Quick Ratio

Smith and Sons, Inc.

Income Statement

$($in millions$)$

Current Year Previous Year

Net sales $10,2009,700$

Cost of goods sold $(5,500)(5,200)$

Gross profit $4,7004,500$

Selling and administrative expenses $(2,800)(2,700)$

Income from operations $1,9001,800$

Interest expense $(300)(250)$

Income before income taxes $1,6001,550$

Income tax expense $(420)(400)$

Net income $1,1801,150$

Smith and Sons, Inc.

Balance Sheet

$($in millions$)$

Current Year Previous Year

Assets

Current assets

Cash and cash equivalents $350550$

Accounts receivable $900800$

Inventory $650800$

Other current assets $400250$

Total current assets $2,3002,400$

Property, plant & equipment, net $2,4502,350$

Other assets $5,7005,900$

Total Assets $10,45010,650$

Liabilities and Stockholders' Equity

Current liabilities $3,1503,050$

Long$-$term liabilities $5,0005,400$

Total liabilities $8,1508,450$

Stockholders' equity$-$common $2,3002,200$

Total Liabilities and Stockholders' Equity $10,45010,650$

Calculate the quick ratio for Smith & Sons, Inc., for each year.

Round answers to two decimal places.

Previous Year Answer

$0$

Current Year Answer

$0$

Did the company$$s ability to pay its current liabilities improve over the two years?