Current Ratio Smith and Sons, Inc. Income Statement (in millions) 2016 2015 Net sales $10,400 $9,900 Cost of goods sold (5,500) (5,200) Gross profit 4,900 4,700 Selling and administrative expenses (2,800) (2,700) Income from operations 2,100 2,000 Interest expense (300) (250) Income before income taxes 1,800 1,750 Income tax expense (420) (400) Net income 1,380 1,350 Smith and Sons, Inc. Balance Sheet (in millions) 2016 2015 Assets Current assets Cash and cash equivalents 550 750 Accounts receivable 900 800 Inventory 850 1,000 Other current assets 400 250 Total current assets 2,700 2,800 Property, plant & equipment, net 2,250 2,150 Other assets 5,700 5,900 Total Assets 10,650 10,850 Liabilities and Stockholders' Equity Current liabilities 3,350 3,250 Long-term liabilities 5,000 5,400 Total liabilities 8,350 8,650 Stockholders' equity-common 2,300 2,200 Total Liabilities and Stockholders' Equity 10,650 10,850 Calculate the current ratio for Smith & Sons, Inc., for 2015 and 2016. Round answers to two decimal places. Smith and Sons, Inc. Balance Sheet (in millions) 2016 2015 Assets Current assets Cash and cash equivalents 550 750 Accounts receivable 900 800 Inventory 850 1,000 Other current assets 400 250 Total current assets 2,700 2,800 Property, plant & equipment, net 2,250 2,150 Other assets 5,700 5,900 Total Assets 10,650 10,850 Liabilities and Stockholders' Equity Current liabilities 3,350 3,250 Long-term liabilities 5,000 5,400 Total liabilities 8,350 8,650 Stockholders' equity-common 2,300 2,200 Total Liabilities and Stockholders' Equity 10,650 10,850 Calculate the current ratio for Smith & Sons, Inc., for 2015 and 2016. Round answers to two decimal places. 2015 2016 Did the company's ability to pay its current liabilities improve over the two years? The decrease in ratio indicates that Smith & Son's ability to pay its current liabilities improved. The increase in ratio indicates that Smith & Son's ability to pay its current liabilities declined. The decrease in ratio indicates that Smith & Son's ability to pay its current liabilities declined. The increase in ratio indicates that Smith & Son's ability to pay its current liabilities improved