Simon Company\'s year-end balance sheets follow 2017 At December 31 Assets Cash

Question

Simon Company's year-end balance sheets follow 2017 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 $ 32,749 37,902 39,086 53,694 56,063 4,431 296,509274,03545,526 549,578 473,774 398,800 93,978 115,796 10,546 64,339 87,648 9,850 135,476 79,267 $ 53,168 mortgages on plant assets Common stock, $10 par valu Retained earnings Total liabilities and equity 106,420 105,699 87,253 162, 500 162,500 162,500 95,879 549,578 473,774 398,800 145, 182126,308 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

Current Ratio Current Ratio =Current Assets/Current Liabilities Choose Numerator / Choose Denominator = Current Ratio 2017 253069 / 135476 = 1.87 to 1 2016 199739 / 79267 = 2.52 to 1 2015 153274 / 53168 = 2.88 to 1 Acid-test Ratio Acid Test Ratio= Choose Numerator / Choose Denominator = Acid Test Ratio Cash + Marketable or Short term Investments + 2017 126727 / 135476 = 0.935 to 1 Accounts Receivables / 2016 102241 / 79267 = 1.289 to 1 Current Liabilities 2015 92780 / 53168 = 1.745 to 1

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