Refer to Sanderson Companys balance sheets in Exercise 17-7. Analyze its year-end short-term liquidity position at the

Refer to Sanderson Company’s balance sheets in Exercise 17-7. Analyze its year-end short-term liquidity position at the end of 2012, 2011, and 2010 by computing

(1) The current ratio and

(2) The acid-test ratio. Comment on the ratio results.

Transcribed Image Text:

At December 31 2012 2011 2010 Cash... Accounts receivable, net Merchandise inventory 62,500 49,200 500 8,500 53,000 4,000 .*** 277500 255000 229500 ..$518,000 $445,000 $372.500 ....88,500 9.700 Prepaid expenses Plant assets,net... Total assets ^.... 9,375 Liabilities and Equity Accounts payable Long-term notes payable secured by mortgages on plant assets Common stock, $10 par value .. Retained earnings Total liabilities and equity... 7,500 102,500 82,500 62,500 62,500 162,500 129,100 104.750 78,250 ..$518,000 $445,000 $372.500