Exercise 13-9 (Static) Analyzing and interpreting liquidity LO P3

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[The following information applies to the questions displayed below.] Simon Companys year-end balance sheets follow.

At December 31	Current Yr					1 Yr Ago			2 Yrs Ago
Assets
Cash		$	31,800			$	35,625		$	37,800
Accounts receivable, net			89,500				62,500			50,200
Merchandise inventory			112,500				82,500			54,000
Prepaid expenses			10,700				9,375			5,000
Plant assets, net			278,500				255,000			230,500
Total assets		$	523,000			$	445,000		$	377,500
Liabilities and Equity
Accounts payable		$	129,900			$	75,250		$	51,250
Long-term notes payable			98,500				101,500			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

The companys income statements for the current year and one year ago follow. Assume that all sales are on credit:

For Year Ended December 31	Current Yr						1 Yr Ago
Sales				$	673,500					$	532,000
Cost of goods sold	$	411,225					$	345,500
Other operating expenses		209,550						134,980
Interest expense		12,100						13,300
Income tax expense		9,525						8,845
Total costs and expenses					642,400						502,625
Net income				$	31,100					$	29,375
Earnings per share				$	1.90					$	1.80

Exercise 13-9 (Static) Part 1

(1-a) Compute days' sales uncollected.

Days' Sales Uncollected
	Choose Numerator:	/	Choose Denominator:	x	Days	=	Days' Sales Uncollected
		/		x		=	Days' sales uncollected
Current Yr:		/		x		=	0	days
1 Yr Ago:		/		x		=	0	days

(1-b) For each ratio, determine if it improved or worsened in the current year.

Days' sales uncollected

(2-a) Compute accounts receivable turnover.

Accounts Receivable Turnover
	Choose Numerator:	/	Choose Denominator:	=	Accounts Receivable Turnover
		/		=	Accounts receivable turnover
Current Yr:		/		=		times
1 Yr Ago:		/		=		times

(2-b) For each ratio, determine if it improved or worsened in the current year.

Accounts receivable turnover

(3-a) Compute inventory turnover.

Inventory Turnover
	Choose Numerator:	/	Choose Denominator:	=	Inventory Turnover
		/		=	Inventory turnover
Current Yr:		/		=		times
1 Yr Ago:		/		=		times

(3-b) For each ratio, determine if it improved or worsened in the current year.

Inventory turnover

(4-a) Compute days' sales in inventory.

Days Sales In Inventory
	Choose Numerator:	/	Choose Denominator:	x	Days	=	Days Sales In Inventory
		/		x		=	Days sales in inventory
Current Yr:		/		x		=		days
1 Yr Ago:		/		x		=		days

(4-b) For each ratio, determine if it improved or worsened in the current year.

Days sales in inventory