Comparative financial statement data of Hollingsworth, Inc., follow:

1. Market price of Hollingsworth’s common stock: \($50.60\) at December 31, 2023, and \($33.49\) at December 31, 2022 2. Common shares outstanding: 12,000,000 during 2023 and 12,000,000 during 2022 3. All sales are credit sales

Requirements:

1. Compute the following ratios for 2023 and 2022:

a. Current ratio

b. Times-interest-earned ratio

c. Inventory turnover

d. Operating income percentage

e. Return on common stockholders’ equity

f. Earnings per share of common stock 

g. Price/earnings ratio 

2. Decide (a) whether Hollingsworth’s ability to pay debts and to sell inventory improved or deteriorated during 2023 and (b) whether the investment attractiveness of its common stock appears to have increased or decreased.

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1 2 3 Hollingsworth, Inc. Comparative Income Statements For the Years Ended December 31, 2023 and 2022 4 (amounts in thousands) 5 2023 2022 6 Sales revenues $ 449,990 $ 441,010 7 Less: Cost of goods sold 234,000 226,000 8 Gross profit S 215,990 $ 215,010 9 Less: Operating expenses 140,000 135,000 10 Operating income 75,990 S 80,010 11 Less: Interest expense 10,200 12,600 12 Income before income taxes S 65,790 S 67,410 13 Less: Income tax expense 6,690 20,310 14 Net income 15 59,100 $ 47,100