Question

Required information Part 2 of 4 Exercise 13-8 Liquidity analysis and interpretation LO P3 [The following information applies to the questions displayed below.] Simon Company's year-end balance sheets follow. points At December 31 Assets 2017 2015 2016 $ 33,579 $ 39,250 $ 40,076 57,400 58,000 4,453 240,871 Cash 89,000 112,000 10,813 Accounts receivable, net Merchandise inventory Prepaid expenses 63,000 83,500 10,303 eBook 318,101 289,717 Plant assets, net $ 563,493 $ 485,770 $ 400,800 Total assets Hint Liabilities and Equity $ 141,713 $ 82,916 $ 53,435 Accounts payable Long-term notes payable secured by mortgages on plant assets Common stock, $10 par value Retained earnings 106,996 89,463 112,844 162,500 Print 162,500 162,500 152,284 127,510 95,402 $ 563,493 $ 485,770 $ 400,800 Total liabilities and equity References The company's income statements for the years ended December 31, 2017 and 2016, follow. Assume that all sales are on credit: For Year Ended December 31 2017 2016 $ 732,541 $ 578,066 Sales $ 446,850 227,088 12,453 $ 375,743 146,251 Cost of goods sold Other operating expenses Interest expense 13,296 8,671 9,523 Income taxes Total costs and expenses 695,914 543,961 $ 36,627 34,105 Net income 2.25 2.10 Earnings per share of

Answer 1

2
Accounts Receivable Turnover
	Choose Numerator:	/	Choose Denominator:	=	Accounts Receivable Turnover
	Net sales	/	Average accounts receivable, net	=	Accounts receivable turnover
2017	732,541	/	76,000	=	9.6	times
2016	578,066	/	60,200	=	9.6	times
3
Inventory Turnover
	Choose Numerator:	/	Choose Denominator:	=	Inventory Turnover
	Cost of goods sold	/	Average inventory	=	Inventory turnover
2017	446,850	/	97,750	=	4.6	times
2016	375,743	/	70,750	=	5.3	times
4
Days’ Sales In Inventory
	Choose Numerator:	/	Choose Denominator:	x	Days	=	Days’ Sales In Inventory
	Ending inventory	/	Cost of goods sold	x	365	=	Days’ sales in inventory
2017	112,000	/	446,850	x	365	=	91.5	days
2016	83,500	/	375,743	x	365	=	81.1	days
	Workings:
	Average Accounts Receivable:
	2017	76,000	=(89000+63000)/2
	2016	60,200	=(63000+57400)/2
	Average Inventory:
	2017	97,750	=(112000+83500)/2
	2016	70,750	=(58000+83500)/2