Current Ratio Smith and Sons, Inc. Income Statement (in millions) 2016 2015
Net sales $10,700 $10,200
Cost of goods sold (5,500) (5,200)
Gross profit 5,200 5,000
Selling and administrative expenses (2,800) (2,700)
Income from operations 2,400 2,300
Interest expense (300) (250)
Income before income taxes 2,100 2,050
Income tax expense (420) (400)
Net income 1,680 1,650

Smith and Sons, Inc. Balance Sheet (in millions)

2016 2015
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' 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

Required:
a. Calculate the current ratio for Smith & Sons, Inc., for 2015 and 2016.
b. Did the companyâs ability to pay its current liabilities improve over the two years?