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Computing and Interpreting Return on Equity (ROE) Two music companies

Computing and Interpreting Return on Equity (ROE) Two music companies reported the following in their financial statements:

Question:

Required:
1. Compute the 2015 ROE for each company (express ROE as a percentage rounded to one decimal place). Which company appears to generate greater returns on stockholders€™ equity in 2015?
2. Compute the 2015 P/E ratio for each company. Do investors appear to value one company€™s earnings more than the other€™s? Explain.

Transcribed Image Text:

Urban Youth Sound Jona 2015 2015 2014 2014 Net income Total stockholders' equity Earnings per share Stock price when annual results reported $27.500 24302 $41,500$36,739 300,399 3 521,198 0.85 14.45 387.101 1.10 20.35 1.00 18.50 095 1615

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Fundamentals of Financial Accounting

ISBN: 978-0078025914

5th edition

Authors: Fred Phillips, Robert Libby, Patricia Libby

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Question Posted: Nov 02, 2015 06:02 AM

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Computing and Interpreting Return on Equity (ROE) Two music companies reported the following in their financial statements:

Question:

Urban Youth Sound Jona 2015 2015 2014 2014 Net income Total stockholders' equity Earnings per share Stock price when annual results reported $27.500 24302 $41,500$36,739 300,399 3 521,198 0.85 14.45 387.101 1.10 20.35 1.00 18.50 095 1615

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Req 1 The companies appear to be evenly matched with regards to return on equity Re...View the full answer

Fundamentals of Financial Accounting

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