FA12

Debt-to-Equity Ratio Consider the following financial statement data for Hi-Tech Instruments:

For the Year Ended December 31
(Thousands of Dollars, except Earnings per Share)
Sales revenue	$212,000
Cost of goods sold	127,000
Net income	10,300
Dividends	4,600
Earnings per share	$4.15

HI-TECH INSTRUMENTS, INC.
Balance Sheets
(Thousands of Dollars)	Current Year	Prior Year
Assets
Cash	$20,300	$20,000
Accounts receivable (net)	48,000	43,000
Inventory	41,500	45,700
Total Current Assets	109,800	108,700
Plant assets (net)	54,600	52,500
Other assets	17,600	15,800
Total Assets	$182,000	$177,000
Liabilities and Stockholders Equity
Notes payablebanks	$8,000	$8,000
Accounts payable	24,500	20,700
Accrued liabilities	18,500	23,000
Total Current Liabilities	51,000	51,700
9% Bonds payable	42,000	42,000
Total Liabilities	93,000	93,700
Common stock	50,000	50,000
Retained earnings	39,000	33,300
Total Stockholders Equity	89,000	83,300
Total Liabilities and Stockholders Equity	$182,000	$177,000

* $25.00 par value; 2,000,000 shares

Industry Average Ratios for Competitors
Quick ratio	1.3
Current ratio	2.4
Accounts receivable turnover	5.9	times
Inventory turnover	3.5	times
Debttoequity ratio	0.73
Gross profit percentage	42.8	percent
Profit margin	4.5	percent
Return on assets	7.6	percent

Calculate the company's debt-to-equity ratio. Note: Round answers to two decimal places, when appropriate. Answer

Compare the result to the industry average.

The company's debt-to-equity ratio is (higher or lower, pick one) than the industry's average.