The Following Information Was Provided by Joseph Company as of December

question 126

Essay

The following information was provided by Joseph Company as of December 31, Year 2:
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. $\begin{array}{|l|r|}\hline \text { Net income } & \$ 528,000 \\\hline\text { Preferred stock, }(20,000 \text { shares at } \$ 10 \mathrm{par}, 4 \%) & \$ 200,000 \\\hline \text { Common stock (220,000 shares at \$1 par) } & \$ 220,000 \\\hline \text { Paid-in capital in excess of par-common } & \$ 2,475,500 \\\hline \text { Retained earnings } & \$ 3,824,500 \\\hline\\\hline\end{array}$

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Definitions:

Altruistic

Showing a selfless concern for the well-being of others; characterized by doing things purely out of a desire to help, not for any personal gain.

BATNAs

An acronym for "Best Alternative to a Negotiated Agreement," indicating the course of action that a party will take if current negotiations fail.

Bargaining Zone

The range within which an agreement is reachable during negotiations, bounded by the minimum and maximum limits of both parties.

Agreement

A mutual understanding or arrangement between two or more parties, often formalized in a contract or verbal commitment.