Mixon Companys year-end balance sheets show the following: Required: Compare the year-end short-term liquidity position of this

Mixon Company’s year-end balance sheets show the following:

Required:
Compare the year-end short-term liquidity position of this company at the end of 2006, 2005, and 2004 by computing the:
(a) Current ratio and
(b) acid-Test ratio. Comment on the ratioresults.

Transcribed Image Text:

2006 2005 2004 Cash Accounts receivable, net Merchandise inventory 88,500 111,500 9,700 00 30,800 35,625 36,800 62,500 82,500 49,200 53,000 4,000 229,500 Plant assets, net Total assets 277.5 255,000 Accounts payable.. Long-term notes payable secured $128,90075,250 49,250 Common stock, $10 par value Retained earnings Total liabilities and equity 82,500 162,500 162,500 162,500 78,250 $518,000 $445,000 $372,500 129,100 104,750