Relationships. Steinhour Company's 1998 condensed income statement and 1997 and 1998 partial balance sheets are as follows:

\section*{Required:}
1. Examine Steinhour's liquidity position for 1998. Assume that high-performing firms in this industry have a current ratio of \(2.5: 1\) and a quick ratio of \(1: 1\). Comment.
2. If the industry average for return on sales is 15 percent, for gross margin is 60 percent, and for times interest earned is 10 , comment on Steinhour's performance.

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Sales Expenses: Cost of goods sold Interest... Other operating expenses Net income.. Current assets: Cash.. Accounts receivable Inventory.... $98,000 $56,000 2,900 26,000 84,900 $ 13,100 12/31/1998 $ 1,200 15,000 23,500 12/31/1997 $ 800 13,000 18,000 Other current assets 1,400 Total current assets. $41,100 Current liabilities: Accounts payable. $ 8,000 Current portion of long-term debl 2,000 Total current liabilities. $ 10,000 1,600 $33,400 $ 7,500 2,100 $ 9,600