Compare the year-end short-term liquidity position of this

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Reference no: EM13480515

Mixon Company"s year-end balance sheets show the following:


2006

2005

2004

Cash

$30,800

$35,625

$36,800

Accounts receivable, net

$88,500

$62,500

$49,200

Merchandise inventory

111,500

82,500

53,000

Prepaid expenses

9,700

9,375

4,000

Plant assets, net

277,500

255,000

229,500

Total assets

518,000

$445,000

$372,500

Accounts payable

$128,900

$75,250

$49,250

Long-term notes payable secured by mortgages on plant assets

$97,500

$102,500

$82,500

Common stock, $10 par value

162,500

162,500

162,500

Retained earnings

129,100

104,750

78,250

Total liabilities and equity

518,000

445,000

372,500

Required:

Compare the year-end short-term liquidity position of this company at the end of 2006, 2005, and 2004 by computing the: (a) current ratio and (b) acid-test ratio. Comment on the ratio results.

Reference no: EM13480515

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