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Current Ratio

The following financial data is from Hi-Tech Instruments' financial statements (thousands of dollars, except earnings per share.)

2016Sales revenue$210,000Cost of goods sold125,000Net income8,300Dividends2,600Earnings per share4.15

Hi-Tech Instruments, Inc.

Balance Sheet(Thousands of Dollars)

Dec. 31, 2016Dec. 31, 2015AssetsCash12,300$18,000Accounts receivable (net)40,00041,000Inventory39,50043,700Total current assets91,800102,700Plant assets (net)52,60050,500Other assets15,60013,800Total assets160,000$167,000Liabilities and Stockholders' EquityNotes payable-banks$6,000$6,000Accounts payable22,50018,700Accrued liabilities16,50021,000Total current liabilities45,00045,7009% Bonds payable28,00040,000Total liabilities73,00085,700Common stock, $25 par value (2,000,000 shares)50,00050,000Retained earnings37,00031,300Total stockholders' equity87,00081,300Total liabilities and stockholders' equity160,000$167,000

Industry Average Ratios for CompetitorsQuick ratio1.3Current ratio2.4Accounts receivable turnover5.9 timesInventory turnover3.5 timesDebt-to-equity ratio0.73Gross profit percentage42.8 percentReturn on sales4.5 percentReturn on assets7.6 percent

Calculate the company's current ratio for 2016.

Round answer to one decimal place.

Answer

Compare the result to the industry average.

Hi-Tech Instruments' ratio is higher than the industry average.

Hi-Tech Instruments' ratio is lower than the industry average.

finding the current ratio