The Following Information Was Provided by Joseph Company as of December

question 37

Essay

The following information was provided by Joseph Company as of December 31,Year 2:
$\begin{array}{llr}\text { Net income } & \$ 528,000 \\\text { Preferred stock, }(20,000 \text { shares at } \$ 10 \text { par, 4\%) } & \$ 200,000 \\\text { Common stock, (220,000 shares at } \$ 1 \text { par) } & \$ 220,000 \\\text { Paid-in capital in excess of par-common } & \$ 2,475,500 \\\text { Retained earnings } & \$ 3,824,500\end{array}$
On the most recent trading date,Joseph's common shares sold at $36 and the preferred shares sold at $14.
The following information on industry averages is provided:
Earnings per share $2.06
Price-earnings ratio 13.2:1
Required:
1)Calculate and compare Joseph Company's ratios with the industry averages shown above.(Round your answer to two decimal places.)
2)Discuss whether you would invest in this company.

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Definitions:

In-house Counsel

A lawyer or team of lawyers employed directly by a corporation or organization to provide legal advice and services.

Nonemployee Agent

A nonemployee agent typically contracts with the principal to produce a result and determines for himself or herself how that result will be accomplished. Also called an independent contractor.

Independent Contractor

An individual or entity contracted to perform work for another entity as a non-employee, often with greater control over how the work is completed.

Restatement (Third)

A reference to the third update of the Restatements of the Law, which are collections of common law judicial decisions in the United States, organized by subject.