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Calculate the current ratio for Los Altos, Inc., for both years, using the financial statements displayed below. Round to nearest hundredth. 2020 2019 Current ratio Did the company's ability to pay its current liabilities improve over the two years? Los Altos, Inc. Income Statement For Years Ended December 31, 2020 and 2019 (in millions) 2020 2019 Net sales $10,000 $9,500 Cost of goods sold 5,500 5,200 Gross profit 4,500 4,300 Selling and administrative expenses 2,800 2,700 Income from operations 1,700 1,600 Interest expense 300 250 Income before income taxes 1,400 1,350 Income tax expense 420 400 Net income $980 $950 Los Altos, Inc. Balance Sheet December 31, 2020 and 2019 (in millions) 2020 2019 Assets Current assets Cash and cash equivalents $200 $400 Accounts receivable 900 800 Inventory 500 650 Other current assets 400 250 Total current assets 2,000 2,100 Property, plant, & equipment (net) 2,600 2,500 Other assets 5,700 5,900 Total assets $10,300 $10,500

Calculate the current ratio for Los Altos, Inc., for both years, using the financial statements displayed below. Round to nearest hundredth. 2020 2019 Current ratio Did the company's ability to pay its current liabilities improve over the two years? Los Altos, Inc. Income Statement For Years Ended December 31, 2020 and 2019 (in millions) 2020 2019 Net sales $10,000 $9,500 Cost of goods sold 5,500 5,200 Gross profit 4,500 4,300 Selling and administrative expenses 2,800 2,700 Income from operations 1,700 1,600 Interest expense 300 250 Income before income taxes 1,400 1,350 Income tax expense 420 400 Net income $980 $950 Los Altos, Inc. Balance Sheet December 31, 2020 and 2019 (in millions) 2020 2019 Assets Current assets Cash and cash equivalents $200 $400 Accounts receivable 900 800 Inventory 500 650 Other current assets 400 250 Total current assets 2,000 2,100 Property, plant, & equipment (net) 2,600 2,500 Other assets 5,700 5,900 Total assets $10,300 $10,500

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Current Ratio Calculate the current ratio for Los Altos, Inc., for both years, using the financial statements displayed below. Round to nearest hundredth. 2020 2019 Current ratio Did the company's ability to pay its current liabilities improve over the two years? Los Altos, Inc. Income Statement For Years Ended December 31, 2020 and 2019 (in millions) 2020 2019 Net sales $10,000 $9,500 Cost of goods sold 5,500 5,200 Gross profit 4,500 4,300 Selling and administrative expenses 2,800 2,700 Income from operations 1,700 1,600 Interest expense 300 250 Income before income taxes 1,400 1,350 Income tax expense 420 400 Net income $980 $950 Los Altos, Inc. Balance Sheet December 31, 2020 and 2019 (in millions) 2020 2019 Assets Current assets Cash and cash equivalents $200 $400 Accounts receivable 900 800 Inventory 500 650 Other current assets 400 250 Total current assets 2,000 2,100 Property, plant, & equipment (net) 2,600 2,500 Other assets 5,700 5,900 Total assets $10,300 $10,500 Liabilities and Stockholders' Eauity
Transcribed Image Text:Current Ratio Calculate the current ratio for Los Altos, Inc., for both years, using the financial statements displayed below. Round to nearest hundredth. 2020 2019 Current ratio Did the company's ability to pay its current liabilities improve over the two years? Los Altos, Inc. Income Statement For Years Ended December 31, 2020 and 2019 (in millions) 2020 2019 Net sales $10,000 $9,500 Cost of goods sold 5,500 5,200 Gross profit 4,500 4,300 Selling and administrative expenses 2,800 2,700 Income from operations 1,700 1,600 Interest expense 300 250 Income before income taxes 1,400 1,350 Income tax expense 420 400 Net income $980 $950 Los Altos, Inc. Balance Sheet December 31, 2020 and 2019 (in millions) 2020 2019 Assets Current assets Cash and cash equivalents $200 $400 Accounts receivable 900 800 Inventory 500 650 Other current assets 400 250 Total current assets 2,000 2,100 Property, plant, & equipment (net) 2,600 2,500 Other assets 5,700 5,900 Total assets $10,300 $10,500 Liabilities and Stockholders' Eauity
2020 2019 Current ratio Did the company's ability to pay its current liabilities improve over the two years? Los Altos, Inc. Income Statement For Years Ended December 31, 2020 and 2019 (in millions) 2020 2019 Net sales $10,000 $9,500 Cost of goods sold 5,500 5,200 Gross profit 4,500 4,300 Selling and administrative expenses 2,800 2,700 Income from operations 1,700 1,600 Interest expense 300 250 Income before income taxes 1,400 1,350 Income tax expense 420 400 Net income $980 $950 Los Altos, Inc. Balance Sheet December 31, 2020 and 2019 (in millions) 2020 2019 Assets Current assets Cash and cash equivalents $200 $400 Accounts receivable 900 800 Inventory 500 650 Other current assets 400 250 Total current assets 2,000 2,100 Property, plant, & equipment (net) 2,600 2,500 Other assets 5,700 5,900 otal assets $10,300 $10,500 Liabilities and Stockholders' Equity Current liabilities $3,000 $2,900 Long-term liabilities 5,000 5,400 Total liabilities 8,000 8,300 Stockholders' equity - common 2,300 2,200 Total Liabilities and Stockholders' Equity $10,300 $10,500
Transcribed Image Text:2020 2019 Current ratio Did the company's ability to pay its current liabilities improve over the two years? Los Altos, Inc. Income Statement For Years Ended December 31, 2020 and 2019 (in millions) 2020 2019 Net sales $10,000 $9,500 Cost of goods sold 5,500 5,200 Gross profit 4,500 4,300 Selling and administrative expenses 2,800 2,700 Income from operations 1,700 1,600 Interest expense 300 250 Income before income taxes 1,400 1,350 Income tax expense 420 400 Net income $980 $950 Los Altos, Inc. Balance Sheet December 31, 2020 and 2019 (in millions) 2020 2019 Assets Current assets Cash and cash equivalents $200 $400 Accounts receivable 900 800 Inventory 500 650 Other current assets 400 250 Total current assets 2,000 2,100 Property, plant, & equipment (net) 2,600 2,500 Other assets 5,700 5,900 otal assets $10,300 $10,500 Liabilities and Stockholders' Equity Current liabilities $3,000 $2,900 Long-term liabilities 5,000 5,400 Total liabilities 8,000 8,300 Stockholders' equity - common 2,300 2,200 Total Liabilities and Stockholders' Equity $10,300 $10,500
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