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Debit-to-Equity 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 income11,300Dividends2,600Earnings per share5.65

Hi-Tech Instruments, Inc.

Balance Sheet(Thousands of Dollars)

Dec. 31, 2016Dec. 31, 2015AssetsCash21,300$18,000Accounts receivable (net)43,00041,000Inventory39,50043,700Total current assets103,800102,700Plant assets (net)52,60050,500Other assets15,60013,800Total assets$172,000$167,000Liabilities and Stockholders' EquityNotes payable-banks$6,000$6,000Accounts payable22,50018,700Accrued liabilities16,50021,000Total current liabilities45,00045,7009% Bonds payable37,00040,000Total liabilities82,00085,700Common stock, $25 par value (2,000,000 shares)50,00050,000Retained earnings40,00031,300Total stockholders' equity90,00081,300Total liabilities and stockholders' equity$172,000$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 debt-to-equity ratio for 2016.

Round answer to two decimal places.

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.