Selected data for Richmond Company for 2011 and additional information on industry averages follow.

Required
a. Calculate and compare Richmond Company's ratios with the industry averages.
b. Discuss factors you would consider in deciding whether to invest in the company.

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Earnings (net income) Preferred stock (13,200 shares at $50 par, 4%) Common stock (45,000 shares no par, market value $56) Retained earnings $ 174,000 $ 660,000 510,000 562,500 $1,732,500 Less: Treasury stock Preferred (1,800 shares) Common (1,800 shares) Total stockholders' equity $54,000 24,000 78,000 $1,654,500 Industry averages Earnings per share Price-earnings ratio Return on equity $ 5.20 9.50 11.20%