Refer to Simon Companys balance sheets in Exercise 17-6. (1) Compute the current ratio for each of
Question:
Refer to Simon Company’s balance sheets in Exercise 17-6.
(1) Compute the current ratio for each of the three years. Did the current ratio improve or worsen over the three-year period?
(2) Compute the acid-test ratio for each of the three years. Did the acid-test ratio improve or worsen over the three-year period? Round ratios to two decimals.
Data from Exercise 17-6
2 Yrs Ago At December 31 Current Yr 1 Yr Ago Assets $ 31,800 $ 35,625 $ 37,800 Cash.... Accounts receivable, net 89,500 62,500 50,200 Merchandise inventory.. Prepaid expenses.. Plant assets, net. Total assets .. 82,500 112,500 54,000 10,700 9,375 5,000 278,500 230,500 255,000 $523,000 $445,000 $377,500 Llabilities and Equilty Accounts payable.. $ 75,250 $ 51,250 $129,900 Long-term notes payable secured by mortgages on plant assets 101,500 98,500 83,500 Common stock, $10 par value. 163,500 163,500 163,500 Retained earnings.... 131,100 104,750 79,250 Total liabilities and equity. $523,000 $445,000 $377,500
Step by Step Answer:
1 Current ratio Analysis Worsened Simons current ratio has wor...View the full answer
Related Video
The current ratio is a financial ratio that measures a company\'s ability to pay its short-term obligations with its short-term assets. It is calculated by dividing a company\'s current assets by its current liabilities. The formula for calculating the current ratio is: Current Ratio = Current Assets / Current Liabilities Current assets are assets that can be converted to cash within one year, while current liabilities are debts that are due within one year. A current ratio of 1:1 or greater is generally considered good, as it indicates that a company has enough current assets to cover its current liabilities. A current ratio of less than 1:1 may suggest that a company may have difficulty meeting its short-term obligations. It\'s important to note that the current ratio is just one of many financial ratios that can be used to assess a company\'s financial health. It should be used in conjunction with other financial ratios and qualitative factors to make informed decisions about investing or lending to a company.
Students also viewed these Business questions
-
Refer to Simon Company's balance sheets in Exercise 13-6. Analyze its year-end short-term liquidity position at the end of 2015, 2014, and 2013 by computing (1) The current ratio and (2) The...
-
Refer to Simon Company's balance sheets in Exercise 13-6. Simon Company's year-end balance sheets follow. Express the balance sheets in common-size percents. Round amounts to the nearest one-tenth of...
-
Refer to Simon Company's balance sheets in Exercise 17-6. Analyze its year-end short-term liquidity position at the end of 2017, 2016, and 2015 by computing (1) the current ratio and (2) the...
-
Prove Theorem 9.7.1. Theorem 9.7.1 Principal Axes Theorem for ft3 Let ax2 + by2 + cz2 + 2dxy + 2exz + 2fyz + gx + hy + iz + j = 0 be the equation of a quadric Q, and let xTAx = ax2 + by2 + cz2 + 2dxy...
-
Consider the merry-go-round of Practice Problem 8.1. The child is initially standing on the ground when the merry-go-round is rotating at 0.75 rev/s. The child then steps on the merry-go-round. How...
-
Refer to Figure 21. Find the angle between AB and AD.
-
Can employee recognition and pay-for-performance programs work too well? Discuss.
-
OMalley Services, Inc., began 2014 with total assets of $216 million and ended 2014 with assets of $358 million. During 2014, OMalley Services earned revenues of $398 million and had expenses of $167...
-
Acme Medical Center is implementing a new electronic health record (EHR), converting from a paper system. Dana is the nurse manager of the orthopedic department which clusters outpatient, inpatient,...
-
In a pretest, data on Nike were obtained from 45 respondents. These data are given in the following table, which gives the usage, sex, awareness, attitude, preference, intention, and loyalty toward...
-
Simon Companys year-end balance sheets follow. (1) Express the balance sheets in common-size percents. Round percents to one decimal. (2) Assuming annual sales have not changed in the last three...
-
Following is an incomplete current-year income statement. Determine amounts a, b, and c. Additional information follows: Return on total assets is 16% (average total assets is $68,750). Inventory...
-
Explain the need for a general journal.
-
An email marketing campaign on Marcy's - beautiful affordable clothing for families in Kitchener, Ontario including 1. What is the focus and purpose of this campaign? 2. Two researched facts/stats...
-
Groupon company following which CSR approach? Example of CSR activity related to the approach such as corporate philanthropy or community development? Groupon code of ethics related to human rights?
-
What three compositional factors does Cullen recommend considering when working on a design?
-
Select two media organizations Identify a challenge that both media organizations have faced. Compare and contrast how the two organizations have responded to the challenge. Which organization's...
-
Company : Groupon Research the company's mission, value statement, code of ethics, code of conduct. DO NOT REWRITE these in your paper. Use this information to identify the position they project to...
-
Refer to the accompanying figure showing surge protectors p and q used to protect an expensive television. If there is a surge in the voltage, the surge protector reduces it to a safe level. Assume...
-
Michelles trust is subject to 3.8% surtax on the lesser of the trusts net investment income or the excess of the trusts adjusted gross income over the $12,400 threshold (the highest trust tax rate)....
-
Refer to the information in QS 6-5 and assume the periodic inventory system is used. Determine the costs assigned to the December 31 ending inventory when costs are assigned based on FIFO. December 7...
-
Refer to the information in QS 6-5 and assume the periodic inventory system is used. Determine the costs assigned to ending inventory when costs are assigned based on LIFO. December 7 10 units @ $ 9...
-
Refer to the information in QS 6-5 and assume the periodic inventory system is used. Determine the costs assigned to ending inventory when costs are assigned based on weighted average. December 7 10...
-
Suppose that you invest in a 10-year, semi-annual coupon, $1,000 par value bond when it is first issued. The coupon rate and yield to maturity are equal both 8 percent. Immediately after purchase,...
-
1. A 1000 kg GPS satellite is placed in orbit circling the Earth. Find its period of orbit if it is placed at an altitude of 200 km above the surface. (4 marks) 2. A 5000 kg satellite has an...
-
(17%) Problem 6: In a study of the forces involved when motor proteins move subcellular structures in cells, Shtridleman et al.* studied the motion of objects in living cells. In this paper, they...
Study smarter with the SolutionInn App