Selected data for Dalton Company for Year 3 and additional information on industry averages follow.

Required

a. Calculate Dalton Company’s earnings per share ratio, price-earnings ratio, and return on equity ratio and compare them with the industry averages.

b. Discuss factors you would consider in deciding whether to invest in the company.

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$ 97,800 $330,000 255,000 Earnings (net income) Preferred stock (13,200 shares at $25 par, 4%) Common stock (45,000 shares no par, market value $28) Retained earnings 281,250 866,250 Less: Treasury stock Preferred (1,800 shares) Common (1,800 shares) Total stockholders' equity $27,000 12,000 39,000 $827,250 Industry averages Earnings per share Price-earnings ratio Return on equity $2.60 9.50 11.20%