 / 69514 = 2.53 to 1 2015 134106 / 47102 = 2.85 to 1 2 Acid-Test Ratio Choose Numerator: / Choose Denominator: = Acid-Test Ratio Cash + Short-term investments + Current receivables / Current liabilities = Acid-test ratio 2017 27867 + 0 + 84063 / 116407 = 0.96 to 1 2016 33903 + 0 + 58749 / 69514 = 1.33 to 1 2015 33927 + 0 + 45237 / 47102 = 1.68 to 1

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