Comparative financial statement data of Romano, Inc. follow: 

1. Market price of Romano, Inc.’s common stock: $86.58 at December 31, 2025, and $46.54 at December 31, 2024. 

2. Common shares outstanding: 12,000 on December 31, 2025, and 10,000 on December 31, 2024 and 2023. 

3. All sales are on credit..

Requirements 

1. Compute the following ratios for 2025 and 2024: 

a. Current ratio 

b. Cash ratio 

c. Times-interest-earned ratio 

d. Inventory turnover 

e. Gross profit percentage 

f. Debt to equity ratio 

g. Rate of return on common stockholders’ equity 

h. Earnings per share of common stock 

i. Price/earnings ratio

2. Decide 

(a) Whether Romano, Inc.’s ability to pay debts and to sell inventory improved or deteriorated during 2025.

(b) Whether the investment attractiveness of its common stock appears to have increased or decreased.  

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ROMANO, INC. Comparative Income Statement Years Ended December 31, 2025 and 2024 Net Sales Revenue Cost of Goods Sold Gross Profit Operating Expenses Income from Operations Interest Expense Income Before Income Tax Income Tax Expense Net Income 2025 $ 467,000 237,000 230,000 136,000 94,000 9,000 85,000 24,000 $ 61,000 2024 $428,000 218,000 210,000 134,000 76,000 10,000 66,000 27,000 $39,000