SImon Company\'s year-end balance sheets follow. At December 31 Assets Cash Acco

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 2015 $ 23,445 $ 28,803 $ 30,027 67,256 47,95839,243 86,306 65,313 43,495 7,550 7,561 3,303 220,920 199,914 184,232 $405,477 $349,549 $300,300 $102,983 $ 58,483 $ 38,847 mortgages on plant assets Common stock, $10 par value Retained earnings Total liabilities and equity 75,467 80,396 65,703 162,500 162,500 162,500 64,527 48,170 33,250 $405,477 $349,549 $300,300 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

Acid-Test Ratio Choose Numerator: / Choose Denominator: = Acid-Test Ratio Cash + Short-term investments + Current receivables / Current liabilities = Acid-test ratio 2017 $23,445 + 0 + $67,256 / $102,983 = 0.88 to 1 2016 $28,803 + 0 + $47,958 / $58,483 = 1.31 to 1 2015 $30,027 + 0 + $39,243 / $38,847 = 1.78 to 1 Current Ratio Choose Numerator: / Choose Denominator: = Current Ratio Current assets / Current liabilities = Current ratio 2017 $184,557 / $102,983 = 1.79 to 1 2016 $149,635 / $58,483 = 2.56 to 1 2015 $116,068 / $38,847 = 2.99 to 1

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