Simon Company's year-end balance sheets follow.

At December 31	Current Year	1 Year Ago	2 Years Ago
Assets
Cash	$ 34,258	$ 38,855	$ 39,283
Accounts receivable, net	95,358	70,771	52,912
Merchandise inventory	119,894	93,519	56,346
Prepaid expenses	10,705	10,720	4,543
Plant assets, net	314,679	281,733	251,816
Total assets	$ 574,894	$ 495,598	$ 404,900
Liabilities and Equity
Accounts payable	$ 146,012	$ 82,081	$ 53,447
Long-term notes payable	111,322	113,988	88,588
Common stock, $10 par value	162,500	162,500	162,500
Retained earnings	155,060	137,029	100,365
Total liabilities and equity	$ 574,894	$ 495,598	$ 404,900

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

Exercise 13-6 (Algo) Common-size percents LO P2

1. Express the balance sheets in common-size percents.
2. Assuming annual sales have not changed in the last three years, is the change in accounts receivable as a percentage of total assets favorable or unfavorable?
3. Assuming annual sales have not changed in the last three years, is the change in merchandise inventory as a percentage of total assets favorable or unfavorable?

Complete this question by entering your answers in the tabs below.

Express the balance sheets in common-size percents. (Do not round intermediate calculations and round your final percentage answers to 1 decimal place.)

SIMON COMPANY
Common-Size Comparative Balance Sheets
December 31
	Current Year		1 Year Ago		2 Years Ago
Assets
Cash		%		%		%
Accounts receivable, net
Merchandise inventory
Prepaid expenses
Plant assets, net
Total assets		%		%		%
Liabilities and Equity
Accounts payable		%		%		%
Long-term notes payable
Common stock, $10 par
Retained earnings
Total liabilities and equity		%		%

Answer rating: 100% (QA)

To calculate the commonsize percents for the balance sheets we need to express each asset liability and equity item as a percentage of the total assets or total liabilities and equity respectively Com... View the full answer