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 Current Year 1 Year Ago $ 35,180 99,964 128, 199 11,440 309,799 $ 584,582 $ 40,719 69,142 92,298 10,477 291,314 $ 503,950 $ 148,472 111,000 163,500 161,610 $ 584,582 Liabilities and Equity Accounts payable Long-term notes payable. Common stock, $10 par value Retained earnings Total liabilities and equity For both the current year and one year ago, compute the following ratios: 2 Years Ago $ 41,576 55,434 61,441 4,806 260,943 $ 424,200 $ 85,168 115,909 163,500 139,373 $ 503,950 $ 54,875 95,623 163,500 110,202 $ 424,200 1. Express the balance sheets in common-size percents. 2. Assuming annual sales have not changed in the last three years, is the change in accounts receivable as a percentage of total assets favorable or unfavorable? 3. Assuming annual sales have not changed in the last three years, is the change in merchandise inventory as a percentage of total assets favorable or unfavorable?
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 Current Year 1 Year Ago $ 35,180 99,964 128, 199 11,440 309,799 $ 584,582 $ 40,719 69,142 92,298 10,477 291,314 $ 503,950 $ 148,472 111,000 163,500 161,610 $ 584,582 Liabilities and Equity Accounts payable Long-term notes payable. Common stock, $10 par value Retained earnings Total liabilities and equity For both the current year and one year ago, compute the following ratios: 2 Years Ago $ 41,576 55,434 61,441 4,806 260,943 $ 424,200 $ 85,168 115,909 163,500 139,373 $ 503,950 $ 54,875 95,623 163,500 110,202 $ 424,200 1. Express the balance sheets in common-size percents. 2. Assuming annual sales have not changed in the last three years, is the change in accounts receivable as a percentage of total assets favorable or unfavorable? 3. Assuming annual sales have not changed in the last three years, is the change in merchandise inventory as a percentage of total assets favorable or unfavorable?
Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter6: Receivables And Inventories
Section: Chapter Questions
Problem 6.7.1MBA
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