Linking PB and PE Ratios to ROE The following graphic plots the PE and PB ratio combinations for each of five separate companies A through E. Identify the company with the following description of its current and expected future performance.

___ 1. High current profitability, earnings expected to decline but profitability will remain high ___ 2. Average current profitability, earnings and profitability expected to remain at the average ___ 3. Low current profitability, earnings expected to increase but future profitability will be about average ___ 4. High current profitability, profitability will remain high ___ 5. High current profitability, earnings expected to decline markedly and profitability will be low