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

1. Market price of Tennyson’s common stock: \($43.51\) at December 31, 2023, and \($31.36\) at December 31, 2022 2. Common shares outstanding: 11,000,000 during 2023 and 11,000,000 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 Tennyson’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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C 1 2 3 4 5 Tennyson, Inc. Comparative Income Statements For the Years Ended December 31, 2023 and 2022 (amounts in thousands) 2023 2022 6 Sales revenues $ 445,910 S 425,080 7 Less: Cost of goods sold 236,000 224,000 8 Gross profit $ 209,910 $ 201,080 9 Less: Operating expenses 132,000 128,000 10 Operating income 77,910 $ 73,080 11 Less: Interest expense 10,600 11,600 12 Income before income taxes S 67,310 S 61,480 13 Less: Income tax expense 18,860 19,630 14 Net income 15 $ 48,450 S 41,850