Assume that you are an investment adviser. What other information would you want to have before advising a client regarding the purchase of Cooperstown stock?

The Stockholders’ Equity section of the balance sheet for Cooperstown Corp. at the end of 2017 appears as follows: 8%, $100 par, cumulative preferred stock, 200,000 shares authorized, 50,000 shares issued and outstanding ………………………………………….$ 5,000,000 Additional paid-in capital on preferred …………………………………………..2,500,000 Common stock, $5 par, 500,000 shares authorized, 400,000 shares issued and outstanding …………………………………………………………..2,000,000 Additional paid-in capital on common ………………………………………….18,000,000 Retained earnings ……………………………………………………………….37,500,000 Total stockholders’ equity ……………………………………………………..$65,000,000 Net income for the year was $1,300,000. Dividends were declared and paid on the preferred shares during the year, and a quarterly dividend of $0.40 per share was declared and paid each quarter on the common shares. The closing market price for the common shares on December 31, 2017, was $24.75 per share. Required 1. Compute the following ratios for the common stock: a. Earnings per share b. Price/earnings ratio c. Dividend payout ratio d. Dividend yield ratio 2. Assume that you are an investment adviser. What other information would you want to have before advising a client regarding the purchase of Cooperstown stock? View Solution:
The Stockholders Equity section of the balance sheet for Cooperstown

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