Selected data for Faulkner Company for 2005 and additional information on industry averages follow.

Required:

a. Calculate and compare Faulkner 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 (30,000 shares at $1 par, market value $56) Paid-in Capital in Excess of Par Value-Common Retained Earnings $ 174,000 $ 660,000 30,000 480,000 562,500 Less: Treasury Stock Preferred (1,200 shares) Common (1,200 shares) Total Stockholders' Equity 1,732,500 $54,000 24,000 78,000 $1,654,500