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[The following information applies to the questions displayed below.] Simon Company's year-end balance sheets follow.
At December 31Current Year1 Year Ago2 Years AgoAssetsCash$ 26,801$ 30,087$ 32,947Accounts receivable, net79,21555,90943,502Merchandise inventory95,73071,72846,339Prepaid expenses8,4607,9793,625Plant assets, net239,549222,017196,687Total assets$ 449,755$ 387,720$ 323,100Liabilities and EquityAccounts payable$ 111,989$ 64,869$ 41,796Long-term notes payable84,55488,28469,977Common stock, $10 par value162,500162,500162,500Retained earnings90,71272,06748,827Total liabilities and equity$ 449,755$ 387,720$ 323,100
For both the current year and one year ago, compute the following ratios:
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 favourable or unfavourable? 3. Assuming annual sales have not changed in the last three years, is the change in merchandise inventory as a percentage of total assets favourable or unfavourable?
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