Quick Ratio

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

	2020	2019
Quick 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	$21,000	$19,950
Cost of goods sold	11,000	10,400
Gross profit	10,000	9,550
Selling and administrative expenses	5,600	5,400
Income from operations	4,400	4,150
Interest expense	600	500
Income before income taxes	3,800	3,650
Income tax expense	840	800
Net income	$2,960	$2,850

Los Altos, Inc.
Balance Sheet
December 31, 2020 and 2019
(in millions)	2020	2019
Assets
Current assets
Cash and cash equivalents	$400	$800
Accounts receivable	1,800	1,600
Inventory	1,000	1,300
Other current assets	800	500
Total current assets	4,000	4,200
Property, plant, & equipment (net)	5,200	5,000
Other assets	11,400	11,800
Total assets	$20,600	$21,000
Liabilities and Stockholders' Equity
Current liabilities	$6,600	$6,380
Long-term liabilities	11,000	11,880
Total liabilities	17,600	18,260
Stockholders' equity - common	3,000	2,740
Total Liabilities and Stockholders' Equity	$20,600	$21,000