Question

Exercise 17-6 Common-size percents LO P2 Simon Company's year-end balance sheets follow.

At December 31 Current Yr 1 Yr Ago 2 Yrs Ago Assets Cash $ 35,402 $ 40,967 $ 41,017 Accounts receivable, net 102,605 73,866 55,794 Merchandise inventory 127,716 97,608 60,616 Prepaid expenses 11,287 11,080 4,511 Plant assets, net 323,019 293,745 256,562 Total assets $ 600,029 $ 517,266 $ 418,500 Liabilities and Equity Accounts payable $ 153,889 $ 89,166 $ 55,242 Long-term notes payable secured by mortgages on plant assets 109,421 117,781 93,413 Common stock, $10 par value 163,500 163,500 163,500 Retained earnings 173,219 146,819 106,345 Total liabilities and equity $ 600,029 $ 517,266 $ 418,500 1. Express the balance sheets in common-size percents. (Do not round intermediate calculations and round your final percentage answers to 1 decimal place.) 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?

Answer 1