Assume that you will soon graduate from college and that you have job offers with two pharmaceutical firms. The first offer is with Alpha Research, a relatively new and aggressive company. The second is with Omega Scientific, a very well established and conservative company.

Financial information pertaining to each firm, and to the pharmaceutical industry as a whole, is as follows:

The Omega offer is for $36,000 per year. The Alpha offer is for $32,000. However, unlike Omega, Alpha awards its employees a stock option bonus based on profitability for the year. Each option enables the employee to purchase shares of Alpha’s common stock at a significantly reduced price. The more profitable this company is, the more stock each employee can buy at a discount.
Show how the above information may help you justify accepting the Alpha Research offer, even though the starting salary is $4,000 lower than the Omega Scientificoffer.

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Financial Measure Current ratio Quick ratio. Return on assets. Return on equity P/e ratio Alpha 2.2 to 1 1.2 to1 17% 28% 20 to 1 Omega 4.5 to1 2.8 to 1 8% 14% 10 to1 Industry Average 2.5 to1 1.5 to 1 10% 16% 12 to1 . . _ - - . . ..