Current Ratio

Calculate the current ratio for Los Altos, Inc., for both years, using the financial statements displayed below. Round to nearest hundredth.

	2020	2019
Current ratio	Answer	Answer

Did the companys ability to pay its current liabilities improve over the two years? AnswerYesNo

Los Altos, Inc.
Income Statement
For Years Ended December 31, 2020 and 2019
(in millions)	2020	2019
Net sales	$22,500	$21,375
Cost of goods sold	12,375	11,700
Gross profit	10,125	9,675
Selling and administrative expenses	6,300	6,075
Income from operations	3,825	3,600
Interest expense	675	563
Income before income taxes	3,150	3,037
Income tax expense	945	900
Net income	$2,205	$2,137

Los Altos, Inc.
Balance Sheet
December 31, 2020 and 2019
(in millions)	2020	2019
Assets
Current assets
Cash and cash equivalents	$450	$900
Accounts receivable	2,025	1,800
Inventory	1,125	1,463
Other current assets	900	563
Total current assets	4,500	4,726
Property, plant, & equipment (net)	5,850	5,625
Other assets	12,825	13,275
Total assets	$23,175	$23,626
Liabilities and Stockholders' Equity
Current liabilities	$7,800	$7,540
Long-term liabilities	13,000	14,040
Total liabilities	20,800	21,580
Stockholders' equity - common	2,375	2,046
Total Liabilities and Stockholders' Equity	$23,175	$23,626