PLEASE ANSWER EACH QUESTION CORRECTLY (GRADED), THANK YOU.

2. Simon Company's year-end balance sheets follow.

At December 31	Current Year	1 Year Ago	2 Years Ago
Assets
Cash	$ 28,457	$ 31,972	$ 32,967
Accounts receivable, net	78,473	57,081	44,854
Merchandise inventory	99,671	76,175	48,252
Prepaid expenses	9,075	8,647	3,813
Plant assets, net	252,595	229,807	209,914
Total assets	$ 468,271	$ 403,682	$ 339,800
Liabilities and Equity
Accounts payable	$ 113,101	$ 66,176	$ 43,957
Long-term notes payable	85,394	93,775	72,843
Common stock, $10 par value	163,500	163,500	163,500
Retained earnings	106,276	80,231	59,500
Total liabilities and equity	$ 468,271	$ 403,682	$ 339,800

For both the current year and one year ago, compute the following ratios:

(1-a) Compute the current ratio for each of the three years. (1-b) Did the current ratio improve or worsen over the three-year period? (2-a) Compute the acid-test ratio for each of the three years. (2-b) Did the acid-test ratio improve or worsen over the three-year period?

Compute the current ratio for each of the three years.

(1A)

Current Ratio
	Numerator:	/	Denominator:	=	Current Ratio
		/		=	Current ratio
Current Year:		/		=		to 1
1 Year Ago:		/		=		to 1
2 Years Ago:		/		=		to 1

(1B)

Did the current ratio improve or worsen over the three-year period?

Current ratio

(2A)

Compute the acid-test ratio for each of the three years.

Acid-test ratio
	Numerator:					/	Denominator:	=	Acid-Test Ratio
		+	Short-term investments	+		/		=	Acid-test ratio
Current Year:		+		+		/		=		to 1
1 Year Ago:		+		+		/		=		to 1
2 Years Ago:		+		+		/		=		to 1

(2B)

Did the acid-test ratio improve or worsen over the three-year period?

Acid-test ratio